Congratulations, you are adding to your family! What an exciting time! So, let’s budget for your baby!
Budgeting for your baby is very beneficial, and you will be so glad you did.
Having a baby budget will help you be able to solely focus on your baby when they arrive because the finances will already be decided!
When you budget for a baby, you are budgeting for the leave that you will be on when the baby comes.
The baby expenses to follow, like, diapers, clothes, formula, etc. will need to be added to your monthly budget as a line item or cash envelope expense. Head here to learn how to build a monthly budget!
Because those child expenses and more will be long-term.
And the parental leave savings will only be temporary.
Download the Baby Budget Template to follow along!
So here’s how to budget for your leave.
1. Max Out-Of-Pocket Insurance
If you have insurance, then give your insurance company a call. The representatives are usually very helpful and will not give you the run-around on costs.
Simply ask them how much your maximum out-of-pocket expense is going to be for having a baby. They will explain your insurance policy and what is all covered, then give you the total possible amount that you will pay.
That is the number that you will put in the first column for maximum out-of-pocket insurance.
IF YOU DON’T HAVE INSURANCE
If you don’t have insurance, no need to panic.
Your task is to call the hospital that you will be delivering at. Ask the billing department how much the average cost is to have a baby for someone without insurance.
You will probably not get hard numbers, but they should be able to give you a good estimate of what the cost will be! That number is what you will put in the max out-of-pocket column.
2. Baby Cushion
Now, this is more a number to decide on between you and your spouse. This baby cushion is extra padding for the budget for whatever you need.
Whether it’s an expensive baby item or just extra money that you want to have for baby spending when you’re on leave.
Or if you want to figure out the rest of your budget, then use the baby cushion as a plug number to round up your total savings goal.
For example, the total of everything else is $8,200. You want to go ahead and plan on saving $10,000. So, your baby cushion amount is $1,800.
3. Mother’s Monthly Income or Monthly Household Expenses
If the mother works, you will put her monthly income in the template.
Then you will also put in the total monthly household expenses.
You will use the greater of either the mother’s monthly income or your total monthly expenses.
So, if the mother’s monthly income is $5,000 a month, but your household expenses are only $3,000 a month. Then you will use the mother’s monthly income in the template.
Why do you use the greater of the two?
Because, unless you plan on doing a trial run without the mother’s monthly income, then you need to use the greater of the two.
Since you will already have more than enough on your plate when the baby comes, you want to make every other aspect of your life run smooth.
If you cut your monthly income, it could potentially add financial stress to you and your family. We are trying to prevent that with the baby budget!
4. Months of Maternity Leave With The Baby
Now that you have your numbers figured, it’s time to decide on how long you will be on maternity leave!
If you plan on a 3-month leave, then you will plugin 3 months to the template.
The only number you will times by 3 is the greater of the mother’s income or the monthly expenses.
Once you have your max out-of-pocket, baby cushion, and mother’s income/monthly expenses (times number of months on leave) you will total those three numbers and that is your baby budget goal!
If you want to get extra nerdy, you can go back and add the actual expenses after everything is said and done! This is a fun way to compare how well you did with your budget.
Completing the “actual” section will also be helpful if you plan on having more children in the future. You can use this template to help build your next budget more accurately.
Hopefully, this is helpful for you and your future family! And get some extra baby snuggles for me when they come!
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