Our baby girl turned one month old last week, and I finally had a chance to sit down and look at how our budget has changed since then. There were several changes I expected, but I also noticed a few changes that I didn’t necessarily expect. For example, you expect there to be a high cost of delivering a baby. But you might not consider how your utility bill might be affected by having a baby.
Unexpected Ways Having a Baby Changed Our Budget
Utilities. My wife is now a stay at home mom, so there is someone at home almost 24 hours a day. Before we had our child, we were both out of the house during the traditional 8-5 work day – which meant we could use our programmable thermostat to control the temperature and save money. Now that someone is home all day, we need to leave the thermostat at a more comfortable setting during the day time. The weather has been nice so far this summer, but I know we will notice a big change over the course of the year (and years to come). The extra 9 – 10 hours per day that we will need to run the AC or heater will likely add about 30-40% on our annual bill.
Groceries. My wife and I still prepare the vast majority of our meals at home, but we have had a few grocery expenses pop up that we didn’t have before. My wife has always been a big fan of organics, but it seems like the habit has shifted into overdrive since our baby arrived (our baby is primarily breast fed, though we supplement with formula on occasion). Vitamins, formula, and convenience foods such as pre-sliced vegetables and other items have added to the bill.
Medical. This is our first child, so we had to increase our insurance to the family plan. The additional $100 every two weeks was expected, but it is difficult to plan for each pediatrician visit, medication, and other miscellaneous medical expenses that pop up.
Convenience. Time has become one of the most valuable commodities in our household (slightly behind sleep). Because time has become so valuable to us, I’ve found myself more inclined to make purchases based on convenience. For example, buying items based on proximity in lieu of driving to the next store, buying convenience items, not putting as much research into smaller purchases, etc.
Miscellaneous baby expenses. My wife and I left a lot of things off our baby registry so we could determine which items we actually needed instead of rushing out and buying everything. That turned out to be a good decision as we live in a relatively small house and don’t have a lot of room for extras. But that also means we have had to go out and buy quite a few items. Some of these are planned, such as diapers and wipes, but others are unplanned.
The Temptation to Spend is Real
It’s amazing how little babies need so much stuff! But the more we talked to other parents and looked through baby stores, the more we realized that we don’t need the majority of the baby items companies want you to believe you need. But the temptation to spend remains. We are excited about bringing new life into the world and I think companies play on that excitement to entice people into spending more money. Not just new parents, but their family and friends as well.
My wife and I are taking things slowly. We are still researching what we will need and won’t need, and so far, we have eliminated dozens of items from “the essential baby item list” that was probably put out by some marketing company. So far, our plan has been to go through the list line by line and decide whether or not we need the item, when we will need it if we do, and whether or not it is something we can get cheaper at a consignment store – yes for a bouncer, no for a car seat (safety reasons).
Necessity vs. practicality. My wife and I have the money to purchase the items we need to have a happy and healthy baby, but we are limited in other areas, such as space and time. Our house is not large and eventually we will need to upgrade to a larger home. The limited space in our house means we can’t go all out with a full suite of baby furniture. And the more I look into it, the more I realize that it isn’t necessary for a newborn. A place to sleep – yes. But a multi-piece furniture set complete with crib, changing table, dresser, toy chest, etc. is overkill for our needs. We want to ensure that what we buy is both necessary and practical for our situation.
Quality vs. cheap. My wife and I are more interested in buying quality items instead of just saving money. If that means spending more money to buy an item we think will last longer, then we will do it. The last thing we want to do is have to replace something after a few months.
Our car and house will need upgraded – but not yet. We live in a relatively small 2 bedroom town house that is more vertical than horizontal. We have enough space for a child, but the layout doesn’t leave much room for the baby to walk or run, which babies like to do. We also plan on having more than one child, so eventually we will need to buy a larger home. But our baby won’t reach the walking stage for well over a year from now, so we have time before we need to upgrade. The same thing goes for our cars. I drive a 4 door compact car, and my wife drives a 2 door Honda Accord. Obviously, the Accord won’t be a good fit for a newborn, so my wife and I plan on trading cars until we absolutely need something larger, or it makes sense to buy. Right now both of our cars are paid off, and not adding a car payment is much more attractive to us than having a slightly larger car.
The temptation will only get worse. My wife and I still have a few months before our baby is due, and we only recently started looking at baby items. I have a strong feeling that the temptation to spend money will only get worse as we get closer to D-Day. It’s a good thing we already started planning. A well-planned list will certainly save us money.
Having Another Child is Not as Expensive As the First Child
There is a financial benefit of having another baby, as compared to having a first child, and no, I’m not just referring to the child tax credit*! Since we already had one child, we are saving a ton of money by not having to buy a lot of things like clothes, toys, baby accessories, and other items that we had to buy the first time around. It helps that both our children are the same gender. Otherwise, we would had to buy some more clothing items. But most of the toys, blankets, and many other items could have been reused.
Our biggest baby expenses so far have been a bassinet (we borrowed one with our first daughter), and diapers. We primarily used cloth diapers with our first child, but our new daughter was born four weeks early, and won’t fit into cloth diapers we already have for a few months yet (she’s so tiny!).
The other area where we are saving money is by knowing what we need and don’t need. Like many first time parents, we ended up spending much more than was necessary with our first child. Being a first time parent is a classic example of “not knowing what you don’t know,” so it’s easy to get carried away buying things that you think you need, but in reality, don’t. Our initial approach was to only buy things as we needed them, so we could avoid that classic trap. It worked out very well for the most part, but we still ended up buying items which we later gave away or donated. I think we are a little wiser in this regard this time around.
Of course, we are also racking up some indirect expenses, as well. Since things are a bit topsey-turvey at the moment, we have been a little more prone to buying prepared foods, or paying a little more for convenience by not shopping at the cheapest stores if they aren’t the closest, etc. Other indirect costs include keeping our home a little warmer throughout the day and evening, so I expect our gas bill will be higher in the coming months. All of these costs are minor in the gran scheme of things, but should be noted if you are already on a tight budget.
Going forward… My wife is a stay at home mom, so for the first few months, I think our biggest baby related spending increases will be limited to consumables, like diapers and wipes, and the occasional health related items. As she gets older, I’m sure things will change even more, with larger expenses for food, clothing, and eventually school, activities, etc. Then of course, you get to the really the big expenses like college and weddings… but those are all in the distant future. For now, I think I’ll focus on enjoying the moment!
*There are some things you need to do in regard to newborns and taxes, including registering them for a Social Security Number, adding another dependent to your W-4 to change your tax withholding, and taking advantage of related tax deductions such as pre-tax medical care, child care deductions, etc. Many of these are on a case by case basis, so be sure to do your research!
I wouldn’t change any of it
The purpose of this article isn’t to complain, but to share this information with other parents who are expecting their first child. My best advice is to plan for a lot of unexpected expenses the first couple months. I’m sure quite a few expenses will pop up!
Do you know of other items I missed, or should expect in the near future?