How Much Do Babies Cost? Amount You Should Save Planning For A Child

SHORT ANSWER: Experts estimate babies cost $20,000-$50,000 in their first year. But that number can vary based on your healthcare costs and the equipment you purchase.

Welcoming a baby is life-changing. Your life will suddenly revolve around a small person who captures your heart and demands your time. But a big question many people ask is: How much do babies cost? The cost will vary based on your circumstances, but experts estimate $20,000 to $50,000 in the child’s first year to cover everything from medical expenses to furniture and supplies. Learn the various expense categories you can anticipate and the best ways to save for welcoming a child.

How Much Does it Cost to Have a Baby?

Estimates for the cost of having a baby differ immensely. That’s because some couples want the best of the best for their child while others take advantage of all the hand-me-downs and offers of free childcare for their child.

Two of the largest financial factors in the cost of a baby are the hospital bills for mom and baby as well as the cost of childcare. If you have excellent health insurance coverage with a low deductible, you can shave several thousand dollars off the estimates of the cost to welcome a child. Families that have a parent who can care for the child or work remotely to be at home with the baby instead of using childcare can also reduce the cost of parenting immensely.

The U.S. Department of Agriculture (USDA) tracks the cost of raising a child. In 2015, parents projected spending $233,610 to raise a child born that year. That’s up from the projected $226,920 estimated in 2011. 

Cost of Childbirth and Healthcare

The cost of childbirth and medical care for a new baby will vary greatly based on your health insurance. Parents with health insurance report expenses ranging from $7,000 to $17,000 based on the Healthcare Cost Institute’s 2020 study. How much of that cost becomes your responsibility depends on your health insurance deductibles.

The cost of childbirth and healthcare varies based on your location as well. To estimate your costs, review your health plan’s coverage. As you look at this coverage, add up expenses as best you can in this manner.

• Deductible: It’s more than likely that you’ll hit your deductible for the year. The average individual health insurance plan deductible is $1,735.
• Coinsurance: Once you hit your deductible, you’ll keep paying for a percentage of your medical care. Most plans charge 20% of the cost of care until you hit your out-of-pocket maximum. For example, if you’ve hit your deductible before a hospital childbirth and the hospital bills you $10,000 for the stay, your portion of that would be $2,000 if your coinsurance rate is 20%.
• Out-of-pocket maximum: So long as your delivery is routine, you likely won’t hit your out-of-pocket maximum. But the safest amount to budget for healthcare expenses for the birthing parent and newborn would be ensuring you can pay your out-of-pocket maximum. For plan year 2024, this amount should not exceed $9,450 for individual plans and $18,900 for family health insurance plans.

Cost of Baby Essentials

Baby essentials can also add up. Here’s a look at the average cost of these items, though you might be able to find some essentials at second-hand stores or from buy-nothing groups in your area.

Nursery

Most nurseries include a crib, rocking chair and dresser with a changing table. These are some of the more expensive essentials to welcome a child.

• Crib: $125-$350
• Rocking chair/glider: $200-$500
• Dresser with changing table: $150-$400

Total: $475-$1,250

Stroller

Stroller costs vary immensely. You can spend upward of $1,000 if you want the best, but there are plenty of models available for a few hundred dollars. If you’re purchasing an infant car seat, you can also get it as a travel combo that comes with the stroller so that they work together. The average cost for a stroller is $200.

Car Seat

Infant car seats range in price from $100 to $500. You can also skip the infant seat and buy an all-in-one that will grow with your child through to a booster seat for around $200. Be careful accepting hand-me-downs for this item as car seats have an expiration date, and if they’ve been in so much as a fender bender they are no longer considered safe.

Diapers

Newborns go through more diapers early on and then slow after the first few months. The average cost of diapers is $70 per month or $840 in the first year.

Feeding

Feeding babies exclusively formula costs an average of $400 to $800 per month. As babies start to eat solids at around 6 months, that cost will slowly decrease, though most babies continue drinking approximately the same amount of formula alongside solids until they reach 1 year old.

Breastfeeding also comes with expenses, including pump parts, clothes that moms can feed in and vitamin D supplements. Estimates put the cost of breastfeeding at around $50 per month.

Feeding a baby once they start eating regular food costs families about $83 per month until age 2. 

Clothing

Babies outgrow clothes every few months in their first year. That translates to spending approximately $50 per month on clothes in the first year, though accepting hand-me-downs and shopping second-hand stores can help reduce the total cost of clothing for a baby.

Other Expenses to Consider

Parents will have varying expenses related to having a baby. These additional costs might apply to you.

Childcare

One of the largest expenses for young children is childcare. The least expensive option is to find a family member willing to care for your child. If that isn’t an option, you can also look into these childcare types.

• Daycare: average cost of $1,213 per month
• Home daycare: average cost of $1,000 per month
• Nanny: $766 per week or approximately $3,064 per month

In response to how much babies cost, one Redditor said this: “Childcare is like 5x the rest of the costs.” 

So if you can find help with this or at least only pay for part-time childcare, you’ll save immensely in a child’s first year.

Increases to Health Insurance

Welcoming a child causes many parents go from self-only coverage or couple coverage to family coverage for their health insurance. The average employee spends $1,401 for a self-only plan and $6,575 for family coverage per year. This means families will see less money in their take-home pay. Actual changes will vary from one employer and health plan to another.

College Savings Funds

While saving for college now isn’t essential, it certainly is helpful. Putting aside just $25 per month could make college or trade school more affordable for your child down the road. If this is a dream you have for your child, consider setting aside funds for a 529 plan or other savings account to help prepare your child.

How to Start Saving for Baby Expenses

As you consider the cost of raising a child, know that there are many one-time expenses along with ongoing costs. That means that you can’t just save money to welcome a child. You’ll need to ensure you have ongoing cash flow.

To start saving money for baby expenses, consider these tactics:

• Build a baby budget: Start calculating your expenses now and what ongoing expenses will look like once you have a child. Have conversations with family members about the potential for help with childcare before you have a child to ensure you can afford whatever childcare you need. Use a budgeting app to get disciplined in tracking and managing expenses.
• Max out your health savings account (HSA): In the years leading up to welcoming a child, max out your HSA contributions so you have savings set aside for medical bills associated with childbirth and ongoing expenses for sick visits. Continue maxing out these contributions once you have a child to maximize tax-free contributions.
• Let people know you are planning for a baby: Accept items people are giving away as their children outgrow them. Most — especially nursery items — are gender neutral. In answer to how much babies cost, one Redditor said this: “I can't give you a range but I can say it would have been a lot cheaper had we been smarter with what we were given.”
• Create a baby registry: If you have a baby registry, you may get more practical gifts for your child instead of 10 baby blankets and pairs of cute baby shoes they’ll hardly wear.
• Adjust your lifestyle now: Start living within the budget you’ll need to follow once you have a baby. That way, you can start putting away savings and getting comfortable with your new lifestyle before the baby is here. This can help reduce resentment toward your baby that they are the reason you can’t do certain things.
• Invest savings: Look at your existing savings and evaluate how you could contribute to an investment account. Place the funds in safe investments to help them grow and help you start preparing for your future now.
• Consider a side hustle: Once you’re a parent, your time will be spread thinner as you care for a little one. If you don’t have an emergency fund or an investment account started, now is the time to build up those funds and a side hustle can help you do that while meeting expenses.

Preparing for the Expense of Raising a Child

The more you prepare now for the expense of raising a child, the smoother things will likely go for you once the child is here. It might feel funny to start preparing for a child before they are here, but the sooner you start, the more financially prepared you will be.