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Planning a Budget for Baby

babyPreparing for your soon-to-arrive bundle of joy can be both exhilarating, and overwhelming. Not only are you assuming the lifelong responsibility of a human being, raising children can be expensive. The United States Department of Agriculture (USDA) estimates that the cost to raise a child in the US is approximately $245,340. By putting together a budget in an advance, you can develop an understanding of the expenses that are ahead when baby arrives. Here are some things to remember when planning your budget for baby.

First Trimester
Prepare a Budget

You may be surprised by how quickly the costs can add up after baby arrives. Between the costs of one-time items such as a car seat or baby crib, and regular expenses like daycare or diapers, baby could easily cost you $10,000 during your first year. You can plan in advance by using an online baby calculator, such as the one at to estimate costs, and have a budget in place so baby doesn’t break the bank.

Evaluate Child Care

Child care is typically one of your biggest costs. Begin researching early your child care options and associated costs. If you or your spouse plan to stay home with the little one, consider the loss of certain benefits, such as 401(k) match in addition to your missing salary.

Have a Safety Net

Work to eliminate debt, and aim to save 3 months or more of living costs.

Anticipate Medical Costs

Talk to your insurance company to get an idea as to the expenses you can expect for prenatal care and the baby’s delivery and subsequent checkups.

Second Trimester
Preserve Your Income

Determine how much life and disability insurance you need, and research different plans. Term life insurance will be your most reasonable option on a budget, and explore the possibility of getting disability insurance through your employer.

Write Your Will

A will is necessary to assign a guardian for you child, should anything ever happen to you. Contact a lawyer to make a will, or purchase inexpensive software to do it yourself.

Review Your Benefits

Find out whether you have paid maternity leave benefits or not. If you want time off with baby without income, you will need to have funds in savings to pay the bills.

Third Trimester
Buy for Baby

It’s time to start buying necessities for baby, like highchairs and strollers. Talk with your family about what you need, and register for items to avoid getting multiples.

Save for College with a 529

A 529 savings plan is a great way to save for college and offers un-taxed gains and withdrawals for school, as well as tax deductions in South Carolina.

Insure Your Baby

Within 30 days of his or her birth, add your baby to your health insurance and enroll in a flexible spending account to save for medical care and child care before tax.

Enjoy the Tax Break

In 2016, the tax credit for a child is $3,373; calculate your desired withholding at to keep more of your money each pay period instead of loaning it to the government interest free for a year.

Need more guidance on planning financially for baby? Contact the personal banking professionals at First Reliance Bank in Florence, South Carolina today!


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