CWG Insight Series: New Baby Cost Planning

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As some of you may know, my wife Jessie and I have our first child on the way this fall. I’ve also noticed many of our clients are becoming first-time grandparents. Being the planner that I am, I’m starting to think about all the costs involved with raising and educating a child. This would be helpful information to have on hand for any first-time parent, so I felt this was a well-timed article to write.

Becoming a parent should bring mostly excitement and joy, but a little bit of panic is normal, particularly when you think about the baby budget. In the U.S., the average new parent with insurance coverage can expect to pay almost $14,000 for their labor and delivery, according to a 2020 research article published by the Healthcare Cost Institute. According to a US Department of Agriculture report also from 2020, the average middle-income family spends between $12,000 and $14,000 on child-related expenses each year. For newborns, the cost is higher. Some studies show numbers ranging from $20,000 to $50,000 for the child's first year of life, depending on location and household income.

Knowing these costs presents an opportunity to start budgeting for a new baby ahead of their arrival. While some families will be able to absorb the costs without issue, others will need to look for ways to reduce their living expenses or produce additional income to support the new costs. A recent New York Life article did a nice job summarizing more of the specifics to plan for and I’ve copied their outline below.

Beyond the direct costs of the baby, you may need to consider additional life insurance and college education savings. On the life insurance front, you’ll want to ensure you have enough coverage to support your family’s needs should you pass. A 20 to 30 year term policy could be a good choice and should not be too costly. As for college savings, the average in-state all-in annual cost roughly averages $25,000 a year. You would need to invest $400 a month from the time the baby is born until they start college at age 18 to cover all 4 years.

All of these costs definitely add up and can seem quite daunting, but with proper planning, you can reduce some of the stress and be prepared for what is no doubt a life-changing experience.

Baby Expenses for Month 0

Some significant purchases are required in advance of your baby's birth. There's no established list of necessary items, but you'll probably invest in a bassinet, bottles, clothes, and a carrier for when your child arrives. Costs can span a wide range, but budget for $1,000 minimum to cover what you'll need at the start.

Month 1 – The Biggest Baby Expenses

The first month of your baby's life may be the priciest because it includes maternity care, the cost of delivery, postnatal care, and a hospital stay.

The numbers can vary depending on where you live, what kind of birth you have, and your insurance policy. While birthing costs in some states can exceed $27,000 the average cost is usually around $10,000.

Months 2 and 3 – Feeding and Daily Care Expenses

Figuring out a sleep routine is the biggest challenge here. The good news is that babies usually don't require much beyond breastmilk or formula and diapers at this point. If you're breastfeeding, your costs will be lower (aside from the one-time expense of a pump, which costs anywhere from $40 to $185), while powdered formula will run you between $70 and $150 per month.

Add about $60 for bottles and $75 for the monthly diapers and wipes you'll go through. There are vaccinations your baby should get and a couple of visits to the doctor during these months, which should be budgeted for as well. Estimated monthly amount: $300.

Month 4 – Monthly Childcare Expenses

If you return to work after the baby is born, childcare could take up the lion's share of your budget starting this month. According to data, weekly childcare costs have risen significantly over the past six years.

The average weekly childcare cost for one infant is $565 for a nanny, $215 for a daycare or childcare center. These costs vary among states, and each family's arrangement with their provider, but a budget should be in place if you need care for your child while you work. Estimated monthly amount: $2,260.

Months 5 and 6 – List of Baby Expenses as They Grow

Sometime around the five-month mark, the baby reaches a milestone in development and begins eating solid foods. Parents often start with purees, which you can easily make yourself. Compared with food for older kids, babies still get the bulk of their calories from milk or formula. But plan on spending roughly $50 a month on their applesauce, oatmeal, and avocados.

Your growing baby is fitting into new clothes on a regular basis now. Baby clothes are the most common gift that new parents receive, but the average cost of clothes is around $50 a month for the first year. Using hand-me-downs or shopping at second-hand clothing stores can help you save in this area. Estimated monthly amount: $1,100.

Months 7, 8, and 9 – Baby Safety Expenses per Month

Babies typically begin crawling around this age, so now's the time to put up safety gates, install door locks and knob covers, and outlet plugs. Babyproofing can cost anywhere from $100 to $1,000, depending on the size and layout of your home.

Months 10 and 11 – Babysitting Expenses for Your Baby

By this time, you may be thinking about a babysitter, maybe for a few hours here and there or for an occasional night out. If you don't have a friend or family member to watch your child, you may have to consider adding babysitting into your childcare budget.

According to, parents pay after-school babysitters an average of $16.20 per hour to care for one child for about three hours a day, or a total of 15 hours per week. But the average doesn’t necessarily tell you what you’ll pay a babysitter in your specific area, nor does it factor in considerations like the regularity of babysitting work that you are offering and the duties required. Estimated monthly amount for a babysitter: $975.

Month 12 – First Year of Monthly Child Expenses Complete

Congratulations, you made it through your first year of parenting! By this point, you should have an idea of what's needed in your monthly baby budget, so hopefully there won't be any surprise expenses. As you prepare for the second year, start looking at ways you can save on childcare and new items you'll need.

Nick Kolbenschlag