The Smartest Ways to Budget as a New Parent

Life instantly changes when you hold your newborn baby for the first time. While you are relishing every current moment, you are also thinking of all activities to do in the future. Now that you are a parent, you will soon realize that your life priorities now are different than when you were newly married or single. So you don’t become overwhelmed with adapting to life with children, these tips can help you successfully budget as a new parent.

Don’t Believe The Statistics

Parenting can be as expensive or affordable as you make it. The Department of Agriculture predicts the typical, middle-class family will spend $233,160 per child, or approximately $13,000 a year. That figure includes everything from buying a larger house, food, diapers, child care, and even medical insurance.

Can you spend $233,000 (or more) on your brand-new child for the next 18 years of their life? Sure. But, many families do it for less. After all, there are many families that earn a modest income and have more two or three children. If you only earn $35,000 a year (before taxes) and you have two children, is $26,000 of your salary going to be used exclusively to feed and clothe your children? No.

Your monthly expenses will increase some with each child you have, but, you might pay for less than the official projections. Children will get more expensive in their teen years as they eat more, go to prom, and start driving, but, you have a few years to figure out your budget until that day arrives.

For now, just remember that parenting is as expensive as you make it and you can easily spend far less than $12,000 a year and not live like a pauper.

Consider Needs and Wants

If you were to visit your local baby store, you will soon realize that you cannot buy everything in the store. While we all want the best of everything for our children, we cannot afford everything. You will need to choose which items are worth spending the extra money and when to go with the cheaper alternative.

Here are a few examples:

  • Buying a basic crib for $100 or a handmade crib for $600
  • Basic stroller or a deluxe stroller
  • A few toys or 30 toys

Each parent will make a different decision, so it’s up to you. Just remember to not spend more than your monthly budget so that you won’t struggle to pay the bills (than you will not have anything) or to reach that $233,000 per child spending estimate.

Buy Secondhand Clothing or Ask for Gifts

One expense that you can easily control is how you much you pay for clothing. Babies and children grow quickly and will outgrow an outfit or pair of shoes before they need to be replaced. Ask your friends and family if they have any clothing from their children that you can use or request certain items at the baby shower or for birthdays. You can also visit consignment sales to buy quality clothing at discount prices. Since most of these items will be lightly worn, your clothes will still look mostly new and you can get them for bargain prices.

If you plan on having more than one child, keep your clothing as you might be able to have your next son or daughter wear the items. While you might purchase a few special items just for them to wear new, you will spend far less than with your first child because you have already made the small clothing investment.

Full-Time Daycare vs. Staying Home

If you both currently work full-time, one of you may consider quitting your job or switching to part-time employment. Not only may you wish to be at home with your little one to care for them, but, child care is expensive. Depending on where you live, your monthly childcare bill can easily cost $1,500 per month. If you don’t earn much more than that at your job, it might not be worth working, if you can afford to only live on one income.

This is a decision that you will need to make with your spouse. New parents all over the world face the same decision as you. Even if you only leave the workforce until your children are old enough to begin attending school, it can be more cost-effective to stay home for this season of life. After all, by living a frugal lifestyle you can afford to make this career decision. Life isn’t exclusively about money, oftentimes we work hard in our childless years so we can work smarter to enjoy a better work-life balance.

Readjust Your Budget

Your budget as a parent will look different than when it was just the two of you. For example, you didn’t have to buy diapers or pay for a babysitter a few months ago. Take a few minutes to tally up your updated income and expenses.

In fact, it only takes five minutes to create a budget template in Excel.

Until you get into a new financial routine and can put your finances on auto-pilot once again, you both might have to spend a few extra minutes for the first few months to compare your actual spending to your projected spending. The best time to look over your finances is during your baby’s naptime when you talk distraction-free.

Review Your Long-Term Financial Goals

In addition to making sure you are living within your means for the current month, you also need to take a few minutes to review and revise your long-term financial goals. In addition to updating your will and beneficiaries, you should also review the following financial coverages:

  • Life Insurance
  • Non-retirement investments
  • Retirement Investments
  • Emergency Fund (Do you need to add more money to account for the new monthly expenses to still have 3-6 months saved?)
  • Saving for large, future purchases
  • Making extra debt payments (do you need to reduce your extra debt payments to account for the higher monthly living expenses?)

You can use the free financial planning calculator offered by Personal Capital to determine if you are saving enough to accomplish your long-term financial goals. If you use a personal advisor for investing or money management, scheduling a session with them can be time well spent.


Becoming a new parent can make you feel nervous at times, especially with your very first child. Many families financially thrive by practicing the same wise money management skills that you follow as a single person, recently married, or retired. Having children will definitely make life more exciting, but, it doesn’t mean you have to become poor in the process.

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