Adjusted for inflation, the average middle-income family will spend $284,570 on raising a child until the age of 17. That doesn't even include college tuition.

When it comes to family budgeting for a new baby, you need to get organized. Whether you just found out you're expecting or are working on family planning for the future, getting on top of your budget will make managing your expenses easier.

In this article, we discuss managing your expenses and how to factor in those new baby gift baskets from your shower. Continue reading so you can be ready for the new baby. 

Family Budgeting: Where to Start

Family budgeting doesn't start once your baby is born, it starts once you decide to have a baby or when you find out you're pregnant, whichever comes first. 

Before you can set your family planning goals, you need to take a look at your finances and your financial obligations. This helps give you an accurate picture of your situation and the adjustments you need to make before the new baby arrives.

Look at Your Sources of Income

The first step in financially preparing for the new baby is looking at your income. This may include multiple sources such as you and/or your partner's paycheck, interest on savings, investments, and more.

To do this, you'll need several months of bank statements, paychecks, and other account holdings. We recommend at least 3 months worth of income to be able to take an average value. 

Consider Your Existing Financial Responsibilities

You'll take the same approach for calculating your current financial responsibilities. Gather several months' worth of bills, recurring payments, and any other obligations.

This includes your rent/mortgage, utility bills, groceries, insurance premiums, and any other expenses. You'll also want to calculate the average amount you spend on luxury items such as dining out and entertainment.

Consider Future Financial Responsibilities

Now that you have a baseline for your current financial situation, you can start working more on family planning for the future. It's more difficult to calculate for future financial expenses since you can't produce completely accurate numbers.

You can get a general idea if you categorize your expenses. We recommend starting with medical expenses, moving expenses, the supplies for your new baby, and the financial impact of time off for the new baby.

One of the first expenses people think of when it comes to family budgeting is medical expenses. Typically, people start by considering the cost of the delivery and check-ups for the mom and new baby after the birth.

However, you also need to consider prenatal visits for the mother. She'll need regular checkups, bloodwork, and other tests before delivery. That should also include expenses such as prenatal classes. 

Family planning sometimes requires factoring in moving expenses if you need to upgrade to a larger space. For this, you may need to factor in the cost of movers, moving truck rentals, and/or new security deposits.

Another anticipated family planning expense is new baby supplies. However, it's not just food and diapers you'll need. When it comes to baby supplies, people underestimate everything a baby needs.

While food and diapers are a staple, you'll also need clothes, a crib, bedding, diaper rash cream, baby bath wash, baby nail clippers, and more. Each little expense adds up, and the big-ticket items such as car seats and changing tables can be overwhelming.

While you're calculating everything you need to buy, don't overlook the amount of time you'll need away from work. Even with the best possible benefits, you may be facing a time without income or at least a part of it.

This depends on your family situation but it's important to consider how much you're losing from time spent not working. This can include unpaid portions of paternity/maternity/family leave and/or absences for doctors' appointments. 

Managing Your Expenses

Now that you have a clear idea of your financial situation, you can start focusing more on setting your goals. A big part of family budgeting is setting these goals and sticking with them. 

Set Your Goals

If you want to start managing your expenses like a pro, we recommend committing to the 50/30/20 budgeting rule. 

This rule designates 50% of your income to needs such as bills and necessary expenses, 30% to desires such as dining out, and 20% to savings and credit card debt. This is not an exact science and depends on your financial situation.

However, it's important to keep in mind that the goal is to track your spending. It's not about following the rule perfectly. If your needs take up 60% of your budget, then adjust the other categories as necessary. 

Find Ways to Save

One of your financial goals should be to save as much money as possible for when your new baby arrives. Having additional money saved is extra peace of mind if something were to go wrong later. 

Consider opening a savings account if you don't already have one. You can also look at  rewards programs so you earn when you do have to spend. 

Secondhand Belongings

Secondhand belongings are a great method for managing your expenses. The most obvious reason is that they are much less expensive than brand new clothes for newborns. 

It's also worth considering that babies grow very quickly. That means that most secondhand belongings will still be in great condition when you buy them. 

There are several ways to get secondhand belongings. The most common are from thrift stores or friends/family members. 

Family Help

If you have willing family members, consider taking them up on their offer to help you out with the new baby. If you have family members with children, consider asking to borrow their big-ticket items such as cribs and changing tables.

You can also see if you have family willing to serve as backup childcare options. This is convenient for the occasional night out or unexpected conflicts. However, be sure you're respectful and do not take advantage of an offer.

Cut Costs

Unless you're at the peak of financial security, you may need to adjust your spending habits to save enough money for your new baby. You may need to develop ways to cut costs or bring in additional income.

We recommend starting with your luxury expenses such as dining out and streaming services. While services such as beauty and fragrance are currently down in sales by 25% globally, you should consider these types of cuts in your budget.

If you don't have many luxury expenses, consider whether there are other ways to produce more income. You can host a yard sale or sell unused appliances. For some, getting a temporary second job is feasible to pay for medical costs. 

Other Things to Consider

While all of the above pieces are important considerations before the new baby arrives, there are other details to consider when family planning. While they don't fit into your budget in terms of numbers, they affect your planning. 

Expenses Start Immediately

Whether you're planning or already pregnant, the moment you start toward parenthood is the moment family planning begins. The mother needs prenatal vitamins, both parents need checkups, and finances need to be adjusted. 

Don't make the mistake of thinking your family budgeting start once the baby arrives. That could leave you in a financially unprepared position. 

One Time vs. Recurring Expenses

We recommend thinking of your expenses in terms of one-time expenses and recurring expenses. While certain costs such as the crib, car seat, and stroller are major expenses, they're likely to be one-time purchases.

They still need to be considered, but they don't affect your budget in the same way as formula and diapers do.

New Baby Gifts

Getting everything you need for your new baby is overwhelming, especially because there is likely something you'll forget. While all of these baby items add up, don't forget about new baby gifts.

Your friends and family are likely to throw you a baby shower where you'll receive new baby gift baskets, individual items, gift cards, advice, and more. This is a great way to get you started on some of the smaller items.

Some families even chip in for one or two big-ticket items which helps lift some of the financial burden from your shoulders. While you shouldn't count on receiving anything in particular, it does offer a little peace of mind.

Looking Forward

Family planning is all about looking forward, but don't stop at the immediate future. When managing your expenses for the new baby, factor in the distance future.

Start planning things like a college fund. Make sure you have life insurance and quality health insurance. Set your family up for success now if you can.

Get Ready for Your New Baby

Get ready for your new baby with family budgeting. Whether you need to update or get started, now is the time to start managing your expenses. The key to this family planning guide isn't to be perfect but to be prepared.

If you're ready to plan for your family's future, apply for our life insurance plan today.