7 Tips to Financially Prepare for a Baby

This is a sponsored post with BECU. All opinions are my own. I’m so excited to partner with BECU this year to share more about my personal financial journey, including how my husband and I purchased our first home together and how to financially prepare for a baby! BECU is a Washington-based, member-owned credit union committed to supporting their members’ financial well-being through budgeting tools, the Financial Health Check program, and more.

As you read in my pregnancy announcement, our pregnancy was a bit of a surprise. Once we found out the news, we were both excited and overwhelmed by everything we needed to do to prepare for the newest addition to our family. There are so many things to consider when planning for the arrival of your little one – like what hospital to deliver at, what baby gear to buy, what baby and parenting classes to take, how to design our nursery, and most importantly, how to financially prepare for a baby!

According to the US Department of Agriculture, the average middle-income, married-couple family “will spend approximately $12,980 annually per child (i.e., with an income of $59,200-$107,400).” Additionally, the report says middle-income married-couple parents of a child born in 2015 will spend on average $233,610 ($284,570 if projected inflation costs are factored in) “for food, shelter, and other necessities to raise a child through age 17 and this does not include the cost of a college education.” THAT IS A LOT OF MONEY!

With a bundle of joy coming into our lives very shortly, I’m partnering with BECU to share seven tips for how to financially prepare for a baby. We are so glad we started to financially plan for our baby girl as soon as we found out she was on the way so we can be as prepared as possible for her arrival in early September 2020!

1. Review Health Insurance to Determine What is Covered

One of the very first things I did when we found out I was pregnant was look into my health insurance and determine what is and isn’t covered. This helped me narrow down which hospitals were in-network and read reviews about each one. Then, I was able to call my insurance to get an estimate on prenatal care as well as labor and delivery costs. For my hospital and insurance, everything gets billed at the very end, so it was helpful to anticipate and prepare to receive a larger bill once our baby girl is born.

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2. Determine Your Maternity and Paternity Leave

The next factor my husband and I looked into was our work maternity and paternity leave policies, since this could potentially impact our household income. I am thankful that my employer provides 18 weeks of fully paid maternity leave, while Jeff gets six weeks of paid paternity leave. Washington also provides up to 12 weeks of Paid Family and Medical Leave, which went into effect January 1, 2020 and applies to nearly every Washington worker who works a minimum of 820 hours (16 hours per week). Jeff and I are planning to stagger our leaves so that there is no loss of income.

3. Create a Baby Budget and Savings Account

To financially prepare for a baby, creating a baby budget is very useful so that you’re not hit with a ton of expenses all at once. Babies need lots of new items like baby gear, clothes, and nursery decor – and these costs can add up REAL quick. A great way to prepare for this is to research what you’ll need and create a spreadsheet with estimated costs. If you’re going to have a baby shower, anticipate what will be covered by friends and family and what you plan to buy. Due to COVID-19, we decided against a baby shower and will be purchasing everything ourselves. I created a private baby registry to help track what I need and determine how much everything costs. Based on this, we also opened a savings account with BECU specifically for these expenses. This helped us set a savings goal to ensure we have funds to cover our purchases. BECU’s Babies and Budgeting article also served as a helpful tool for us to map out our budget and make sure we were financially on track with what we needed to spend.

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4. Cut Expenses Where Possible

With new expenses piling up for our baby, we tried to cut back where possible and put those extra funds towards our baby savings account. You can review your finances with a Financial Health Check Specialist through BECU’s Financial Health Check Program, which helps you take action around your finances, budget and debt in real-time. For us, we saved a ton of money by completing DIY projects. For example, we installed our own nursery wallpaper, which saved us at least $500 in installation costs, and created a custom nursery closet for only $150 when custom closets can cost hundreds to thousands of dollars! Additionally, working from home has helped us cut back on commuting expenses like parking and gas, so those extra funds are now going into our baby savings account. Another great product to access through your Online Banking is the BECU Save-Up tool, which rounds up or transfers a flat amount into your savings account with every BECU debit card purchase.

5. Look into Free Baby Gear

Babies outgrow things fast, and it’s no wonder there is a ton of free baby stuff out there! Some retailers will even send you a box of free baby samples once you sign up for a registry on their site. Also, I recommend looking into your health insurance to see what benefits they may provide for families expecting a newborn. With mine (and I believe most insurances), moms usually get free breast pumps. 

Additionally, I have a lot of friends that had a baby a year before me, and they’re all ready to offload those items onto me to free up storage space. I’m all for taking their gently used second-hand items because I want to limit how much baby gear I’m buying, especially as baby girl continues to grow so rapidly. I am reserving my baby budget to purchase major items like car seats, strollers, and nursery decor pieces.

6. Determine Childcare Needs

Looking ahead, what are your plans in terms of childcare needs? Will a grandparent be watching the baby? Will you hire a nanny? Will you drop off your baby at a childcare center? Or are you planning to take care of your newborn at home as we continue to navigate these uncertain times? Overall, childcare is a huge expense that should be considered while you budget and financially prepare for a baby. According to data from Care.com, the 2019 average national weekly cost for one infant to be put in a daycare center is $215, which equates to $11,180 per year. Luckily, my parents have already volunteered to watch our baby once Jeff and I go back to work, but I recognize this may not be the case for everyone. However, I am also budgeting for daycare in case it doesn’t work out, or if my parents want to only watch our baby a few days a week.

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7. Open a 529 Account for College

It’s never too early to start saving for your child’s post-secondary education. My parents started a savings account for my college funds when I was born, which enabled me to attend college debt-free. While some parents may not be able to save for their child’s education in full, any funds they are able to set aside early on will help contribute in the long run. BECU has helpful resources such as their College Education calculator that determines how much you should save for your child’s college education. You can also open a 529 account to start saving for college tax-free! More details on starting a 529 account can be found in this Paying for College article by BECU.

I know looking into how to financially prepare for a baby can be overwhelming, but planning ahead will help you anticipate those big costs and fund those unexpected fees associated with a newborn. BECU is always available to help through every step of the way. Even though babies cost a lot, I know it’ll all be worth it in the end. We are so excited to welcome our baby girl in September!