Have a kid they said – it’ll be fun they said… As a matter of fact, they were absolutely right! But like so many fun things in life, having a child can be expensive. From birthing center or hospital bills to diapers and wipes, the costs can add up quickly, and it’s very important to think through your budget before you welcome a new person into the world. But even beyond the costs, there are many other considerations when planning to have a baby. Let’s look at a few!
Parental/Family Leave
This may seem like an obvious one, but you want to make sure you know what kind of parental leave benefit your employer offers, if anything.
- Is there a specific leave provided for childbirth/adoption, or will you have to use vacation time/PTO? In this case, make sure you’ve left enough time for parental leave – I recommend at least two weeks. These can be exhausting days/nights, and you don’t want to be on empty and have to jump fully back into work too soon.
- Are there different leave durations provided for “mom” (birthing parent) versus “dad” (non-birthing parent)? In some cases, the leave period is generous and the same for either parent as either may be the primary caregiver.
- Must the leave be taken continuously, or can you break it up into chunks? If you aren’t required to take it all at the same time, it can be great to take a few weeks at the front end and then save some time for a month or two later when family helpers might be going home.
- Is there an option to work remotely for a few weeks after leave? This can provide a chance for an easier transition back to work, and I recommend taking advantage of it if you can.
If your employer provides no benefit, at the very least, you may be eligible for the Family and Medical Leave Act (FMLA) benefit, which provides for “up to twelve (12) weeks of unpaid, job-protected leave.”
Cash Flow
In some cases, one parent decides to take a break from their career to stay at home with the child. (Side note: That’s absolutely a full-time job, especially if it’s not your first kid.) In other cases, both parents return to work after leave. Regardless of the choice, your cash flow will be significantly impacted; you’re either losing an income stream or incurring childcare/daycare expenses (unless you’re one of the super lucky ones who has access to full-time grandparent support…). For reference, the average cost of infant daycare in Virginia was around $14,000 per year in 2023. Whatever your family decides to do, make sure you’ve plotted out how your cash flow is going to change because it may require some lifestyle adjustments for a season.
Expenses
Now for the least fun part…costs. Your largest upfront cost is generally going to be the actual birth. In Virginia, the average cost of a non-C-section hospital childbirth is around $6,500 with insurance and almost double that at $12,200 without insurance, according to 2022 data. Add $4,000 and $6,000 to those numbers respectively for a C-section delivery. To assist with these large bills, many hospital systems allow for interest-free payment plans. Even if you can pay the cost upfront and out of pocket, I strongly recommend you talk to the hospital billing department to take advantage of a payment plan for as long as they will stretch it – and keep your cash in a high yield savings account! The hospital bill is also a great receipt to hang onto for HSA-withdrawal purposes later…
And if this large expense doesn’t fit into your budget or plan, birthing centers and home births are typically more affordable than hospital deliveries.
A few other expenses to consider are the increase in your health insurance premiums by adding a child, sick visits to the doctor (outside of routine “well-child” visits if your insurance covers those), and all the routine baby stuff (diapers, wipes, clothing, and food – which can add up to around $200-$400 per month). Of course, there is a plethora of other baby gadgets and items you could/should buy (a good car seat for example: $200-$300). Should your family and friends throw you a baby shower, I recommend that you add everything to your registry that you might find helpful (baby swing, body carriers, sound machines to name a few), and don’t be afraid to throw the higher-end stuff on there… People are rarely so willing to splurge as they often do for a baby (especially your first).
Though this is a lot to consider (and I really only scratched the surface), we always try to keep the first things first here at EVOadvisers. Don’t let the various financial implications detract from the pure joy, wonder, and fulfillment that comes with having a baby and growing your family. Bringing a life into the world is one of life’s most precious experiences – and one for which there is no rational price tag.
Now that we have scratched the surface on the life event of having a baby, next up on the LIFE series we will address the moment when a life is taken away, rather than added. While being much harder to consider, we will highlight some things that you can do now that will better prepare you for the moment of being an Executor that can provide you the space to grieve rather than be bogged down by an endless list of things to do. Next up on the LIFE series: Being An Executor.
Taylor Schmaltz, CFP® is a Financial Planner at EVOadvisers.
EVOadvisers is a fee-only, Registered Investment Advisor (RIA) founded in 2006. EVOadvisers is located in Richmond, VA and services clients locally and nationally. EVOadvisers offers transparent, easy to understand, financial planning and investment management services to families, busy professionals, and entrepreneurs who have achieved a stage in life that requires more than a 401(k) to manage.