Financially Preparing for a Baby

As we mentioned before, I’m expecting and due in two months.We were very lucky that we got pregnant so quickly with no issues when we know so many people who have difficulties either conceiving or carrying their baby to term. When we first found out we were as excited as we were shocked and although we were somewhat financially prepared to extend the family even further (we currently have a herd of guinea pigs), there were also many financial “extras” a child brings along that caused us to worry. We currently have the basics for an addition to the family such as a decent sized condo which we wouldn’t have to upgrade, two vehicles since we live out of town and the ability to survive off one income if we really needed to, but we’ve always either paid off debt or saved aggressively so we there isn’t much play room in our budget. One of the main reasons people don’t have children/more children is due to the sheer cost of raising a child to the age of 18. According to statistics, this number is roughly $250,000! However, it really doesn’t have to be that much. Here’s how we are preparing for our new little bundle:

Finances

Obviously, whatever state your finances are in, it’s more than possible to raise a child; people have been doing this for centuries. However, if you have the means I would STRONGLY recommend paying off the majority, if not all of your outstanding debts. Once the added expenses of a baby come in (often coupled with a decreased income), it’ll be much more difficult to focus on your debts and have them paid off in a reasonable amount of time. Also, if possible, have a minimum of three months worth of expenses covered in an emergency fund, just in case. We have $9,500 left in debt at the moment and just over $1000 in our emergency fund, I think our debt load is manageable even with a baby on the way, but ideally I’d really like to increase our emergency fund even further before little Beanie arrives.

Housing

Again, raising a child can certainly be done with less, but ideally it would be nice to have a separate room for your child and/or all of the stuff that tends to come with them (especially for your first child). With the extra little clothes, toys, crib, books, etc, it does tend to add up (and clutter up) rather quickly.For us personally, I don’t see us leaving the condo for at least a few years; we may end up upgrading to a house later on, but for now this works fine for us.

Daycare

Ah daycare, arguably the most expensive aspect of child-rearing, even more expensive than university tuition. For a decent childcare centre in my area, I’m looking at $1000 per month. Add in transportation to and from work, lunches and work clothes and it’s no wonder so many couples choose to have one person home instead of paying for childcare. We decided early on that this is the road we’re going to take; sheer cost being the overriding factor in our decision. For those planning to use daycare, try to up your emergency fund even more to include a few months of daycare expenses, just in case.

Clothes, toys and other baby stuff

As quickly as children grow out of their old clothes and into their new clothes, they don’t actually need that much, nor do you need to go into the poorhouse trying to provide it all. We bought many many articles of clothing  as well as full outfits for just a few dollars each at Costco, Superstore etc. Try to avoid buying baby clothes from actual baby stores as those seem the most expensive ($30 for a onesie vs $3 or $4 at Superstore, $5 for an entire outfit). We also received some articles of clothing as a gift so that was great! Toys, books etc, you can stick to easy building blocks and second hand books for the first few years and budget in the more expensive stuff for birthdays and Christmas etc. Also if you’re not already doing so, start using your library card! It’s dirt cheap and you get unlimited books, DVDs etc. You can even sign up for free child groups through your library. We got a bunch of stuffed animals from my family (some after my little brother) and a few toys from IKEA (also very cheap and cute too!). The only major ongoing costs here are diapers and formula (if you plan to use some), so make sure to budget that in appropriately.

Baby’s Room

There are a few things that you will still need as soon as you bring the baby home such as a car seat, stroller, crib and/or bassinet, place to put his clothes in etc. Anything extra i the room such as changing table, rocking chair, decorations etc can always be purchased at a later date or even not at all. We got a dresser,bassinet and crib second hand (about $120 total), had an old rocking chair and side table that matched, and also threw in a small bookshelf we had on hand. We did buy a few decorative touches for the room such as a cute owl decal for the wall and a giant leaf to enhance the jungle theme we have going. All in all, baby’s room cost us about $200 (and we really splurged on the decal – $70!). We have yet to buy a car seat as well as curtains so it’ll end up costing a little bit more but still not overly expensive.

Child Extras

This is the category which includes school fees, field trips, sports equipment (bikes, skates etc), birthday parties and gifts for their friends, musical instruments, extra curricular activities, summer camp, saving for post-secondary, pre-school etc. These are the expenses that are often overlooked and generally not factored into any budget, but include some activities that most parents want their child to be able to participate in. For us, this is the most expensive category by far and we’ve allocated $2,500 per year per child to these extras. The good news is that we have a little bit of time before we have to start paying for the majority of these (I doubt our little guy will be playing a musical instrument or going off to summer camp at the age of 2). The bad news is that the older our boy gets, the more expensive his wants and needs will become (especially when it comes to food).

Bottom Line

It really isn’t that expensive to have a child if you try and stick to a budget and not overspend on things that you as well as the baby, really don’t need. Right now we put $40 every couple of weeks to a little baby fund which we don’t even notice being taken away from our paycheck and it’s allowed us to spend a little on things to prepare for Beanie’s arrival. We’re going to try and keep this budget at $40 or $50 every couple weeks after he is born as well but we may upgrade the budget if we find that this simple isn’t feasible.

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