Having a baby? Nine financial considerations for new parents

By Xin Lu on 12 August 2008 (Updated 11 December 2008) 46 comments

My friend recently had a baby girl and she told me about the costs for a normal pregnancy and delivery. To say the least I was a bit flabbergasted that over $25000 was charged for a delivery with no complications. Since I want to have children in the future, I did a bit of research into the financial preparations one can do for a baby's arrival. Hopefully this will be helpful for all the potential parents out there.

1. Health insurance coverage - If you do have health insurance you could still end up paying quite a bit out of pocket depending on what happens during delivery and what type of insurance you have. You should definitely check the policy for what your out of pocket expenses are for hospital stays and major surgery in case of a C-section. If your work has multiple insurance options it is possible to switch into a slightly more expensive policy that covers more during a pregnancy and subsequent delivery. If you do not have health insurance and you are pregnant then it is very hard to buy insurance since insurance companies treat pregnancy as a pre-existing condition. However, it is possible for pregnant American women to apply for Medicaid before delivery. Any insurance is better than none since a delivery could cost anywhere from $10000 to $30000. Additionally, a newborn is very susceptible to disease so having medical coverage for the baby is very important.

2. Set up a flexible spending account if available - Flexible spending accounts allow you to contribute pre-tax money from your paychecks and pay for medical expenses or dependant care. The only disadvantage is that you must spend what you put into the account within the "Benefit Period" or lose the money you put in. The Benefit Period begins January 1st and ends March 15th of the following year. The great thing about flexible spending accounts is that the full amount you intend to contribute over the year is available for your use immediately even if the year is not over. So for example, if I tell my employer that I need to set aside $2000 next year, that entire $2000 would be available to me on January 1st even though I have not had any paycheck deductions. This is especially beneficial for expectant mothers who intend to quit working after the birth of a child since they could use the entire amount set aside by the employer for hospital expenses and not return to work to pay it back. That money is also not taxed as income

3. Pay off major debts - Once a baby arrives most families' expenses go up so it would be harder to pay off debts. I do not think that people necessarily have to pay off every cent of debt they have before having a baby, but paying off as much debt as possible before a kid arrives could relieve quite a bit of stress later.

4. Do not shop too much for the baby before it is born - This is some advice I got from moms I know. Quite a few women said to me that babies grow so fast that buying every cute outfit out there is a waste of money. It is much cheaper to ask for old clothes from friends and relatives who also had babies. For example, one woman got bags full of baby clothes from a sister in law who had a baby a year prior. Another piece of advice I got was that newborns do not really need toys or shoes so money is better spent on more useful things like bottles and diapers. It is also a good idea to stock up on a variety of diapers during sales before the baby is delivered since inflation will make everything more expensive a year or two down the road.

5. Life and disability insurance - The general accepted advice is to buy term life insurance for yourself before you have a child so it protects your child in case you die before his or her adulthood. For more about choosing a life insurance policy, Julie Rains wrote a good article about term and whole insurance here . She also wrote about why you do not need to buy life insurance for your child .

6. Raise your income if you need to - Do you need more income to support a new addition to the family? If so, it is probably best to find ways to earn more money before the baby arrives. This could mean asking for a raise, finding a better paying job, or setting up a income generating side business. Once a child arrives you may find that being a new parent is stressful enough without additional money making pursuits.

7. Housing - Many families buy a new house or rent a bigger place before or during pregnancy, but that may not be the best thing to do if the cost of the new space is unaffordable or much higher than before. Babies do not need that much space before they start walking so there is time to search for larger housing after delivery. You could save thousands of dollars by delaying the housing upgrade by a few months or years.

8. Prepare for leave from work - Most American companies do not have very generous maternity or paternity leaves, but most employees can take a 12 week unpaid leave to bond with a child under the Family and Medical Leave Act without losing their jobs. Since the leave is unpaid you need to figure out if you have enough cash to cover the leave. Also it is important to inform your manager a few months before you go so that you can train someone to fill in for you while you are on leave.

9. Childcare - This is something that needs to be thought about before the baby arrives. Who will take care of the child? Will one parent stay at home? This is probably the most important thing to figure out before the baby arrives. One thing is for sure, good childcare is never cheap.

A child is an incredible responsibility, and a bit of planning goes a long way. This is not an exhaustive list of the financial preparations new parents should be aware of before welcoming a baby, but it is a start. After a child is born there are many other financial concerns such as paying for college and adding them as beneficiaries to your will and retirement accounts. Anyway, I think parenting never really ends, but being financially prepared from the start will give you more time with your child.

What would you add to this list? Feel free to give advice to future parents in the comments!

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Andrea Karim's picture

As a non-mother, the only I can offer is this: black onsies are your friend.

Also, that baby in the picture makes my ovaries go into hyperactive mode.

Guest's picture
Guest

LOL! You're right! That baby is so cute! As soon I saw the picture my heart melted and I thought "I want one!"

Fred Lee's picture

I'm all for being practical, but having a baby is the most important event in a families life, so I think it's fair to indulge a little and buy a few cute but impractical outfits. It's going to happen, even if you think you'll never succumb, and besides, you'll get all that stuff from friends and in-laws.

The reality is, it's fine to dress them in second hand clothes, they don't care one bit, but for your first baby, aren't you going to want get a little sappy and sentimental? Believe me, if you don't, then grandmum and grandad will. 

And Andrea, I can't imagine a mother or father dressing their baby in a black onesie, even in New York City... well, maybe there.

Guest's picture
Zannie

Health Savings Accounts are an alternative to Flexible Spending Accounts; you get to keep the money year over year, but there are restrictions on what sort of insurance you can have in order to contribute to it.

As I understand it, cloth diapers are cheaper than disposables in the long run (especially if you have more than one kid) and they are certainly better for the environment. They're worth considering.

A friend of mine recently dyed some of her daughters onesies black. I bought another friend a black onesie for her son that had a skull and crossbones on it, and read "Yo ho ho and a bottle of milk."

Guest's picture

Zannie,

We had a HSA in place with the recent birth of our second child. It actually worked out better because while the deductible was higher than the traditional plans the out of pocket limit was actually lower. On top of that the premiums are lower than our traditional plan options and the company deposits an additional $95 into my HSA every month. Plus you can take full advantage of the tax benefits since you can put more in than the FSA and you don't have to worry about losing it.

Look at your company's HSA options if you have one and don't discount it just because you are planning on having a kid.

Also, we cloth diaper and it saves us a fortune. Especially with newborns. They seem to go through 15 diapers a day. I think we paid about $40 for 20 diapers, several pairs of the plastic covers, and a couple of fancy clips. We still usually put him in disposables at night just because I'm a little less coordinated at 3am.

Guest's picture
Rebecca S.

Another very frugal thing to consider: Breastfeeding. Besides the high price of formula ($20/tin, which lasts only a few days!), it has health benefits, which might save you more down the road. Even if you have to pump at work, the cost of a pump is likely to be less than the cost of formula.

Depending on your level of hippie/crunchy parenting, you might also consider not buying a crib and "co-sleeping" (it sounded crazy to me, until I was an exhausted new parent). It's not for everyone, but it can be incredibly convenient, a good bonding experience, and cheaper.

Also, Freecycle is a great source for all sorts of hand me downs -- start early!

Guest's picture
Guest

I agree. Between cloth diapers (WAY easier than expected! love them!) and breastfeeding, we have saved so much money already, and our baby is only 7 months old. Whenever I'm at the store and see the high costs of formula and disposable diapers, I am thankful that we made those two decisions... plus it's best for our baby, which is even more important.

Guest's picture
Peter T

We have two children, four and one years old.

25k for a delivery without complications is outrageous. We paid about 8 to 10k, both C-sections, first unplanned, second planned. Hospitals offer guided tours through their delivery stations; don't hesitate to ask an administrator there (not the guide) for prices, to compare with other hospitals.

Breastfeeding is best, even for the wallet, but it is important to not put pressure on the mother if it doesn't work. Some woman have problem with breastfeeding, for them bottle feeding is good.

Cosleeping is best, to give the baby natural comfort and to avoid loosing too much sleep yourself. A bassinet at the edge of the bed or a small basket-like bed between the parents are both fine. For 9-12 months, the baby can sleep with the parents, then the baby and the parents need to have the baby in its own bed.

Childcare is really expensive, look around for cheap but sufficient care. From three or more children, consider a nanny. We pay 2000 per month for childcare, also due to state rules about allowable teacher-children ratios. That is our highest monthly expense.

Guest's picture

I think your advice is very good! I had one noninsured hospital birth and we set it up to pay it off in two and a half years with no interest. We asked for self pay discounts from the doctor and hospital. We even called the epidural company and anyone we ran into who would be sending us a bill to negotiate prices. We got a list of items needed and went to CVS to buy them. We even bought silly things such as stool softener. When we were ready to pay it in full after 2 years, we called to get the balance and they gave us another discount as well for making a final payment to pay it off early. The total was about $6000 instead of $10000.
If you have a high pain tolerance, get a midwife and the cost will only run you about $2500.

Guest's picture
A

Cost to have my son at home=$0.
Cost for my daughter-in-law to have her son and daughter at home=$0

Not everyone can do this, but it's something to think about.

Guest's picture
Guest

Wow! $0, did you and your daughter-in-law not even hire a midwife? I do hope for a home birth as well.

Guest's picture
sam

Wow is that for real? $25000 for normal delivery?! Maybe that hospital is the most expensive hospital in the world? Here in the Philippines, a normal deliver could cost $1000-$1,200 only! Well that was almost 2 years ago. So here's the personal finance tip for expecting mothers, go to any 3rd world country to save money*laughs*.

Anyway, I do agree with the points above. Always secure a health insurance for your baby. Well my employer took care of that so it was no big deal for me. I also did some part time web development months before arrival of our baby to augment our cash flow. Another thing, I agree with the post above, don't buy too much clothes. Baby grow so fast that in a weeks time, 1 dozen of socks you bought a week ago may no longer fit your baby's growing feet! Better ask relatives if they have one-which in our tradition we no longer have to since they just give it to us without even asking:)

Sam
Fix My Personal Finance
http://fixmypersonalfinance.com/

Guest's picture
Kacie

$25k? Yikes. Even without insurance, I've heard much cheaper figures in the US.

My insurance is picking up most of the costs for my delivery at the end of this year, and my out of pocket expenses for the entire pregnancy will be about $280. I'm very fortunate!

Guest's picture
Carrie

For so many reasons that could (and will) be a whole new post. We're the only ones (or one of the few) who think surgeons (OB/GYNs) are necessary to attend low-risk births. We're not the only ones with a 30% surgical delivery rate, but that certainly doesn't help keep costs down.

You don't need a high tolerance for pain to give birth outside a medical setting. Few people "tolerate" the pain of childbirth, but it is a temporary condition, after all.

By the way, we never paid a dime for either of our children's births -- insurance covered everything, including three-day hospital stays each time (for different reasons). Most, though not all, of our friends also had their deliveries fully covered. So while I agree it's a good thing to look into before getting knocked up, I woudln't freak out about it until you find out. You may well be fully covered.

Xin Lu's picture
Xin Lu

Well, my friend explained that the $25k figure was for people who did not have insurance because she got an itemized bill with the pre-insurance rates and insurance negotiated rates. She has insurance but she has to pay 30% out of pocket. This was with 2 days of hospital stay and each night was billed for $5000. She said she was really mad that the doctor was there only for 20 minutes and billed $3800.  I guess California is one of the most expensive states to have a baby in. 

Guest's picture

We had our baby at home, a little over three months ago, and paid $3000 to the midwife who assisted us. We pay $100/month into a college savings plan for our son, and $158/month for his health insurance. I spent about $30 on fabric to make diapers and a sling for him. Oh, and I did break down and buy a pair of shorts at a thrift store last week for $1.25. People offered hand me downs, and we gladly accepted. We'll pass them on to other people when our son doesn't need them anymore. His dresser used to be mine, and we attached a hand-me-down changing pad onto the top. Our crib was used ($30) and my parents contacted the manufacturer to make sure it still met code (he takes naps there, but has been co-sleeping with us at night, and recently moved into a hand me down bassinet). We spent $230 to buy an organic mattress for the crib, where he'll be sleeping after a few more months. The car seat was really the only other thing we needed, and my best friend lent us hers while she's between babies. It will probably only fit our son for another few months, and then we'll have to buy a new one, so we'll figure another couple hundred dollars there. I'm breastfeeding (free) and we've spent a total of about $40 on diapers so far, including the fabric we used to make them and the water and detergent to clean them (I hang them to dry - that's free too). The current diapers should fit for another few months before I have to alter them or make more. For me, the key has been to avoid shopping. I haven't been to Babies R Us or Target or any other place where I'd see lots of stuff that I didn't know I needed.

Guest's picture
Guest

Another reason not to buy clothes ahead of time is that other people are very kind. We received a flood of gifts, almost all of which were baby clothes. We did not need to buy clothes until she was one year old. Some of the clothes were never even used, as she grew out of them so fast. Other things were needed, like diapers, cots, bottles and so forth, but not clothes.

Unless you are a total loner with no friends, you may wish to take your time and see what the kindness of others brings. At the same time, be sure to show the same kindness to other new parents!

May I suggest calling the new parent and asking what they don't have yet? You are not obligated to get what they say, but I know that the baby utensils I got Chris were much more appreciated than yet another onesie. If you do go for clothes, get something for six months or older. Sure, you won't see it on the baby tomorrow, but it is much more likely to be used.

Guest's picture
Mark

I'm a European and I'm appealad when I read articles like this.

$10-30k for a delivery in a US hospital? Are you kidding me? I'm sorry to say this people, I have a lot of friends in the US who I dearly love, but your health system simply sucks.The amount of money you pay for even basic health services is simply outrageous.

I live in newly joined EU member country, with high quality health services... and the delivery of a baby here cost.... nothing. It's free. And not only that, but the mortality rate of newborn babies is lower than that of the US (4.8/1000 here VS. 6.3/1000 in the US).

What I'm trying to say here is that is your goal is to live a high quality frugal life, US might not be the best place for it. $10-30k... get out of here..

Guest's picture
Guest

I live in the US and agree with the European post. We (husband and me) are self-employed, and have been paying $1,360 to continue our COBRA family coverage since my husband was laid off last year. The only entities benefiting from our health care system in the US, are the “for profits”, including the Pharmaceutical and Insurance industries. Sadly, there appears little political will to change our profitable system, because those profiting have the means to lobby for industry favorable legislation, and appeal to the rugged individualism of American voters who prefer to have ownership of their medical risk (read:high debt), rather than pool our money together to spread risk and lower cost.

Xin Lu's picture
Xin Lu

Yup, if you don't have any insurance in the United States you'd go broke for just having a child. I read that C-sections are at least $25k and in California it could run even higher with longer hospital stays. I saw a movie about midwives and wrote about it here:

The Business of Being Born

That seems like a good choice for many women.

 

Guest's picture

It's posts like these that really make me glad I'm Canadian.

Your point about not buying things ahead of time is excellent - yes, you will get gifts and plus if you buy in advance you might be tempted to "buy everything" just in case. Most of the stuff you see in stores is not needed.

Another reason to wait is that babies can be very different - just because all your friends bought strollers right away doesn't need you will need one - our second child refused to be in a stroller for several months.

Mike

Guest's picture
Miranda

One thing that really struck me when I was pregnant was the rampant consumerism. This idea that you *need* all this stuff. You *need* a diaper genie. You *need* all sorts of fancy toys. You *need* this, this, this and this. I was starting to feel overwhelmed, and then my mom talked to me about what I had as a baby. I realized I didn't need 75% of what I was being told I needed. That really helped out.

And I agree about buying too many clothes in advance. My husband was really bad about it -- even buying clothes for when our son was 2 and 3 years old. Then they'd be put away for later, and we'd forget about them! Now, though, he's mellowed about that, and we try to buy only what we need -- on sale and from thrift stores.

Guest's picture
martha in mobile

Ads for unnecessary products contain subtle (or not) message that you must have this or that in order to succeed as a mother. And we are all nervous as first-time mothers!

My advice - read various boards to see what works for other moms before you buy the latest and greatest.

If you are doing cloth diapers (I did), make sure you own a sturdy washer/dryer. (My Maytag and I have just celebrated our 7,000 load). You will be changing diapers every 1-2 hours and washing a load every day or every other day. (Disposable diapers really ARE much more convenient, but horrible for the environment). Commit to cloth -- if you cave and go to disposable, you will have made a large financial investment that will go to waste. 12 years later, I am still using old diapers as cleaning cloths!

Final advice: get a sling. Babies and Moms love them, Dads and Grandmas really love them. You may need two different sizes if the adults are of vastly different heights.

Guest's picture
ronnie

Wow....it's completely free for anyone to give birth in Canada. Whenever I feel like complaining about our system, I just remind myself that it could be much worse. At least I'll never go into debt over medical issues!

Guest's picture

I knew a couple that came over from South Africa already pregnant with no insurance. It's amazing how the price drops when you tell docs up front you have no insurance and a limited budget. All the unncessary testing and unneeded stuff just disappears.

Guest's picture
Jesse Perrigo

$25000 for a delivery can't be right.

Guest's picture
Zannie

@20

I'm glad to hear the HSA/HDHP worked out so well for you! I suspected that it would, but since I don't have kids (nor do I plan to) I hesitate to give advice, per se, about having them. But I did at least want to point out the out the option so that parents and prospective parents would know that it is there so they can do their own research.

Kudos on the cloth diapers. I read recently that a parent who switched from disposables to cloth found that his two year old daughter preferred them; she objected when he went to put a disposable on her to use up the ones they still had from before the switch. Apparently being wrapped in plastic is unpleasant.

Isn't it cool how doing the more environmentally responsible thing often ends up being cheaper and making your family happier?

Guest's picture
spaces

25k is about what it cost some friends of mine to have a baby in Houston three months ago.

I'm currently 13 weeks pregnant with my first child, and will use cloth diapers. I'm also trying to follow this guideline: If my grandmother didn't have it, then I should think thrice about whether I really need it.

Guest's picture
Steve

The reason that childbirth is very costly is because hundreds of thousands of babies are delivered in hospitals to illegal Mexican aliens who do not pay their hospital bills.
The costs are passed on to hard working citizens. Dozens of hospitals have closed down because of this. Costs will continue to increase for all medical care, and your insurance premiums will double within the next decade, while illegal aliens continue to drain the medical system.

Guest's picture
Carolyn

I had a high-risk delivery with emergency C-section, 10 day hospital stay, delivered my daughter at 27 weeks at a prestigious (read expensive) teaching hospital. Total bill for the whole event, for me, was $24K. (Don't ask about the bill for my daughter.) Most of the people I know who had regular hospital deliveries were in the $5-6K range, c-sections run about $8-10.

I second all the advice about the things that aren't needed. Clothing, food, blankets, diapers, wipes, carseat, carrier or sling. All the rest is optional. If people must buy gifts ask for books.

Guest's picture
Val Jones

Simple Yet Dynamic Lessons Can Make Having A Newborn Baby Much Less Frightening, Providing You With True Peace Of Mind During The Course Of Pregnancy..

Tips in Preparation For When you Having Your Baby

Pregnancy brings the greatest of joys but also the greatest of responsibilities there will ever be so, prepare yourself mentally, physically and financially because you will need all three areas and many others along the way. This article is about tips, hints and other information on having a baby, not normally covered in other books. Many feel that being a mother is what makes life meaningful and complete. However, what we all don't know and cannot plan in advance for is pregnancy and what will happen during that period of time.

Excessive drinking can result in miscarriage or stillbirth and puts baby at risk of disabilities, behavioural problems and slow growth. A well balanced diet can provide a pregnant woman with most of the nutrients needed during pregnancy, but some supplements may be necessary.

For most women it makes sense to avoid straddling their partner while making love -- woman-on-top, sitting or standing -- since this can cause the semen to leak and may result in fewer sperm making their way to the egg. Ovarian reserve is the number and quality of eggs in your ovaries and how well the ovarian follicles respond to hormones in your body. A reduced ovarian reserve is natural as a woman ages, but young women might have reduced ovarian reserves due to smoking, a prior surgery on their ovaries, or a family history of early menopause.

Morning sickness and all its discomfort can occur at any time. Morning sickness is said to be brought on by changes in a pregnant woman’s hormones. Morning sickness usually occurs in the early period of pregnancy, in the first three months. It is very popular among women, as almost 80% of them have nausea and puke in the morning.

In the third trimester, some pregnant women begin to leak colostrum from their breasts. Colostrum is the first milk that your breasts produce for the baby. It is a thick, yellowish fluid containing antibodies that protect newborns from infection. Once you reach the third trimester, you should talk to your doctor or midwife about labor and delivery. Learn your options for pain relief. Find out how to reach her if you go into labor.

Your body needs vitamin D to help absorb calcium. It is made naturally in our bodies in response to sunlight. The government's Food Standards Agency recommends that all pregnant women take a supplement of 10mcg of vitamin D daily. Vitamin A in excess can be harmful to a developing baby. Liver is a rich source of iron as well as vitamin A, hence it is recommended only small amounts of liver are consumed during pregnancy. If an induction date is looming, there are things you can try to hurry up the waiting game although we cannot guarantee that any of them work. Friends may suggest that eating curry can bring on labour, but spicy foods can cause heartburn and if you're not used to them, irritate the bowel, leaving you with an upset stomach.

Depression after pregnancy is called postpartum depression or per partum depression. After pregnancy, hormonal changes in a woman's body may trigger symptoms of depression. During pregnancy, the amount of two female hormones, estrogen and progesterone, in a woman's body increases greatly. In the first 24 hours after childbirth, the amount of these hormones rapidly drops back down to their normal non-pregnant levels. Birth centers give women a "homey" environment in which to labor and give birth. They try to make labor and delivery a special, warm, family-focused process.

If you're like most new moms, you're eager to hang your maternity clothes in the back of the closet. Thankfully, there's no secret to weight loss after pregnancy. It takes healthy foods, a commitment to physical activity and plenty of patience. Breastfeeding Your Baby Can Help You Lose Weight. Breastfeeding is healthy for you and your baby.

For teens who want to learn more about teen pregnancy, they can go to many anonymous sources, besides the internet. Teen boys who are going to become fathers also need the involvement of their parents. Although some boys may welcome the chance to be involved with their children, others feel frightened and guilty and may need to be encouraged to face their responsibilities. That doesn't mean, however, that you should pressure your teen son or daughter into an unwanted marriage.

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Guest's picture
Spoodles

25K for an uncomplicated birth?! They must have used silk swaddling blankets and gold plated monitoring equipment! We've had two, with a third on the way, and the total for each never went about $10,000 for midwife/doctor, office visits, ultrasounds, tests, hospital stay, and all the miscellaneous stuff they stick you with. That's the whole pregnancy, not just the birth.

Guest's picture
Spoodles

about=above in the comment above

Guest's picture

I am 6 months pregnant so this post was very interesting, and made me feel a lot better that we haven't bought anything for our baby's arrival yet. However, there were two points that made me feel very glad that I live in the UK.

It had never occurred to me what the cost of giving birth was because the costs are covered by the state (in fact I don't think our health insurance covers labour because it is not an illness).

I am organising my maternity leave at the moment with my work and I can have up to 12 months of without losing my job and for 9 months of that I get maternity pay from the Government.

These certainly reduce the cost of having children.

Guest's picture
Margo

Anyone know what citizenship rules would apply to the baby, if expectant parents traveled out of the country to save on delivery costs?

Guest's picture
Suz

My husband and I are waiting for about another 3-5 years before starting to raise a family because of this cost factor. My best friend, however, is actively trying to get pregnant and I fear for her. She has a non-working husband and more monthly bills than she can pay. I've tried to talk to her about it, but she won't listen. I worry she'll end up more stressed and not be able to enjoy her pregnancy and baby when she does get pregnant. For now, however, the stress seems to be keeping her from concieving, but it isn't a foolproof system. I'll have to give her a copy of this article...

-Suz

Guest's picture
Guest

For the FSA, you can't just allocate $3000, put in $1000, and walk away... that money WILL come out of your paycheck. You can't quit work and not pay it back.

Guest's picture
Amanda

Whoa, you can get a C-section for $24K? My bill (c-section, 4 days hospital stay, plus I suppose a little extra for that dratted endocrinologist they sicced on me because I'm diabetic) was FORTY THOUSAND DOLLARS (Southern New Jersey). Thank god we have good insurance.

Other than the $1600 I paid out of pocket for delivery, though, we spent about $300 total on baby stuff. I inherited all my sister's boys' clothes, bibs, bedding, and burp clothes, as well as a bassinet. Somebody nice gave us a swing, which I didn't think we needed, but it really has been a big help (baby likes to be in constant motion, and sometimes I really DO have to set him down...), and his grandparents gave us a crib. The only things I had to buy were a car seat and cloth diapering supplies. Someone did give us a stroller, but baby usually rides around in a pouch sling or a mei tei (I sewed these... you do want to get sturdy fabric and good thread, but even so, you can shop carefully and make a carrier for about $6)

As for indulging in cute outfits, I highly recommend sticking with pants or little jumpers with adjustable button straps at the shoulders (buy or make the pants a little long... babies' waist measurements don't change very quickly, so you'll be able to use them for months). I like to sew, so I get cheap entertainment and a little "me" time by making baby stuff-- good way to use up scraps and recycle fabric.

Guest's picture
Guest

I really like this website.. it has helped me alot on my project i am doing.

Guest's picture
Julia

I found this article to be very helpful for perspective new mothers. I am not a mother myself but I am trying to put an end to teen pregnancy. I cited some of your ideas on my blog to help teenagers be aware of the financial burden.

A baby has always been looked at as an expensive addition to your life. And a wonderful addition in the right circumstances. I feel some people are unaware of how expensive a baby can be and I think you did a good job shedding light on this issue.

Hopefully teenagers and adults will find this and test to see if they are ready to have a baby or not. And hopefully we can contribute to trying to prevent babies being born in unfit circumstances.

If you are interested in my blog go to: http://julia0819.wordpress.com/

Guest's picture
Guest

Be careful with FSA savings accounts. The money is taxed now when you take the money out of the account. It was one thing that was done to help pay for this new health care law.

Lars Peterson's picture

Thanks for the comment! It's hard to keep up with all the recent tax changes, especially those as a result of ACA.

While the ACA did make changes to FSA and other pre-tax healthcare funding vehicles such as Health Savings Accounts, it did not make the change you note regarding taxes. Pre-tax contributions are not taxed when the funds are withdrawn and used to pay for qualified medical expenses.

The ACA does impose a ceiling on employee pre-tax contributions of $2,500 per year. This ceiling is designed as a mechanism to fund ACA -- fewer tax-free dollars = more taxable dollars.

Details here: http://www.irs.gov/publications/p969/ar02.html#en_US_2012_publink1000204174

Note that the old "use or lose" rule no longer applies with respect to FSAs. Up to $500 may be carried over from year-to-year. (http://www.shrm.org/hrdisciplines/benefits/articles/pages/fsa-lose-it-ru...)

Guest's picture
Jennifer E

I would recommend instead of stocking on disposable diapers that you look into cloth diapers. Yes, a large initial investment but they definitely pay off.

Guest's picture
Guest

This is all VERY helpful, but I still have questions! My boyfriend and me recently got engaged and right after we found out we were pregnant. Although this was not planned we are both very excited to become parents. I'm currently on my parents health insurance up until I am in my mid twenties, but I was informed as soon as I have a baby or get married, I no longer have that health insurance and I have to acquire my own. Is this true? If so I need to look into other forms of paying hospital expenses after having the baby. We are very concerned about finances right now and we are trying to figure out the best way to go about the pregnancy and expenses afterwards. Any advice would be greatly appreciated!!!

Guest's picture
Guest

Wow this article has some glaring factual errors. Most notably: "This is especially beneficial for expectant mothers who intend to quit working after the birth of a child since they could use the entire amount set aside by the employer for hospital expenses and not return to work to pay it back."

If you terminate employment you will owe that remaining FSA contribution amount immediately - it will be taken out of your final check and if that doesn't cover it, you'll have to pay the difference out of pocket. So for example if I set aside 3k in my FSA then spend it all on January 10th then quit January 31st having only made two bi-weekly contributions for $250 total, you're not going to just get to walk away with $2,750. That money is going to come from somewhere - and guess what, it's not your employer and not the government. It's going to come from you.

Poorly researched article. Even if it is 5 years old, if someone stumbles across this, they will be misinformed.

Lars Peterson's picture

Thanks for your comment, Guest. You're absolutely right that this article is overdue for an update, especially after all the recent changes to tax law as a result of the ACA.

Please note, however, that employees are not in fact required to reimburse employers for FSA withdrawals in excess of their contributions. This is one result of the principle of "uniform coverage" which, according to the Society for Human Resource Management, "indicate[s] that the maximum amount of reimbursement from a health care FSA for medical expenses must be available at all times during the period of coverage. The uniform coverage rule prohibits an employer from tying the maximum amount of reimbursement at any particular time to the amount the employee has contributed... This restriction sometimes results in an employee leaving the organization with reimbursed expenses greater than the employee’s contributions."

For more details, see SHRM's guidance on this issue, here: http://www.shrm.org/TemplatesTools/hrqa/Pages/FSAmidyearbalance.aspx

Please also note that Obamacare imposed a ceiling on pre-tax FSA contributions of $2500. An employee could not elect to set aside $3000 in an FSA fund, as in your example.

Thanks again for your comment!