Babies can be expensive. The U.S. Department of Agriculture’s calculator on child-raising costs estimates that you could spend more than $12,000 during the first year of your baby’s life.
But do you have to spend that much money? Maybe not. Since the day my son was born almost 16 years ago, I’ve never spent as much on him as the federal agency projects.
That doesn’t mean I couldn’t have saved more money, though. Here are six things other moms and I wish we’d known sooner about saving money on baby costs and tips on how you can avoid these financial mistakes.
1. Buying ‘must-haves’ that aren’t needed
“I wished I had known as a new mom all the things that are a waste of cash for babies,” said Carly Fauth, the head of marketing at financial education website Money Crashers, citing Diaper Genie systems and bottle warmers.
“Diapers need to go straight into the trash; no need to store them in the house,” Fauth said. “And a pot of hot water will warm a bottle just fine.”
Lindsay Sutton, the associate vice president of digital content for financial app Twine, wished she hadn’t spent money on an expensive glider rocking chair.
“Most of my nursing and ‘rocking’ the babies happened in bed or walking around,” Sutton said. “That money would have been better used by putting it in a college savings account.”
Before spending money on a gadget or item that someone tells you is a must-have, ask yourself whether you need it and whether it truly will make your life easier — and where the money might make a greater long-term, positive impact on your child’s life.
“I could’ve gotten by with buying way less,” said Lisa Sansom, the founder of corporate consulting firm LVS Consulting. “These things don’t make parenting any easier and only make more of a mess.”
2. Leaving necessities off the baby registry
Tangela Walker-Craft, the founder of lifestyle website Simply Necessary, wished she’d thought through what she included on the baby registry.
“Register for items [that are] useful beyond the newborn stage,” Walker-Craft suggested. “Request diapers, clothes, and other items in multiple sizes for when the baby is up to a year old.”
According to Investopedia, you can expect to use more than 2,700 diapers in your baby’s first year. If you estimate 20 cents per diaper, that could set you back about $540. Add on the cost of about $20 per month for wipes, and you’re looking at spending about $780 to keep your baby’s bottom clean and covered.
Having those items gifted to you — instead of spending your own money on them — can be a big financial help, said Walker-Craft.
Baby formula, utilitarian onesies, diapers, wipes, bedding, and other necessities might be boring, but requesting them on your baby registry can make a difference in your bottom line, especially if you’re struggling with student loan debt or other financial issues.
3. Spending on new baby items
One of my biggest regrets was buying so many little outfits for my son that were new. In the end, he ended up mostly wearing onesies in the first year of his life and grew out of the outfits quickly, often wearing them only once — or not at all.
This spending mistake also applies to other items, including toys, food grinders, bedding, mattresses, cribs, strollers, and highchairs. With secondhand items, make sure to clean and disinfect them thoroughly before using them for your baby.
“I wish I’d known about the great market in secondhand baby everything,” said Sansom. “The baby doesn’t care about color or style, and you can buy what you need gently used.”
Another tip is to borrow items instead of buying something you’ll use only for a few weeks. For example, my son’s bassinet was borrowed from my parents.
One exception might be a car seat because it’s a vital piece of life-protecting equipment. If you decide on a secondhand car seat, the National Highway Traffic Safety Administration has a checklist that can help you assess its risks.
4. Not knowing your company’s maternity leave policy
The Family Medical Leave Act provides certain employees with time off to have a baby, but it doesn’t require your company to pay you. In fact, the United States is the only country among the Organization for Economic Cooperation and Development’s member nations that doesn’t have a national policy for paid maternity leave.
Review your company’s policy carefully. Understand how much maternity leave you’ll have, especially if it’s unpaid, and be realistic about how you’ll handle your finances, Fauth recommended.
“You’re looking at a decrease in income at the same time your expenses are going to increase,” she said. “The sooner you can start planning, the better off you’ll be.”
Only 6% of all employers with 50 or more employees offer full pay during maternity leave, according to the Society for Human Resources Management, but 58% of employers provide some type of replacement pay. Even being on one-third pay can help your finances during this time.
Another option is to look into short-term disability insurance, Fauth said. In some cases, having a baby qualifies you for insurance payments.
5. Neglecting to start a ‘baby fund’ ASAP
Sutton wished she and her husband had saved up for a baby ahead of time — especially since she ended up with twins.
She worked for a company that offered full pay during maternity leave, but her little family still ended up struggling. Her husband quit his job to help with the twins, cutting their income. “We eventually adjusted, but we could have eased some stress in those early months with a larger savings account that we could have dipped into,” Sutton said.
Walker-Craft suggested opening a high-yield savings account and automatically transferring money into it regularly to save up for baby expenses.
To find the money for a baby fund, Fauth suggested examining your finances ahead of time, trimming expenses by using coupons, and looking for low-cost entertainment options before you’re forced to by the arrival of a child. Additionally, you can get friends and relatives to help with the baby fund by having them give money during the baby shower or via a fundraising page on GoFundMe or another crowdfunding site.
6. Not asking for help
Finally, don’t be afraid to ask for help. If you live close to family, get help with babysitting rather than pay for child care, suggested Sutton.
And if you live away from your family, like Sutton did at the time her twins were born, look for a babysitting exchange. “I wish I’d made more friends and did more play dates and traded off babysitting rather than pay for it,” she said.
You can request aid in other ways, including help with cleaning, laundry, or getting a break for an afternoon.
If close friends and family want to know how they can help, consider asking for gift cards to grocery stores and big-box stores such as Walmart and Target, suggested Walker-Craft.
“If you’re experiencing a drop in income while on maternity leave, being able to use gift cards to buy things you need for the household can be huge,” she said.
Make a money plan before it’s too late
We tend to think about the logistics of setting up the nursery and making sure we make it to the hospital. But it’s a little harder to think about the money realities of being a new mom.
Plan how you can use the baby registry, save up, and remove things from your must-have list to save money on baby-related expenses. Go through your budget and see what changes you can make, and start making those changes now.
“Prepare ahead of time, setting money aside prior to having a baby,” said Walker-Craft. “It can prevent unmanageable debt.”
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.97%1||Undergrad & Graduate|
|2.47% – 6.99%3||Undergrad & Graduate|
|2.68% – 8.77%4||Undergrad & Graduate|
|3.24% – 6.66%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.01% – 9.75%6||Undergrad & Graduate|