Money Saving Tips When You're Expecting a Little One

InspireHer: Plancorp Women’s Initiative | Family Finances | Baby

 Meaghan Faerber By: Meaghan Faerber

Whether you planned to have a house full of kids or no kids at all, you’re probably reading this because you are expecting a little one of your own. Congratulations!

As a mom of three, I can honestly say they are the most precious gift you will ever be given. When you meet your baby for the first time, your heart somehow grows in love for this child more than you could ever imagine. Up until that point, if you’re like me, between the hormones and what-if thoughts, you’ve been on an emotional rollercoaster. One of the thoughts you might be having is “How in the world can I afford this baby?!”. According to the Peterson-Kaiser Family Foundation Health System Tracker, the average cost to give birth in the United States is almost $19,000! The good news is, health insurance covers most of that cost, leaving the parent(s) paying between $3,000-$4,000. So, as you walk out of that hospital with your adorable baby, you will also be leaving with a hefty invoice. Unfortunately, this is only the first of many expenses for your little nugget. Time to start planning!

Let’s talk about some of the major expenses that come with babies and ways you can save in each area.

1. Maternity Clothes

As you grow that little miracle, your body also grows, calling for a new wardrobe. Maternity clothes are pricey because brands know you’re desperate to look cute while also feeling comfortable. Rather than buying an entirely new closet full of clothes you’ll only wear a few months, prioritize those pieces that you cannot live without. My “must have” items were a pair of pants that could be worn for work and casual, a maternity dress, and few shirts. Those stretchy-at-the-top pants are a must have during pregnancy. Take it from me – if you try to wear your pre-maternity pants for too long, when you put them on post-maternity, they will slip right off. So do yourself a favor and bite the bullet for comfy maternity pants.

Since maternity clothes are worn for such a short amount of time, borrowing them from a friend or sibling or purchasing them from a resale store will save you a lot of money and the items will most likely be in great shape! One more tip on maternity clothes – consider purchasing tops that you can wear post pregnancy so you get more use out of them.

2. Big Baby Items

There are some items that you must have right away for your baby and there are some items that you might think you need right away but can be purchased a little later. For example, you cannot leave the hospital without a car seat. This expensive item is one that you will have to purchase before baby arrives - no way around it. Another big ticket item is a crib. Many moms want to have the nursery all set up and looking cute before baby arrives, but then end up not even going into the nursery besides to grab clothes out for the first 3 months. Rather than purchasing an expensive crib for the nursery right away only to have the baby sleeping in a bassinet or pack-in-play in your room, one option is to buy the crib a little later to stretch out the big expenses. When it comes to sleeping arrangements in your room, if you’re like me, I didn’t have a large space for a crib in my room next to my bed, so baby had to sleep in a pack-in-play or Snoo for the first few months. And only after a few months he outgrew that sleeping arrangement. For this reason, I recommend borrowing this “in-your-room” item that you will only use a few months and put that money towards a crib that your baby will spend up to several years in.

3. Diapers

Those little nuggets may be cute, but they also make a lot of stinky messes. The average baby goes through about eight to twelve diapers every day, which amounts to about $75 per month. One way to save on this is using cloth diapers. While the upfront cost is quite an investment, it can pay off for families planning to have multiple kids. Now, the time, stench, and mess it takes to clean them is another story…

4. Food

For the first 6 months of your baby’s life, he/she will only be drinking breastmilk or formula. By the time babies are 6 months, most of them drink formula as a portion of their meals. Whether you are supplementing with formula or your baby exclusively drinks formula, the cost adds up quickly. The cost for a 35-ounce container of formula ranges from $20 to $50+. At 6 months old, you could be spending $250 per month on formula! One money saving alternative to formula is breastfeeding. While breastfeeding is not easy or even an option for some moms, it sure does help cut costs.

Once your baby starts sitting, usually around 6 months, they start experimenting with baby food. This is a fun and entertaining time for babies! Starting off with pureed baby food, those little jars or pouches cost, on average, $2 per serving. As your baby’s appetite grows, the more of these little jars you find yourself buying. As an alternative, making your own baby food can save you quite a bit of money, and it can be fun! I truly enjoyed making baby food for my 3 little ones. I would often buy produce in bulk, spend one day cooking and pureeing, and then freezing the food in one-ounce portions to pop out at any time. I felt good about knowing exactly what was in the food they were eating and saving money. Rather than spending $2 on a 4 oz jar of sweet potatoes, I could make my own pureed sweet potatoes for $0.50 per 4 oz.

5. Childcare

The first person I told I was pregnant after my family was the childcare director at the daycare I wanted my son to attend. At 6 weeks pregnant, the daycare facility already had a waitlist! Not only is childcare hard to find, but the average cost of childcare in the US ranges from $4,800 to $15,500! One way to save money on childcare is to utilize Dependent Care Flexible Spending Account. This allows you to use pre-tax dollars to pay for qualified dependent care expenses. For 2023, you can contribute up to $5,000 per household using pre-tax dollars.

6. Education

The cost of education, especially private and post-secondary education, continues to rise in the US. Funding a 529 Savings Plan can help ease the burden of those large expenses down the road. 529 plans are a wonderful savings tool we like to call a (potential) triple tax-advantaged account – you get a tax deduction for contributing (if you live in a state that allows for the deduction), the growth is tax free, and the funds are not taxable when withdrawn if they are used for qualified education expenses!

So, as you can see, babies cost a lot of money. But, good news – they can also help you save on taxes! In the United States, several child related tax credits are available including the following:

  • Child Tax Credit allows taxpayers to claim a credit up to $2,000 per qualifying child in 2023.
  • Adoption Credit provides a tax credit up to $15,950 in 2023 for qualified expenses paid to adopt an eligible child.
  • Credit for Other Dependents allows taxpayers a credit up to $500 for dependents, including older children.

Now that we’ve explored some money savings tips, check out this article from InspireHer’s founder, Sara Gelsheimer, for other noteworthy planning ideas you should consider when that little bundle of joy arrives.

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Meaghan Faerber joined the Plancorp team in October 2020 after spending the first 10 years of her career in public accounting. After graduating from the University of Missouri, Meaghan began her career at PricewaterhouseCoopers, LLP, where she provided income tax services to high net worth families and corporate executives. She continued working with ultra-high net worth individuals, other small business owners, and family office clients as a tax manager at Burds & Kuntz, PC where she expanded her knowledge and expertise in tax planning & compliance, philanthropic endeavors, and family office services. Meaghan brings her tax expertise with her to the Plancorp Family Office practice and is dedicated to helping clients with not only their tax planning needs, but in all aspects of their financial lives. Meaghan lives in Washington, MO with her husband and two young children. She and her husband both grew up in Washington, where they met in high school, and were excited to move back to raise their family in the town they love. Outside of work, Meaghan enjoys exercising, spending time with her family & friends, cooking with her husband, and watching her children grow and experience new things. More »