If you’re preparing to welcome a new baby, you’re probably already expecting sleepless nights and plenty of new expenses – as well as unforgettable milestones along the way. While you likely know your expenses are about to change, it can be difficult to pin down exactly how much these changes may cost. Which baby items are must-haves, and which can you afford to skip?  Which items are one-time purchases, and which will become ongoing costs? Calculating what you’ll spend in the first year isn’t an exact science, but having a plan can reduce financial stress so you can focus on what matters most. Here are the first-year expenses you can expect and how to plan for them.

1. Start with Common One-Time Expenses

Below are some items that expectant parents typically purchase before or just after birth to prepare for bringing their little one home:

• Nursery furniture – such as a crib, mattress, changing table, and dresser.
• Baby gear – such as a stroller, infant car seat, high chair, baby monitor, and a starter supply of diapers and wipes (don’t buy too many newborn diapers – your baby will likely quickly outgrow these).
• Toiletries and medication – such as an infant thermometer, baby bath, and washcloths.
• Newborn clothing.

2. Understand Ongoing Expenses

These are items that typically become a non-negotiables within your budget once you bring your child home:

• Diapers and wipes.
• Feeding – such as formula if you plan to use it, and baby food as your child grows.
• Medical expenses – such as co-pays for doctor visits.
• Toiletries and medication – such as baby wash, shampoo, and over-the-counter infant pain relievers and fever reducers.
• Clothing, since your baby’s wardrobe will need to be replaced as they outgrow their newborn clothes.
• Childcare – which tends to be the biggest potential variable expense and will differ based on each individual family’s situation.

3. Learn Where You Can Save

While there are certainly items that might be worth spending a little more on, there other areas in which you can save:

Clothing. Babies typically outgrow their clothing every 2-3 months and because of this – used clothing can also be like-new. If you prefer to buy new clothing, it might be worth skipping the full wardrobe and sticking to a handful of onesies and sleepers per size category.

Baby gear (such as strollers and highchairs). You can usually purchase these items second-hand at local thrift stores, garage sales, or online marketplaces for a fraction of the cost. An exception to the second-hand rule are car seats. It is recommended to always purchase new car seats, as they do expire and prior crash history may not be available.

Diapers. There are subscribe-and-save services to save on the price and shipping cost of diapers. You may also consider using cloth diapers. The upfront cost of cloth diapers is more, but this can cut the total spend since they are reusable. Lastly, consider going with store brand diapers – they will typically work just as well. The same may go for store brand formula, provided it meets the same FDA standards as name-brand formula. Research as much as you can in advance.

Toys and books. While not a necessity, you may also be able to find great deals on toys and books at your local thrift shop, a garage sale, or via online marketplace. If you have friends or family members who have slightly older children, you may even be able to take advantage of hand-me-downs.

4. Prepare Financially Before Baby Arrives

There are a few ways to baby-proof your finances before your little one arrives:

• Save 3-6 Months of Expenses in an Emergency Fund. Personal finance experts always recommend having 3-6 months of expenses stored away for a rainy day, but this becomes even more important with a new addition to your family. A new baby paired with a sudden emergency (job loss, medical emergency, or major car repair) can lead you into relying on high interest debt to stay afloat. This can be avoided by having an emergency fund.
• Consider a Baby Sinking Fund. Babies often come with unexpected expenses. It may be useful to have a baby sinking fund, or a separate savings account specifically for unforeseen baby-related expenses. This can help you avoid dipping into your general savings or emergency funds.
• Work on Finalizing Childcare Plans. Depending on the parental leave policies available to you and/or your spouse, assistance from family, and your personal preferences – you may need to budget for extra childcare costs. While there are many childcare options out there, daycare centers may have waitlists and should be researched and toured early. Consider whether you prefer a daycare center or an at-home nanny. Many families even opt to have a back-up care plan in place after they finalize their primary childcare option.

It is common to see estimates for the cost of your baby’s first year in the ballpark of $15,000 to $20,000, which is an eye-opening figure for most. Keep in mind that this amount varies significantly between families based on multiple factors such as geographic location and childcare needs. Although financially preparing for your baby’s first year might be daunting, a little thoughtful planning can go a long way into being more prepared to welcome your newest addition.

If you have questions about expanding your budget for a new baby, managing your savings, or creating a financial plan for your expanding household – First Financial is here to help you every step of the way. Contact us today or make an appointment at your local branch to further discuss the options that may be available to you.

A First Financial membership is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties.  A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. Contact the Credit Union for more information.