Today’s post is from our regular Wednesday contributor, Cat.
I asked countless people this question when I found out I was pregnant. I was shocked that no one had an answer for me.
So many people said babies don’t need much and don’t have to cost as much as you think. Others cautioned that you can never have enough money so don’t even try.
With all of this advice and non-advice, I was left with nothing more than to pick an arbitrary number that I knew I could hit before my baby was born: $10,000.
As many of you know, it’s a darn good thing I picked such a high number since I found out I was having two.
I wish I could tell you that I thought long and hard about that number that I saved, but really, I pulled something out of a hat that I knew was possible and seemed like it would help us make it through the first few months.
However, if I knew what I knew now, here’s how I would have broken down the costs:
1. Out of Pocket Insurance Costs
Everyone’s insurance is different, and we all have different out of pocket maxes. I now know that my own personal out of pocket max is $2,000 and that the out of pocket max for an entire family of four is $4,000. So, I know that in a worst case scenario, if I have to put both twins in the NICU for several weeks, the most I’m going to have to pay is $4,000. I’ve already reached close to $2,000 just because of the super detailed high risk ultrasounds required for twins.
Like I said, it’s a good think I picked $10,000 since it’s possible nearly half of it will be spent on medical costs alone.
2. Nursery Costs
While you don’t have to have the fanciest nursery on the block, you will need some basic things like a crib, a baby monitor, and diapers. If you are a first time parent, you’ll often be gifted these things at baby showers and so you might not have to spend as much as you think. So far, I’ve spent around $300 on various decorations for their nursery, and I will soon spend about $300-$400 more on some last minute safety items and things we did not receive at our showers.
3. Maternity Clothes
This is one thing I did not think about at all. I have no idea why. Just like vendors jack up prices when you say you are getting married so too do clothing stores when the label says “maternity.” I’m actually quite disgusted at the industry as a whole. No one should have to pay $30 just so a t-shirt will fit them. That’s just wrong. I’ve gotten most of my clothes from second hand stores or on sale. If I worked in an office, the cost would be much, much higher. Luckily, I didn’t have to buy business clothes.
I’m sure I’m forgetting a ton of things like car seats and baby clothes and nursing tanks and that awesome pregnancy pillow that wraps around you like a big snake. However, you can see how I can easily spend the entire $10,000 I saved just because of medical expenses and basic necessities alone.
How much did you save for your baby? Is there anything you wish you would have bought but didn’t? Tell me now while I have a few weeks before mine get here! :)
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I haven’t had a baby yet but I did work at Babies R Us in high School. Baby stuff is not cheap!
We’re aiming to save $4,000 (plus $1,000 emergency fund) because we have family with recent babies and lots of friends who are already donating necessities. We’ve already reached 50% of our goal on SmartyPig! Thanks for introducing me to the site! xoxo, Em
BudgetforMore It’s a big industry for sure. I sometimes wonder why I haven’t already started a biz that targets people with babies!
With second hand and limiting the clothes, you don’t need a full closet for just a few months, so it doesn’t have to be so expensive. I wouldn’t be comfortable with less than a year of expected baby expenses I think.
I think it was SO smart of you to save specifically for the babies. I personally did not do that and it is a big financial regret in my life. Now, I tell all of my soon to be pregnant peeps that it is a must. Children cost money and some of that money will be knowns like diapers, etc., but there will be so many unknowns like medical costs, etc. The best way to prepare is for a baby savings fund. Good for you!
Great breakdown Cat! This is sort of similar to what we did when we had ours. We saved the out of pocket max and enough to cover my wife’s salary for the 12 weeks she’d be taking off as well as a few other things. There can be so many little costs that come up that it’s so helpful to have that cash to fall back on and use.
It’s smart that you’re thinking ahead and trying to figure out the costs. It’s surprising that people seem to just “wing it” financially when it comes to major things like having babies.
I think with having kids probably the most expensive part to start off is the birth itself. I read a while ago that the average delivery costs from $9,000-$17,000, while a C-section can run up to $25,000. A good reason to have insurance.
My wife also had a higher risk pregnancy where we had to do regular ultrasounds, and then after my son was born he was in the NICU for a couple days. All in all we paid out about $4000 out of pocket to my wife’s $3000 max, and then miscellaneous costs for my son after he was born. It could easily be much more depending on how things go and what health issues you’re dealing with related to the birth.
So I don’t think $5,000-10,000 is unreasonable.
When it comes to buying baby items – my suggestion is to get everything you really want free via your baby showers, and then other things you want or need just buy them second hand. Often you can get brand new or next to new baby items for a fraction of the cost. And often you’ll only be using it for a few weeks.
I wrote about this topic a while ago when we were expecting our son:
http://www.biblemoneymatters.com/what-expenses-should-i-expect-when-having-a-child/
Great planning Cat! I have been thinking about this in preparation for a couple years down the road. I figured that medical costs and baby stuff costs would factor in but I hadn’t thought about maternity clothes either. The biggest cost (in addition to medical) that I am concerned about is replacing my income should I, theoretically, become pregnant and have difficulties resulting in the need for bed rest pre-delivery. Since my husband is a student we rely solely on my income and I figure I would need to save 4-6 months of expenses to cover maternity leave and also cover my salary in case of medical complications that make me stop working early. I have had a couple of friends spend the last couple months of their pregnancy at home and that cost can add up. We also are planning to wait to have kids till he works full time anyway to avoid the added stress.
I’m really sad to say that we had quite a bit of credit card debt when our daughter was born and not much in savings. We also did not have maternity insurance. It was not included in health policies at the time and it was incredibly expensive so we decided to pay cash for pre-natal and delivery. It was actually not bad at $5000. You got a discount for prepaying! Then, I had to have a C-section and stay in the hospital for a week, so that was blown, but my insurance kicked in because it was medically necessary. We had a $5K deductible, so the cost ended up being the same! It would have been over $25,000 if we hadn’t had insurance. I made payment all throughout my pregnancy, so it was paid in advance. If I had it to do over, I’d save at least for my deductible, then maybe a few thousand for unknowns. If you don’t need it, you can put it in their college fund.
Honestly, you don’t need much at first except food, diapers, and lots of onesies. My sister in law gave us all of her old nursery furniture and stuff, so that was great. The best thing she gave us was one of those Boppy pillows. I thought it was kind of stupid at first, but it’s great for when your arms are too tired to hold the baby. I’m not sure how it would work with two, though. Maybe they make a double one.
Am I the only one who doesn’t think kids are expensive? Our kids are 6,4, and 2 and I actually have never thought to myself “kids are so expensive.”
The only thing we’ve ever consciously saved for was the insurance deductible when we had high deductible insurance (with most of our kids we had really good insurance).
We got most all of our baby and kid things second hand. Between friends, family, craigslist, yard sales and thrift stores we were more than covered. There are some things we are extra careful about, like we’ll only get car seats that aren’t expired and have never been in an accident, but we have still got them second hand from friends and family we know and trust.
When we lived in town I stocked up on diapers when there would be awesome sale + coupon deals (often at Walgreens or CVS). I had a diaper shelf in the garage where I would stock all sizes. Now that we live in the boonies (and can’t drive an hour to the store for every deal). It has save tons!
Nursing is another thing that keeps the cost way down. I’ve never purchased formula, but I’ve seen the price tag!
Honestly the only things I’ve had regrets about are the things I bought new and realized I should have bought used!
moneymatters Hey no links in comments! Just kidding : P
DC @ Young Adult Money moneymattersoops.. Sorry! ;)
Our biggest expense so far has been the hospital stays. Other than that, I think our kids have been relatively cheap. We didn’t really plan financially for our kids because we were young and dumb at that time, but it still turned out okay. You’re way ahead of the game, Cat!
Interesting. Jessica at Budget for Health just posted about how she was able to get almost everything for $150 out of pocket, plus the cost of her medical bills (mostly thanks to gifts and second hand). I’ve heard that car seats can be rather pricey.
“Tell me now while I have a few weeks before mine get here!” – just gives me shivers! So excited for you! Honestly, I don’t know if there is a magic number, sort of like retirement, it’s personal to you. So helpful, I know! LOL! First-time parents probably spend the most both out of need – you don’t have anything and because everyone tells you things you need that you may really not. I agree making sure that you can cover any out-of-pocket hospital expenses is important. Well, we always hope everything thing goes smoothly, you also want the peace of mind of knowing that if something doesn’t that you don’t have to worry about paying the hospital bill and can focus your attention on where it belongs.
I like that figure, Cat. That’s enough to cover the medical expenses you know you’ll have out of pocket, plus gives plenty of room for the unknown. I figure if you overestimate for any reason, you can just put that money aside for 529’s or ESAs.
DonebyForty Absolutely – We definitely want to get those 529s started!
ShannonRyan Oh gosh I know. It’s very, very soon. They are welcome to come any day now lol. Mamma is uncomfortable.
Ugifter Ah that is awesome. Yes I think we went a tad overboard in the “safety” category. Hubs has just seen and heard so many crazy things that is is in “ultra safe” mode and wants a few things that we proooobbbbably don’t need but hey, whatever helps you sleep at night. :)
Holly at ClubThrifty Thanks girl! Yeah hopefully they don’t have to go to the NICU which is when it will start to get really expensive.
SixFiguresUnder Nah lots of people have told me kids aren’t that expensive. I think they’re right. It’s just all the start up costs for first time parents that cost quite a bit.
Eyesonthedollar Oh yes! Actually they do make a twin boppy. It’s green is it’s twice the size. It was sort of hilarious because it’s enormous and is called the Breast Friend or something and it arrive in a huge box on my doorstep that said BREAST FRIEND across the whole box and I’m sure the mailman doesn’t know what’s going on at my house lol!
moneymatters DC @ Young Adult MoneyThanks for the tips!! So glad to hear your baby is okay. I just about fell on the floor when I got the first bill for the high risk ultrasound. Was not expecting that one!
Raquel@Practical Cents Yeah I am too Type A to wing stuff haha.
FrugalRules So true. Thanks John!
blonde_finance Right it’s all those unknowns that kill me. I wish they could just give me a number but I think I’ll hit all the maxes with these two.
RFIndependence Yeah I got lots of their clothes for the shower and on eBay. :) They are so cute and tiny. Can’t wait!
DC @ Young Adult Money BudgetforMoreSeriously weddings and babies are just nutso industries. We just need to invent something that moms HAVE TO HAVE and get all the mommy bloggers to talk about it and bam, millionaires. Problem solved, DC. We’ll be rich. ;)
BudgetBlonde SixFiguresUnder That’s good :) It just seems that lately I’ve heard so many people talking about how expensive kids are. Being a parent really is wonderful (and challenging), so I would feel sad for people who “opt out” because they think they can’t afford it. Where there’s a will, there’s a way!
Good luck with everything! I’m excited for you!!
I can’t imagine ever having enough money to support another human being! Having good insurance is definitely helpful.
I can understand why this is an important topic. People want to be as prepared as possible for the birth of their child. That makes sense. Honestly, we didn’t think about the money side one bit before we started having children. We started having children when we felt emotionally ready to have them. Money wasn’t an issue.
brokeandbeau I kind of feel the same way. They are remarkable little creatures for boosting the motivation!! :)
Brian @ Luke1428 Yeah I am really glad I made a savings fund, but I’m also glad I didn’t wait until I was financially “set” or traveled to all the places I want to see. I feel like I could have made a ton of excuses to not have kids yet, but in the end, we felt this was the best time for us. Of course, it was just kind of a shock with the whole twin thing. That I was not prepared for in any way shape or form and it took a ton of time to get used to the idea!
We have a lot of things that we haven’t used. Baby monitor…we only have a one-bedroom and he’s in the same room so no real need. My wife would love to spend on decorations but we’re thinking about moving, plus don’t have time to decorate at this point =) Good luck with everything!
$10,000 sounds like a nice round number to me. I would probably want to have a similar sized emergency fund before I have kids. I hope you write some posts about what you actually find you need once the twins are here, and what was a waste of money.
Our good friends seemed to go the route of finding second hand items as much as possible, so long as they’re items that are safe to get second-hand. They got a wonderful furniture set on Craigslist which included a beautiful wooden crib for significantly less than had they gotten it brand new. I keep telling her not to buy clothing as they’ll either get tons free or can get it super cheap second hand.
Congrats on the twins that’s very exciting! My wife is ~6 months and we’ve been going through the same saving/spending decisions. With some friends and family who already have young children we found that we’re getting lots of 2nd hand items. My wife got some great maternity clothes which look absolutely brand new (probably because they’re only worn 3-4 months). So far its been less expensive than we thought it would be.
Babies are not expensive. I never understood why people were in debt with newborns. When my daughter was born in 2006, formula was $20 a freaking can. Yeah right. And I made too much to be on WIC so I breastfed for 15 months. Free. I also didn’t buy anything newborns don’t need. Newborns don’t need 100 outfits, Nike shoes, little accessories, etc. You get a bunch of stuff at your baby shower if you have one. I didn’t even buy diapers for the first 3 months because I had gotten so many.
Now kids…kids are expensive. That’s because as they get older, they want to do $200 cheerleading seasons, $75 for spring soccer, $50 for basketball, electronics, clothes, other entertainment and a massive amount of food when they go through growth spurts. Plus, birthday parties. You’ll be invited to each other. You can probably get away with dodging them in kindergarten, but I’m telling you, 1st grade is a different story. The amount of changes these little kids have made over the summer/year is mind blowing. Last year they could barely write their names correctly. This year they are doing excel spreadsheets and reading chapter books! My 7 year old has made a band with her best friends and is devastated if one of them ends up sick. Skipping birthdays is a no no when your child is best friends with everyone in class. >_< You can’t get away with giving a kid $5 in a card anymore.