There are few things that we look forward to more than starting a family. Children are the ultimate legacy. They are proof that we existed, the glue that binds us together, and the reason for most, if not all, our labors. If you're planning a pregnancy then congratulations on your first step toward building a family. I'm sure you've asked yourself time and again if it's the right time and how you plan to make ends meet, but having a baby may not be as expensive as you thought. At least not for the first few years.
Unlike most things you'll have in your life, babies are generally pretty inexpensive to make. Without going into the process in too much detail, let's just say that your production cost is usually next to nothing. You shouldn't have to purchase materials in most cases and while there's definitely some sweat equity involved, the labor intensive exercise can be thought of as owner's capital investment.
The first thing to do is check your health insurance plan and review the costs that you will be responsible to pay. Plan to have several unplanned visits to the doctor. Especially if you're a first time parent. Most new parents don't yet realize the difference between a moderately sick child and an actual emergency. You'll have to spend a few dollars in co-pays each time you go and generally there's an out of pocket cost for medication. While reviewing your insurance, find out if your well-checks are free. Even with fantastic medical insurance, you could find yourself spending as much as $2,000 for the first doctors appointments, ultrasounds, and baby's shots. If your baby requires a stay in ICU or some monitoring, you'll need to shell out extra.
There are some cases in which production requires highly specialized processes such as in vitro fertilization. These processes can run into the tens of thousands and carry no guaranteed results, but carry an increased chance to create twice the output for ideal candidates. A word to the wise on this matter. If your doctor tells you that you are not an ideal candidate, he or she is gently urging you to find another process to use that has a better chance of results without the high price tag.
Be aware. Twin births account for 3.3% of all births in the United States and the rate has increased a staggering 76% since 1980. This is largely due to the fact that older women have an increased chance to produce more than one egg at a time and when taken with fertility drugs or accompanying a fertility procedure the rate of twins can increase to a whopping 25% with triplets occurring between two and three percent of the time. If you're older and are using any of these methods, consider the real possibility that you may end up having at least two kids to manage.
Sticking to the average model and process method, the bulk of your up front expenses will be made on equipment. Most clothing, baby monitors, linen, crib, rocker, swing, carseats, new furniture and accessories can be easily acquired using the time honored tradition of a baby shower. This is the absolute definition of angel investment from those close to you. Without the benefit of a shower, these things can total in cost from between $800 and $1,000 so be sure not to leave anyone off the guest list.
Be sure to set a baby budget. Decorating a nursery, baby proofing the house, and picking up those extras that you missed at your shower shouldn't run you more than $1,000. Decorating a nursery costs money but this is not a fixed cost as it will vary depending on somebody's taste and budget. Just be sure to stay within your means. In a very short few years, your darling children will be attempting to destroy all your hard work in their room despite your efforts by writing on your walls, throwing their toys at the finely crafted wood furniture, and pulling the stuffing out of the plush chair you used to nurse them in.
Eventually we were going to have to talk about diapers. You can expect to pay about $50 per month for each child to wrap their little gifts for you. The fancy diapers with the designs on them are cute, but they cost more. What you really want is something that is absorbent and fits well around the legs as they're the prime leaking points.
Breast feeding can be a very personal choice. From a strictly financial standpoint though, it's an all you can eat, free buffet. You'll need to invest in a milk pump too. I suggest looking at Craigslist or talking to friends since these things really don't see a lot of use before people are done using them. If you decide not to breastfeed or use a hybrid method, you will spend anywhere between $50 and $100 on formula each month depending on the type that you buy and your baby's appetite.
To sum up, when you look at starting your family using the normal procedure, you'll want to make sure you have about $4,000 saved up to pay for your out of pocket costs specifically related to having a new child. Anything above that should be available in your emergency fund. Remember that they're not one in the same. You should save for your baby costs in addition to your normal cash balance. Be prepared to spend up to an extra $250 a month in recurring expenses on the high end. Remember that these little buggers are inexpensive to make and maintain in their first few years, but the real costs are coming down the line. Child care, family vacations, and their education are the things that can put you in the poor house later. Consult with your financial planner to save for the big ticket items so you don't put your family at risk by failing to plan.