How Much Does it Cost to Have a Baby? A Handy Checklist

Catherine Hawley
October 29th, 2020 | 7 min

Financially preparing for the arrival of a baby, means taking similar steps to establishing a solid financial foundation–with some additions. We all thing we know how much it costs to have a baby, until the time actually comes.

I’m a mother of twins and even though my husband and I were financially prepared, it felt like nothing could have readied us for the sleepless nights, countless diaper changes and all other things related to parenthood.

Here is the order I recommend to get you organized. However, you can work on multiple steps in tandem. If you have one step covered, move on to the next.

Deal with your debt

If you have non-mortgage debt, have a plan to pay it off. An online tool like can help you run the numbers so you can figure out additional payments needed and how this will affect the timeline to pay off your debt as well as the money you’ll save.

Create an emergency fund

The amount of money that is right for you to have in your emergency fund is very personal. The key driver is your expenses. So you’ll have to “get into the weeds” and determine how much you spend. We could go off on a budgeting tangent, but if you don’t track expenses already, it may take some time to determine. Then you’ll come up with a multiple of spending that is right for you.

If you’re focused on paying off debt maybe it will be one month of expenses. You may have heard the rule of thumb to have three to six months set aside. The number that is right can vary according to your comfort level and depends on your job security etc. NerdWallet has this tool to help you determine an appropriate emergency fund amount for you.

Budget for shifting expenses

As I mentioned above getting a handle on your spending is key. Expenses are about to shift (and perhaps grow). So knowing where you stand now and getting a sense of what might change will be helpful. Additionally, plan for expenses that are unique to a baby’s first year. Baby Center has this cost calculator. The way it all adds up can be intimidating, but considering items from a baby registry and looking at mom’s groups and second hand stores for quality used goods can help reduce costs.

Calculate your cash reserve

It is helpful to have cash on hand to cover a reduction in wages while you are on parental leave. Calculate this by the reduction in wages per week times the number of weeks of leave (generally 12 weeks under FMLA). This equals the amount to set aside in a short term reserve.

In California we have coverage for short term disability for pregnancy and information can be found here. Check what is available from your employer and in your state.

Get life insurance

Start this process as it can take time to put a policy in place. For most people a term policy will be appropriate. This Forbes article outlines helpful information. Also, has a calculator to assist you in determining the amount of coverage.

Double-check your health insurance

Check to see if you need to make any changes in coverage given the expenses you anticipate and what your current plan offers. Plans vary from employer to employer and from state to state. Check out how Matt of Mom and Dad Money shares his thought process on this decision.

Get long term disability insurance

This is income replacement insurance if you are unable to work due to disability or illness. Start by checking to see if your employer offers a group policy. If not, consider putting individual coverage in place. This can be expensive and isn’t for everyone. There are many aspects of a policy to consider. All the details are beyond the scope of this post but at least you know this is important to uncover. Here is an article to help you consider important factors about this insurance.

Start your estate planning

This becomes particularly important when you have a baby because you will legally name a guardian in the case where you and your spouse are both deceased. Estate planning has other elements. More on that here but naming a guardian is a critical part of your estate plan when children are involved.

Claim your tax credit

When you go to file your tax return for the year the baby is born you’ll want to be sure you include the child. This will result in a $2,000 tax credit. Of course, the devil is in the details, and lucky Turbo tax has this explanation. If you qualify for the credit then you’ll either owe less or receive a larger refund, in most cases.

Get the baby's Social Security number

This will happen after the baby is born. You fill out paperwork and you'll receive a card in the mail. This pamphlet from the Social Security Administration has the information you need. I recommend only sharing the SS number when absolutely required to reduce the chance of identity theft. May forms request if by default but it is not required. In those cases don’t provide it.

Start your college savings

You might consider a 529 or other savings account. Technically this can be done before your baby is born. However, most parents wait until after the baby arrives. Some states have tax deductible contributions. Here is an article I wrote to help you choose a 529 that is right for you.

The cost of having a baby is a lot more than just diapers and college savings programs. I hope the above items help you with your financial preparedness when it comes to welcoming your little one.

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