How to Avoid Going Broke When the Baby Comes

Becoming a parent means spending less money on yourself and more money on others. A baby or toddler could mean hiring a nanny, a cost that could be an entire full-time salary. Even without full-time child care, raising a family can get expensive if you don’t plan for it. Below are common expenses for parents, followed by some tips on how to earn extra income.


Feeding a baby is cheap if you’re breastfeeding, but every year after that, there’s an extra mouth to feed. Now you’ll have to start thinking about adding a few hundred dollars to the monthly grocery bill and an extra $5-20 per person every time the family goes out to eat. You can save money and make better nutritious choices by packing their lunches for school and not ordering sodas at restaurants.


An expansion in the family means an expansion in the home. You might be able to get away with a one-bedroom apartment for the first year of your child’s life, but as they get older, they’ll need their own space. As your family gets bigger with more children, you’ll need even more space. Prepare to spend an extra 15 percent for a bigger place.

Life Insurance

You’ll need to factor life insurance into your budget now that you’re going to have a family. As unpleasant as the topic may be, budgeting for life insurance is one of the most important things you can do for your family. They’ll be given a monetary payout upon your death, which can be very helpful for any debts you may leave behind. A term life policy, which comes with a fixed term length, may be the best option for you. Depending on your health and age, you may qualify for affordable term length coverage options. It’s best to obtain a quote from an insurance provider to learn what specific options are available to you.


Many adults get sick and simply wait for it to pass, but sick kids usually need medical attention. They’re exposed to more germs at daycare and their immune systems aren’t as strong as ours during their developing years. There’s also the possibility of a common illness developing into something more serious if it’s not treated properly. Your insurance premium will go up when you add dependents to your healthcare plan, and your deductibles and copays will add more costs to your family medical bills. One way to offset some of this is to open a flexible spending account (FSA) or a health savings account (HSA). 


Education can be free, but college isn’t. Sometimes lower education isn’t free if the public schools in your area aren’t the best. College tuition keeps increasing, and tuition will be the same as a full-time income by the time your children are in college. Start saving for their college fund early by setting aside a little each month and putting cash gifts into the fund.

Clothing and Other Supplies

Under the umbrella of clothing comes diapers, shoes, backpacks, sports uniforms, swimsuits, etc. Imagine how much you spend on clothes each year. Now add another person to that budget and imagine having to buy even more for them because they continue to grow. The next time a friend or relative asks if your kids need anything, ask for clothing. They don’t need toys, but they always need to be clothed.

Extracurricular Activities

There’s no doubt that a child costs more for day-to-day living, but let’s not forget about the extras. Sports, clubs, scouts, birthday parties and theme park visits cost money. When you go on an annual family vacation, you’re now paying double for flights and eating out.

How can you save?

You can try to increase your income by asking for a raise or getting a temporary second job. Alternatively, if possible, you can make investments or buy a second home to use for rental income. In fact, by taking advantage of conventional mortgages, which are perfect for second homes and investment properties, you can pay for your mortgage and set aside some money while collecting rent. It helps, however, to put down at least 20 percent of your down payment, which will help you get lower interest rates and eliminates mortgage insurance payments.

Many parents, however, are opting to have stay-at-home jobs. Remote work can include freelance writing, designing, website building, and social media. It can also include starting a blog and building a following. Find something you’re an expert at and write about it. It could be fitness, cooking, sewing, politics, science, fiction, beauty, crafting, or even simply being a parent.

As you plan for the baby’s arrival, have a financial plan in place. Set up your childrearing fund while you set up the nursery so you’re prepared for the extra costs. Staying on top of your finances can improve your all-around health, and your overall happiness will benefit. After all, having a family should be the happiest times of your life, not the most financially stressful.

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