by Liz Pulliam Weston
The nesting instinct can cause expecting parents to embark on all kinds of expensive preparations. If you’re not careful, you can find yourself blowing thousands of dollars on furniture, clothing, equipment, and other purchases before the tot even arrives.
The key to surviving this period with your financial health intact is to have a plan and stick to it. Otherwise, the $4 billion baby products industry and your own oscillating emotions will lure you into overspending.
Here’s your plan of attack:
Factor in your fixed costs. Talk to your insurer or hospital about how much of the delivery costs you’ll be expected to shoulder. Find out how much it will cost to add your new child to your health insurance. Explore child-care options and costs if you’ll be returning to work Adjust your budget to reflect these expenses. If you decide to stay home, you can determine how your forgone salary will impact your financial situation. You may discover that you aren’t missing out on as much income as you thought, once taxes, commuting costs, and child-care expenses are factored in.
Figure out what items you really need–and what you don’t. Talk to experienced parents, consult some guidebooks, and use the Internet to compile your must-have list, along with the expected price of each item. Don’t assume that if a baby store stocks a product you have to have it; many parents discover the money they spent on a coordinated linen set or a deluxe wipes warmer would have been better invested in a college fund.
Accept donations. Your friends and family may start offering their hand-me-down baby gear as soon as you announce that you’re pregnant; take them up on their offers after making sure the stuff meets current safety standards. Go easy on buying clothes and stuffed animals. You’ll probably get plenty of both. Your loved ones will likely want to throw you a shower, and you can ask for whatever items haven’t already been donated.
Don’t disdain yard sales and consignment shops. You’ll find a wealth of gently used or even never-used items at a fraction of their retail prices. To sanitize plastic items, use a weak bleach solution or disposable cleaning wipes; clothing and most stuffed toys can be sent through the washing machine.
Consider breastfeeding. The La Leche League estimates the average mother can save $2,000 in her child’s first year by breastfeeding. If breastfeeding is not possible, you can reduce formula costs by using coupons, asking your pediatrician for samples, and seeing if you qualify for insurance coverage if your child requires a specialized formula because of allergies.
Diaper defensively. The average child will go through more than 5,000 diapers before potty training is complete, according to Ohio State University estimates. You can save hundreds of dollars by buying generic diapers, using coupons, and taking advantage of sales. Using cloth diapers can also save you money, although some of the savings will be offset by increased laundering costs.
Shop judiciously to fill in the gaps. Bring your list with you on any shopping trips and consider doing research in advance to make sure you’re getting the best prices. Don’t get ahead of yourself; buy only the items you’re sure you’ll use in the first few months after your baby arrives. The tricycle, the videos, and the basketball hoop can wait.
Pay cash. Don’t get in the habit of using credit cards to absorb the extra expenses of a baby or you may find yourself on the road to bankruptcy. Paying cash can provide you with the discipline to stay within your budget and avoid disastrous splurges.
Keep receipts. Maintain a separate folder just for baby-related receipts. You will likely end up raiding it to return unused items.
How about ongoing costs after the child is born? Those will depend on numerous factors, including your lifestyle and the type and amount of child care you might need. Most people should expect their living expenses to rise about 10 percent with every child added to the family. With careful planning you can keep those extra costs from busting your budget.
Liz Pulliam Weston is the author of two books, including Your Credit Score: How to Fix, Improve, and Protect the 3-Digit Number That Shapes Your Financial Future. She is a personal finance columnist for MSN Money and author of the question-and-answer column “Money Talk,” which appears in newspapers throughout the country. She was formerly a personal finance writer for the Los Angeles Times.