Planning and Budgeting: A New Child & Other Investments

Planning and budgeting for a new child is overwhelming, because it's a reminder of the important responsibility parents have in raising children. It puts money management into a whole new perspective when you're a new parent, and even if you have other children, you handle money differently with each new child. Here are some guidelines to help you prepare for your new bundle of joy:

Infant Expenses

You'll have a new set of grocery, clothing and household expenses associated with having an infant. For example, here are just a few new monthly and one time expenses you'll need to add to your budget:

  • Diapers (cloth or disposables)
  • Baby food and water (homemade or commercial)
  • "Onesies" and sleepwear
  • Socks, shoes and clothing
  • Creams (examples: diaper rash, special soaps and moisturizers)
  • Baby equipment and furniture (examples: cribs, stroller and highchair)

You don't have to create a separate expense category for your child, but you do need to adjust the budget amount in your existing budget.

House or Rent Expenses

If your new child is your first, you may not have much of a change in your house or rent expenses. However, if you have other children, it may be time to upgrade to a bigger apartment or home. This takes proper planning and budgeting, so that you don't find yourself in the red. For example, if you need to move into a two bedroom apartment in another neighborhood, which costs higher in rent, then you'll need to reduce or eliminate other expenses or add to your income. Likewise, if you plan to purchase your first home or move to a larger one, you'll need to plan for the higher expenses, including insurance and property taxes.


Safety is key when planning and budgeting for a vehicle that will transport your family. The arrival of a new child might necessitate the need for your first car. Perhaps you've used public transportation or relied on others to get from one place to the next. You'll need your own car when you have a child, or a more reliable one. Determine how much you'll pay for a car, including registration fees, auto insurance and personal property taxes. Allocate what you'll need to pay for transportation expenses monthly as well as upfront.

Life Insurance

You might have disregarded life insurance to date, or have a minimal face amount in a current policy. When planning and budgeting for a new child you must tackle an issue that's unpleasant to think about: death. Who will pay for funeral expenses if you die? How will your new child receive financial support? These are all handled with an adequate life insurance policy. A term life insurance policy for 20 years is adequate to protect your children, as long as you buy enough. Make sure you plan and budget enough money to support your family for five to seven years, to pay all your debts (including mortgages) plus additional money to purchase land and property that you don't already own.

These are some of the major expenses and investments you'll need to include in your planning and budgeting. Your budget will and should evolve as your child grows.

blog comments powered by Disqus