The cost of caring for a American newborn during its first year of life is more than $6,000.

If you're considering having a child sometime in the near future, you might want to consider this: It's said that the cost of caring for a newborn during its first year of life is more than $6,000.

The real cost of raising a baby
by Deborah Pike Olsen
Last updated: July 2011

You'll spend almost $10,000 on your baby's first year, according to the thousands of moms who took BabyCenter's exclusive survey.

No wonder 70 percent of new mothers told us they're more anxious about money since having a child. "The financial stress is the hardest thing in my life," says mom Sarah Carley, who has three young children. "You don't realize how much you need for your child – and how tempting it is to buy things."

Forty percent of moms said that having a baby costs a lot more than they expected. And many told us that it's the surprise bills that hurt the most. Even if you're prepared to shell out for diapers, food, gear, clothes, toys, childcare, and healthcare, unexpected or "hidden" extras may bust your budget.

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"It's the $20 co-pays that add up quickly when you have a child with chronic ear infections. It's the $150 co-pay for emergency room visits," says one mom. "It's when you plan on breastfeeding, but it doesn't work out and you end up buying formula."

The good news: When you have a real sense of which costs will rear their ugly head during your baby's first year, you'll be better prepared to handle them. Plus, you'll be able to worry less about your budget and spend more time enjoying your bundle of joy. Here are the most common unexpected costs associated with raising a baby – gleaned from our survey – plus how to keep them in check.

Making room for your baby

It's amazing how cramped things can feel once your baby arrives. Your little one may weigh less than 10 pounds, but his gear and furniture could fill several rooms. And you'll need a quiet place for him to sleep away from your family's hustle and bustle.

Sarah Carley and her husband moved to make room for their growing family. (She's not alone – 35 percent of moms in our survey have moved or plan to.) Now the Carleys are feeling the strain on their bank accounts. "We only put 5 percent down," she says. "And we have no money left at the end of each month. Sometimes I can't buy anything but groceries and gas for three to four weeks, and I hardly ever have cash in my purse."

Other moms remodel instead of changing addresses – 10 percent are renovating or plan to, our survey says.

But whether you move or stay put, you'll probably face a home-related issue that few parents expect: skyrocketing baby-related utility bills. "Our bills probably doubled, from about $150 to $300," says Laura Dowden, a mom of three. "You'd never think of it. But we're spending more on heating and air conditioning now that someone is always home during the day, and we're doing laundry and running the dishwasher much more frequently."

Dowden's surprise expenses didn't end with her utility bill – like 52 percent of moms in our survey, she found herself needing a larger vehicle. "When I was pregnant with our third child, we realized we couldn't fit three car seats in our station wagon, so we bought an SUV," she says. "Now we're spending about $500 more a month than when we owned two sedans."

What you can do

"People are too quick to say, 'We've got a baby, so we have to move,'" says Jeff D. Opdyke, author of The Wall Street Journal Complete Personal Finance Guidebook. "But if you think you'll need to move eventually, set aside money every month for a bigger place."

Rather than buying an additional car, trade yours in for a family-friendly model, suggests Opdyke. Don't be afraid to haggle over the price of a new car or buy used. But avoid leasing, even if monthly lease payments are lower than they are for an auto loan. "There are all sorts of back-end catches that can increase the cost of the vehicle," Opdyke says. "It's a very expensive way to own cars."

Cut your costs on gas and electricity with these simple tips.

Are you house hunting or car shopping to make room for your baby? Swap stories and advice about moms and money with other parents in the BabyCenter Community.

Budget-busting medical bills

If you have health insurance, you probably expect it to cover basics like your delivery and vaccines for your baby. Unfortunately, this isn't always the case. As a new mom, you may face unexpected bills for care that's only partially covered by insurance – or not covered at all.

"Two years ago, we paid nothing when my daughter was born," says Regina Walsh, mom of two. "But our insurance changed, and we had to pay $1,500 after I had my son in February." In our survey, 39 percent of moms paid $1,000 or more for medical bills related to childbirth, and 9 percent of those were on the hook for $5,000 or more.

One mom from our survey was hit with a $4,800 bill for her epidural. "We were surprised to learn that only 25 percent of it was covered by our insurance," she says.

After the delivery, the costs associated with your baby's medical care can be a shock. First there's the cost of your child's health insurance. Walsh says she's spending an additional $200 a month now that her husband and two children are included in her policy.

Then there are co-pays, which can add up even if they seem reasonable. "When my baby goes to daycare, she gets sick almost every week," says one mom. "The co-pay is $20, parking is $30, and the prescription co-pay is $35. It can be $100 or more for each doctor visit."

Finally, you could be stuck with bills for vaccines that some insurers don't cover — like those for chicken pox, rotavirus, and hepatitis A. According to the Journal of the American Medical Association, 14 percent of children were "underinsured" for vaccines in 2000 – meaning their parents had to pay out of pocket for some vaccines or skip them.

"I didn't realize that some of the routine childhood immunizations wouldn't be covered by our health insurance," says one mom. "Some aren't considered 'necessary' by insurers, especially if they're not required by schools. And they can be expensive – up to $200 a shot."

What you can do

Ask your insurance company about your maternity and well-child benefits to avoid surprises. Then, save for medical expenses before they arise. "We put away a certain amount each month for six to seven months before my expected delivery," says one mom.

If you don't have health insurance through your employer, check with your state to see if it offers a low-cost insurance plan. The income cutoffs aren't as low as you'd think, says Amelia Warren Tyagi, coauthor of The Two-Income Trap and All Your Worth: The Ultimate Lifetime Money Plan. Also, consider a high-deductible health plan, which can significantly lower your monthly premiums.

If your employer offers flexible spending accounts, consider signing up. Another option is to set up a health savings account (HSA) at your bank or credit union. An HSA allows subscribers of high-deductible health plans to set aside money for medical expenses on a tax-free basis.

If you receive a medical bill that seems inaccurate, don't be afraid to confront your insurer. "Insurance companies make a lot of mistakes – you have to fight for yourself," says Warren Tyagi. This paid off for mom Caeli Cusumano, who disputed her $6,000 delivery bill and ended up paying $4,500 instead.

Your doctor may offer different payment options, so talk to her if your insurance won't cover something, like your child's vaccines. "You may be able to get a discount for paying cash," says Warren Tyagi.

Have you been hit with surprise medical bills or high co-pays? Swap stories and advice about moms and money with other parents in the BabyCenter Community.

Losing a second income

Paid maternity leave and paternity leave are rare in the United States, so most new parents end up using a combination of short-term disability (STD), sick leave, vacation, personal days, and unpaid family leave to take time off from work to care for their newborn.

This means less pay than usual – or no pay at all. "We're concerned with having enough money in our savings to pay our mortgage while I'm on maternity leave," says one mom. "That's what will determine how much time I'm able to spend at home once the baby is born."

And if Mom or Dad decides to quit a job to become a full-time parent, it can put the family budget in dire straits. "We had my graduate school debt, my husband's debt from undergrad, plus a new baby," says stay-at-home mom Rebecca Reale. "My husband said that if the car needed to be repaired, we wouldn't be able to pay the mortgage."

Some moms find ways to make money from home to supplement the family income. "When I quit my job, we started dipping into our savings a lot, and it was a huge financial strain," recalls mom Jenn Shaw, a former teacher. "So I got three part-time jobs. I tutor and work at the library twice a month, and I'm an area coordinator for an au pair organization. I work mostly from home, when my children are napping. We live paycheck to paycheck, but we have no debt."

What you can do

Talk to your employer (or to your human resources contact, if there is one) about benefits for new parents – they should be able to explain what you have coming from your employer and tell you about any state benefits.

Consider meeting with a "fee-only" financial planner, says financial journalist Jeff D. Opdyke. These professionals, who charge an hourly rate for their services, can help you get your money in order before your baby arrives.

Start saving ahead of time. "My husband and I are trying to put away at least three months of my salary to offset my not bringing home a paycheck when our baby arrives," says one mom-to-be. Keep in mind that while being home has hidden costs (higher electricity and gas bills, for example), you'll save on work-related expenses like commuting, lunches out, nice clothes, and dry cleaning.

Set money aside each month for emergencies. Then you'll be ready when your car breaks down, your cat needs to go to the vet, or another surprise expense pops up. "With a slush fund you've been contributing to every month, suddenly these unexpected costs are manageable," says Opdyke.

If you've decided to be a full-time parent, figure out how to make it less of a financial strain.

Have you found creative ways to afford staying home with your baby – either short term or long term? Swap stories and advice about moms and money with other parents in the BabyCenter Community.
Feeding a larger family

Babies have tiny stomachs – and a surprising way of boosting your food bills.

Though you probably won't be going out to eat as much with a new baby at home, as exhausted new parents you may find yourselves relying on pricey takeout food and prepackaged supermarket meals. "There was no food in the house except for milk and bread," recalls mom Dorrie Gagnon of the early days caring for her twins. "We spent about $30 to $40 a night on takeout."

Plus, you have a new mouth to feed — your baby's. Formula and jarred baby food can be surprisingly expensive (see Top baby costs, and how to save). And even breastfeeding – which many moms assume will cost nothing – can tax your wallet. Working moms usually require a top-end electric breast pump, which runs $250 to $350. And then there are the less-expected nursing purchases.

"I had no idea I'd have to buy nursing clothes," says mom Laura Dowden, who spent about $500 on bras, nursing shirts, dresses, and other items for multiple seasons. Since she works full time, Dowden also purchased sealable bags for storing breast milk, plus ice packs and a thermal container for storing it while she's away.

What you can do

Instead of relying on takeout, ask friends who want to help to pitch in with homemade lasagna and casseroles. "Be honest about what's helpful to you," says financial expert Amelia Warren Tyagi. "People are glad to bring over a pot of stew."

There are tons of ways to save at the supermarket – see our 14 favorites.

Hold off on purchasing nursing paraphernalia. Many women discover they don't need special nursing clothes, and you can find nursing bras at discount stores. And costs associated with nursing and pumping still pale in comparison to what you'd be spending on formula (an estimated $1,260 a year, according to our survey).

Because of possible contamination, the FDA and breastfeeding experts say it's not safe to borrow a friend's breast pump or buy one used. But if you're not ready to commit to buying an expensive top-of-the-line electric pump, or you need one for a relatively short time, try renting a pump designed for multiple users.

Have you seen your food bills heading through the roof? Swap stories and advice about moms and money with other parents in the BabyCenter Community.

Keeping your child happy and safe

We new parents are a marketer's dream: We want the best for our little ones and are desperate for anything that will make our lives more manageable.

Lately this means shelling out hundreds – even thousands – of dollars on the latest and greatest baby products and development-boosting classes.

Tuition costs for a session of Mommy and Me or Gymboree may remind you of college. "The classes cost a ton of money," recalls MJ Boensch, a mom of two. "My daughter and I took Music Together, which was $190 for 8 weeks; and Baby Power, which was $200 for about two months."

With so many products promising to help babies nurse, sleep, and learn, it's no wonder that 82 percent of moms-to-be told us that having "the right" baby stuff will make life easier. But it's impossible to know ahead of time which product, if any, will be the magic charm – and that can lead to unexpected, expensive purchases.

Mom Dorrie Gagnon spent a surprise $450 to cope with colic and help her babies sleep. "I bought a crib vibrator to help calm one twin down so I could deal with the other one," says Gagnon. "And I bought four bouncy seats – two upright and two that reclined." She also purchased special swaddling blankets, a noise machine, and a whole lot of batteries to keep those bouncy seats vibrating.

Basic safety can also be expensive: Many moms are shocked at by the cost of babyproofing. "I had no clue about this," recalls mom Laura Dowden. "You go to the store to buy doorknob covers because you think they'll be useful, and you walk away having spent $200 on other items. Then, two months later, you have to childproof other areas of the house, and you go back to the store again. I've probably spent over $750 on babyproofing, and I couldn't tell you what all the stuff is for."

What you can do

You may be splurging on your baby – but you're probably spending less on yourself. "Suddenly, having a manicure once a week or getting your hair highlighted just isn't as important," says one mom. In our survey, 86 percent of moms say they're saving money by not going out as much, 79 percent spend less on clothing for themselves, and more than half are cutting back on makeup, haircuts, manicures, and gym memberships.

Consider enrolling in just one baby class. "I took a Gymboree class with my first child and met other moms," recalls mom Rebecca Reale. "After that, we organized our own playgroup and I didn't take any other baby classes." Or check out less expensive options like classes at the local YMCA or a church or synagogue. Some moms manage to negotiate prices. Mom Sarah Carley couldn't afford a $250 music class, so she called and asked about financial aid. She ended up paying $100.

Some baby products are true sanity savers. Still, it's a good idea to do your homework before buying. "I remember hearing about all kinds of gadgets in my childbirth classes," recalls mom Sandy Mason. "But if my sister didn't use the products or my friends didn't mention them, I didn't buy them."

You don't want to scrimp on childproofing, but the safest solutions don't always require pricey products. "We rearranged our house so there was nothing dangerous around," says Carley. "We attached dressers to the wall and bought gates from Ikea."

Some moms are able to keep costs low by using hand-me-downs and limiting their purchases. Says mom Jenn Shaw, "We used some gates from a friend who was moving, and we bought a few outlet covers and cabinet latches for the kitchen. We also bolted furniture to the wall. But we didn't spend much money."

Hold on to baby products and childproofing items for your next child – or sell them to other moms on eBay or Craigslist.

Which baby products were worth every penny – and which were a waste of money? Swap stories and advice about moms and money with other parents in the BabyCenter Community.

Precious — but pricey — memories

No one wants to miss once-in-a-lifetime baby moments – or miss out on sharing them with friends and relatives. In our survey, 40 percent of moms purchased a new camera and 13 percent bought a new photo printer. You may also be paying to have professional family photos taken, make and send birth announcements, and create scrapbooks and baby books.

Elaborate first birthday parties and religious celebrations are other fun but potentially expensive parts of your baby's first year. "We had my daughter's first birthday party at our house," says mom Jenn Shaw. "It cost between $100 and $200 for the cake, food, streamers, and plates. It was a stretch, but we wanted to do it."

Finally, many parents are surprised by the increased costs of visiting far-flung relatives and taking vacations with a baby in tow. Airfare (if you buy a seat for your baby) and rental car fees (for a car big enough to hold the car seat and baby gear) can be budget busters.

"We spent an extra $300 on plane tickets for the twins," recalls mom Dorrie Gagnon. "And we spent $800 on a rental car, because we couldn't use a small one."

For mom Sarah Carley, vacations are on the back burner. "We've given up on them, unless it's a once-in-a-lifetime trip or we're visiting family," she says. She's not alone: 60 percent of moms in our survey say they take fewer vacations and travel less often since having their baby.

What you can do

When it comes to electronics, save money buying last year's versions of the products you want, advises financial journalist Jeff D. Opdyke. "Take a look at the model that the new stuff is replacing – it's usually just as good as the latest version, but because it's not cutting-edge technology you'll get it for substantially cheaper," he says. You can also look for deals on eBay or Craigslist.

Get into the habit of uploading pictures to a photo website such as Kodak Gallery, Snapfish, or Shutterfly. The service is free (or, on some you can pay a nominal yearly fee for extra storage and other benefits). This way, you can easily share your photos online with friends and relatives. They can pick out and pay for their own prints, and you can do the same. Save money by being choosy about what you have printed.

Save on birth announcements and holiday cards by making them yourself with photos that you upload. If you're set on fancier announcements or cards, you may want to limit the number you purchase: "We had already sent emails and photos to a lot of people, so it didn't seem necessary to send a birth announcement, too," says mom Sandy Mason.

Your baby won't remember celebrations, so it's okay to keep them low-key. And you don't have to break the bank to throw a great party – see our tips for saving on shindigs.

There are tons of ways to save on family travel – see our ten favorites.

What memory makers (like parties and vacations) or memory preservers (like photo books and professional pictures) have you splurged on? Swap stories and advice about moms and money with other parents in the BabyCenter Community.

The costs of planning ahead

When you're focused on the day-to-day care of your baby, it's easy to put off things like buying life insurance, making a will, and starting a college savings fund for your child.

And of course, taking these steps will also affect your budget. A typical insurance premium for $250,000 coverage is usually a few hundred dollars a year, and having a will drawn up can cost from a few hundred to a few thousand dollars. If your finances are complicated, the costs can rise exponentially: Mom Dorrie Gagnon says that she and her husband are spending about $5,000 to alter their wills and trusts to include their five children.

Other moms are feeling the pinch when it comes to building savings. Mom Regina Walsh, for one, tries to put $50 in each of her two children's savings accounts every month. But when money is tight, saving isn't easy. In our survey, a whopping 72 percent of moms say they've started saving for their child's future – but 55 percent feel like they aren't saving enough.

What you can do

Open a savings account for your child at birth – or beforehand. Just having one gives you the incentive to save, and it's a convenient way to handle financial gifts from friends and family. See our tips on getting into the saving habit for helpful ideas.

The best way to save for your child's college education is to open a 529 college savings plan, says financial journalist Jeff D. Opdyke. Be sure to sign up for an age-appropriate asset allocation, meaning your money will be put into an aggressive fund initially and will become more conservative as your child ages.

Consider signing up for a credit card that helps you save for college, like the Upromise Card or the Fidelity Investments 529 College Rewards American Express Card, says Opdyke. Every time you spend money, a small percentage will be rolled into your 529 plan (until you reach an annual maximum). "You won't build up a gazillion dollars, but it will be enough to mean something 18 years from now," he adds.

You may be able to save money by writing up your will yourself, but be sure you do it legally. See our article on why every parent needs a will to find out how.

Be sure to cover a stay-at-home parent in your life insurance policy. Figure out what it would cost to do that parent's job – childcare, grocery shopping, chores – and annualize that amount over 18 years.

Make sure that at least one parent's life insurance policy is for a large amount – enough to pay for your child's college education and your mortgage, for example. (These are huge expenses that one parent probably couldn't afford alone.) Finally, go for term life insurance instead of whole life insurance, says financial expert Amelia Warren Tyagi. "It's more cost-effective."

Finally, some good news: Having a child may allow you to save money on your tax bill.

Are you saving for your child's college education? Swap stories and advice about moms and money with other parents in the BabyCenter Community.