Tips for Adjusting Your Budget After Having a Baby


More and more moms are electing to stay home with their children, according to Pew Research Center. But a new baby can bump up your monthly expenses by $2,000 a month or so, and when combined with the loss of one parent’s income, the resulting budget gap may seem impossible to straddle. However, it’s may be doable with a little belt-tightening and advance planning.


Anticipate Increased Expenses

Expect that your family's monthly expenses will increase after your baby arrives, and not just to accommodate the cost of diapers. Changes to your health insurance policy may now be necessary, which could cost you more in premiums or copays. 

And, although college may seem light-years away, now’s the time to start saving. Consider setting up an education savings account or a simple trust fund that friends and relatives can also contribute to on birthdays and holidays. If you save right, such as with a 529 college savings plan, you’ll also see some tax benefits.


What Bills Can You Cut?

Make an honest assessment of what you can live without to help free up money for the baby’s needs. Do you really need all those premium channels from your cable provider? Haggle with your cellphone service to see if you can reduce the cost of your wireless plan and ask yourself if you really need a landline in addition to your cellphones. If its cost is bundled into your cable or Internet package, that’s one thing, but if it’s a stand-alone bill, you may be able to comfortably eliminate it. 

Also, now might be a good time to look into refinancing your mortgage if interest rates have dropped since you purchased your home, or consider increasing your loan's term to lower your payments.


Buy Used Clothing for a While

Your baby will quickly outgrow all those cute — but pricey — outfits, so why spend top dollar? Mom will drop her baby weight, so buying brand new clothes right after delivery makes little sense as well. Shop at consignment stores and thrift shops to spend less on items you and your baby won’t be wearing for long. Also, ask friends and relatives for hand-me-down baby clothing. If you do give in to the urge to buy new clothes, sell them later through a consignment shop to recoup some of your cash.


Budgeting for Baby’s Needs

Breastfeeding will save you a bundle on formula, and when your baby transitions to baby food, consider making your own at a fraction of the cost of the store-bought stuff. Splurge on top-brand diapers only for nighttime use when absorbency is most important. Learn the art of couponing for your family’s basic needs and stick to generic brands for those items you can’t find coupons for. Commit yourself to paying full price for something only if there’s no possible way to avoid it.

Tweaking Your Paycheck

It’s always nice to receive a big tax refund in the spring, but why part with money you need now only to get it back, without interest, at some point in the future? Update the amount of your tax withholdings to include your new dependent, then speak with a tax professional about any child-related tax deductions or credits you might be eligible for.