5 financial tips advisors can offer for expectant parents

Preparing for the arrival of a new baby should always include a hard look at household finances. Not only does a new child mean an increase in daily expenses like groceries, housing and transportation, it also creates fresh budgeting pressures that last until the child becomes a young adult.

A middle-class family will spend $233,610 from a child's birth until they turn 18, according to the Department of Agriculture. With that hefty outlay, "understanding the costs of raising children and planning for anticipated and unexpected life events is an important part of securing financial health," Louisa Quittman, the director of the Office of Financial Security for the Department of the Treasury, said in a statement. 

The dollars involved can cause a lot of anxiety for parents. But a few small steps can help them prepare for a life-changing moment, both in their lives and in their finances.

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Matt Becker, the founder of Mom and Dad Money, in Gulf Breeze, Florida, said that expectant parents should start by having regular conversations with each other about their household budget and goals for their child's future, with the aim of hammering out a clear, joint idea about how much money they can or should put towards those objectives. "That type of communication, more than anything else, is going to help you do this well together, because it's hard," Becker said. 

Adapt your sleep — and your budget 
The largest share (30%) of a new parent's expenses go toward housing, according to government data. That big outlay includes everything from higher utility bills to moving to a bigger place to accommodate a new person. The Financial Industry Regulatory Authority suggests that couples aim to keep total housing costs at 30% or less of their monthly gross, meaning pre-tax, income. 

Food represents 18% of child-rearing expenses for middle-income, married-couple families. The Department of Agriculture calculates that parents are expected to spend between $152.30 and $209.70 a month on food in general during the child's first year, not including baby formula. And that range only increases as the child grows. Added an extra of $1,200 to $1,500 forwith just baby formula throughout a baby's first year of life, according to the United States' Office of the Surgeon General. Expectant parents should also account for the cost of diapers as new frequent expenditures. Experts say that parents spend around $1,000 during the child's first year. 

Child care
With inflation, child care centers were more expensive in 2022. Around 70% of parents said they spend 10% or more of their household income on child care, with a majority spending more than 20% or more, according to a 2022 survey by ChildCare Aware. That's more than the 7% of household income that the Department of Health and Human Services considers to be affordable for.

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Eric Roberge, the founder of Beyond Your Hammock, in Boston, MA, suggested that parents think through all of these possible costs before the arrival of the baby. Online calculators such as BabyCenter can help. Once parents have a dollar number, they should start setting aside money in a savings account as a trial.

"See if you can manage your cash flow around the monthly costs. If you can, you'll actually have some money to put toward savings since you don't literally have to spend that money right now," Roberge said. "And if you find your budget no longer works, you know you need to make some adjustments before the baby arrives."