smart spending

8 best ways to make room in your budget for a baby

Work through the baby costs
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Work through the baby costs | Alvin Mahmudov/Unsplash

Work through the baby costs

Grow up, get a job, marry, buy a house, have children. That's been formula for success for decades. Lately, the pattern has changed and the reason may result less because of biological clocks than bank accounts.

"It's the money, stupid," says family wealth adviser Rick McDonald.

Indeed, women of child-bearing age, and couples in general, may put off or rule out children altogether because they're worried about the financial impact.

A report by the National Center for Health Statistics say the number of babies born in the U.S. dropped in 2015, partly as a result of young women electing to wait to have children.

For those contemplating future parenthood, Bankrate has rounded up money-savvy experts for ways to bulletproof your budget before having a baby.

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Fulfill your other dreams first | Africa Studio/

Fulfill your other dreams first

If you have a partner, it's important you're both on the same financial page. That's the advice from Kevin Gallegos, vice president of sales and Phoenix operations, Freedom Financial Network.

Gallegos says that if either partner harbors dreams of travel, attending graduate school or conquering Mount Everest, the couple might want to wait.

To be sure, children deliver mortal blows to a budget. Either adjust your dreams or climb that mountain before jumping into starting a family. That way, the financial blowback of having a child won't result in regret later in life.

Make sure you have enough living space | Pincasso/

Make sure you have enough living space

A home or apartment might seem perfect but can it accommodate a family?

Kathleen Grace, a managing director of United Capital Financial Advisers, says kids take up a lot of space. Does your apartment have enough space for their seemingly endless supply of stuff?

"If not, you will have to consider the additional costs of moving to a new place, with all of its related expenses," Grace says.

And your home isn't the only place that will need more room. Grace points out that many who drive sports cars without a back seat or with one that's not roomy or safe enough for a child or a child's car seat also will need to factor car replacement costs into their budgets.

RATE SEARCH: Need a bigger car for your family? Look at Bankrate's auto loan rates before shopping for a vehicle.

Pump up you savings account | Maria Evseyeva/

Pump up you savings account

When it's just you or you and a partner, financial hard times are easier to address.

You might get an extra job or cut frivolous expenses, but with a child depending on you, even small bumps in the financial road can be terrifying.

Stave off at least some of that financial panic by saving plenty for those rainy days ahead.

Keith Gallegos, a vice president with Freedom Financial Network, says to expect the unexpected. He recommends saving six to nine months -- a year would be even better -- of living expenses before expanding a family.

"The goal is to have enough set aside to pay the basic necessities, including mortgage, utilities and groceries if you or your partner became ill, injured or unemployed, or when an unexpected cost comes up with your child," Gallegos says.

RATE SEARCH: A savings account is good place to start when you're starting a family. Check out the best rates at

Tame debt, seek stability | Phoompiphat Phoomkaew/

Tame debt, seek stability

Still on the hook for college debt?

Matthew Carbray, a partner with Ridgeline Financial Partners, warns that financial stability means taming outstanding debt and saving toward retirement. Having a child doesn't mean either obligation should be neglected.

He also urges first-time parents-to-be to ensure their careers have staying power. "The time for children is when the additional child care costs will not adversely affect your ability to pay your living expenses," he says.

So make sure your situation's stable before extending yourself financially.

Determine your insurance needs | Yuganov Konstantin/

Determine your insurance needs

U.S. health care costs for pregnancy and childbirth eclipse those of all other nations around the world and even with great insurance, you'll still be responsible for some of those expenses.

From drug copays to deductibles, the medical bills can pile up. Josh Guiliano, a financial consultant with Citizens Investment Services, advises doing a thorough audit as to how much of the bill will fall to you. Check on your life insurance and disability insurance as well, before committing to bottles and baby blankets. By doing so, you have less of a chance of being blindsided by the unexpected.

Save for college early | XiXinXing/

Save for college early

Babies are cute but before you know it, they'll be trading in their cribs for college dorm rooms. College hasn't gotten any cheaper than it was when you were growing up, so start thinking about it even before you commit to a kid.

Can you come up with the cash to help Junior get that degree if he decides he want to go to college?

United Capital's Kathleen Grace advises to plan on $300,000 to $600,000 for college expenses, while family wealth adviser Rick McDonald adds that today's young couples see their parents "reeling in tuition debt as they approach retirement" and don't want that to happen to them.

Start early with a college fund, and if you can't make even a small contribution, maybe you should make room in your budget by paying off debt before deciding to have a child.

Do the math | XiXinXing/

Do the math

It sounds simple, but it's amazing how many don't bother to crunch the numbers before throwing themselves into parenting. Michael Foguth, Founder of Foguth Financial Group, says it pays to plan, and the best way to do that is to figure out the price tag.

"Get your ducks in a row before the child is born," Foguth says.

He says to compute the cost of everything from diapers to doctor visits and do a realistic assessment on whether you can handle the bump in your expenses.

Foguth, the father of five girls under the age of seven, speaks from experience when he adds that you may never feel 100 percent ready.

Even if you do, "One of life's biggest events usually comes with some surprises," he says.

Try it before you buy it | Lopolo/

Try it before you buy it

You can see the impact a child will have on your budget by using this smart approach to having kids offered by Guiliano of Citizens Investment Services.

"Live as if you have a child (for) six months to a year with the newly added bills and see how it affects your life," he says.

The best way to do that is to figure out your monthly expenses -- pediatrician, hospital bills, child care, diapers, formula and other -- and set that money aside each month.

"If you find you are still able to manage and your quality of life is acceptable, then it looks as if you are ready," Giuliano says.


Life's financial journey: New parents Don't let family finances keep you up at night. (Even if your baby does.)
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