Expanding your family: How much does it cost to have a baby?

Having a baby is a joyous and exciting journey, but it’s important to understand that it comes with significant financial responsibilities. From the cost of delivery to ongoing monthly expenses, there are financial considerations to expanding your family that may need additional planning. Let’s explore costs and expectations.

First things first—delivery and related expenses

The cost of childbirth can vary widely based on your insurance coverage, location and the type of delivery. A 2022 study1 reported that without major medical insurance, the average total cost of delivery ranged between $14,768 and $26,280. With insurance, out-of-pocket costs for expenses like copays, deductibles, hospital charges and doctor fees average between $2,655 and $3,214.

From the cost of delivery to ongoing monthly expenses, there are financial considerations to expanding your family that may need additional planning.

Additional costs like prenatal care, including doctor visits, scans and other tests, is important to consider as part of your overall budget. Spending is typically lowest during the early months of pregnancy and peaks in the month before delivery, accounting for 20% of total prenatal costs. In the other months, average monthly spending is just over $600.² Other expenses such as psychological care, physical therapy or treatment of other conditions after the birth can also arise that are not necessarily billed as a pregnancy-related expenses.

Your baby is home—what’s next?

The birth and the hospital stay are just the beginning of the journey. Once you bring your baby home, there will be ongoing expenses that can add up quickly:

• Food and formula: On average, formula can cost around $1,100 for the first year.³ Many mothers choose to breastfeed, which can offset some of the initial costs, but as the baby grows older, the ongoing food expenses will increase.
• Diapers: Disposable diapers and wipes will likely take up a significant portion of your baby budget. Babies typically use between six and 10 diapers per day, amounting to about 2,800 diapers during their first year. The cost can range from $500 to $1,300, depending on the brand and whether they are purchased in bulk. This breaks down to an average monthly cost of $42 to $108, or $10 to $25 per week.⁴ While it may be challenging to pinpoint an exact amount, it’s generally recommended to budget around $85 per month for mid-priced disposable diapers.
• Ongoing medical expenses: Babies need routine check-ups and vaccinations, and they’re susceptible to illnesses that can require frequent doctor visits. However, if you have employer-based insurance, keep in mind that having a baby is a considered a “qualifying life event” (QLE) that makes you eligible to enroll in or change your existing health insurance outside the annual enrollment period to help with these new costs.⁵
• Child care: Child care is one of the most significant expenses many parents face. The average annual cost of infant care in the United States is about $15,888, or roughly $1,324 per month.⁶ These costs vary by state and are based on the type of care you chose (daycare center vs. in-home care) as well as your general location, but it is something to consider if you’re a working parent.
• Other expenses: When budgeting for a child, consider the additional costs that toys, clothing, furniture, car seats, strollers and other accessories—with ongoing replacements and additions as they grow—will add to your expenses.

Tax implications—What about the Child Tax Credit?

As of 2024, the Child Tax Credit (CTC) is available to taxpayers with dependent children under the age of 17.⁷ This credit can help offset some of the costs associated with raising a child by reducing your tax liability. To qualify, you must meet certain criteria regarding income, the child's age and the relationship to the parent. While it can provide some financial relief, it is important to recognize that the expenses associated with raising a child far outweigh the benefits of this credit. Make sure you’re familiar with the IRS guidelines or consult with a tax professional who can offer advice.

What’s the bottom line?

Having a baby is a big decision that brings immense joy and fulfillment, but it's important to approach it with a clear understanding of the financial responsibilities involved. By planning ahead, budgeting and being mindful of the costs, you can ensure that you are financially prepared to provide a loving and supportive environment for your growing family.

Additional reading:

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