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How Your Budget Changes When Your Baby Is Born

How to bring a bundle of joy into the world, without also adding a bundle of extra money stress!

Today’s post is by Gerard Dawson, an educator, writer and still new-ish dad.You can find out more about him over at

It was June of 2016, and my son was three months old. I sat at the kitchen table, listing out our monthly expenses (which, as a YNABer, I now call “immediate obligations”).

The number felt good. By my rough estimate, I figured that my wife and I would be able to cover most of what we needed with the cash we already had in the bank. Plus, I figured I’d earn some more money over the summer.

That was my first mistake—projecting instead of budgeting. (As Rule One states, “Only budget the money you have, right now!”)

Excited to spend extra time with my wife and kid, I eased up on the summer job search. Unfortunately, the part-time tutoring job proved to be very part-time, indeed. It only offered a handful of billable hours per week, and I had to drive as many hours to get to work! It didn’t seem worth it, so I quit. That was my second mistake.

Can you predict the end of this story?

By September, our credit card balance was bigger than the bank account balance. In a slight panic, I asked myself where all of our cash had disappeared to. And then it hit me …

Babies Are People, Too.

When I sat down to look at the numbers in June, I hadn’t budgeted for a family of three—I was guesstimating our cash flow based on our previous expenses as a family of two! And it didn’t help that I’d planned on projected future income that never materialized.

Fortunately, around this time, I also discovered YNAB. That taught me a few things that I’d like to share with you today. Being a new parent is a tough (and wonderful) job, and it doesn’t need to be any tougher. Hopefully, my experiences can help you avoid learning a few new-parent budgeting lessons the hard way.

The Inevitable Downside …

Your Cost of Living Will Go up More Than You Think

Put simply, there are just more things to buy when you have a baby. Some of these are regular and predictable, like diapers, but others are irregular and more expensive. To be honest, things that would appear to be luxuries to a non-parent start to feel like essentials to a new mom and dad (I’m talking about you, $60 Baby Bullet, and you, $120 Ergo Baby Holder). This new person may be small, but some our new budget items felt hefty.

For our family, some of the new expenses in our budget included:

  • Diapers
  • Clothes
  • Medical costs
  • Toys/books
  • An ever-growing collection of mats, seats and bouncers

Fortunately, all four of our son’s grandparents live within driving distance, and they helped out with childcare. Also, my wife chose to nurse our baby, rather than using formula. These were two big savings, but also deeply personal decisions.

To incorporate all of these new expenses into our budget, I started by divvying them into a few new categories: Toys/Books, Diapers/Wipes and Clothes/Toiletries. Then, within a couple of months, we added a new category to budget for baby swim and activity classes at our YMCA.

It wasn’t until I saw the total cost of these new categories that I realized just how much it costs to have a child. I mean, they say that kids cost a lot, but kids cost a lot!

Of course, eventually, your baby will stop drinking formula and start devouring whole grocery carts of food in a single sitting. When this happens, you can simply roll over “baby” costs into your other categories. But, at least initially, a new baby means some new budget categories.

Unexpected Expenses Pop Up More Often

So, I know a secret about budgeters. Aside from healthier finances, we love the other effect of a balanced budget—a sense of control. And when your baby is born, you’re going to have to give some of that up.

Sleep is no longer predictable. Punctuality? Ha! Those perfect systems for laundry, meal prep, or weekly planning have been adjusted or obliterated. Can anyone really tell that you wore these pants yesterday?

Not only will you have to roll with the punches to get through your days, but you’ll have to dodge more financial punches, too. Some expenses you just can’t plan for, like when your baby needs a special, and obviously expensive, type of bottle because he just won’t drink out of the one you bought. (Better buy a few, because you’ve got decidedly less time to wash dishes.)

My fix for this was simple: more money in the ‘Stuff I Forgot to Budget For’ category.

There’s An Upside, Too!

Your Priorities Become Obvious

As a new parent, suddenly your true priorities are crystal-clear—newborns are great measuring sticks for what matters the most to you (it’s them).

Even with YNAB’s rock solid rules, staying focused is hard. Things get in the way. You forget to check your budget before you go out for groceries, and you splurge on some expensive steaks or fancy snacks.

Keeping up the focus becomes a bit easier when you’ve got a living, breathing reason to keep your financial house in order (and you might have a spouse who will remind you in case you forget).

Budgeting is simply a list of priorities, and there’s no greater priority-maker than your newborn offspring. When our son came along, my wife and I cut back to free up cash, including:

  • No more thoughtlessly ordering apps and drinks while out for no special occasion (calamari isn’t that good, anyway).
  • Switching from a CrossFit membership to the YMCA and good, old-fashioned working out in the garage (we miss Crossfit, I can’t lie).
  • Giving up shopping at the mall as a recreational activity (Thank goodness for Amazon Prime).

Less Time for Leisure

This sounds like a bad thing, but it’s actually a positive change for your budget—and it’s surprising how much!

With a new baby, you won’t have as much time. Your ‘Eating Out’ and ‘Entertainment’ categories will definitely require less cash. You might skip the Friday afternoon socializing with the office buddies. Basically, any categories related to personal or recreational expenditures will take a temporary—and much needed—dip.

(Fair warning, don’t get too excited, you’ve got designer baby bottles to buy.)

New Baby? Priceless.

A new baby is one of the greatest joys that life can offer. I hope you found this post useful. And don’t worry if your sleep-deprived brain can’t remember these points—simply by following YNAB’s rules, you’ll naturally adjust your budget to accommodate all of the people in your household, even the tiny ones.

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How Your Budget Changes When Your Baby Is Born