Goals - January 2013
Choosing care providers for pregnancy and birth

Baby budget


Chris and I love to be prepared financially (as you know). For the past couple of years we'd been talking about how we could afford to have a family one day. At the time we were focused on the scenario of me staying home from work for a year or more and being a one income family. We though this might work once Chris has tenure and gets a raise (fall 2014) but it was still a stretch to maintain savings and keep up with current expenses. It was a bit stressful to think of how it could all work out.

After I found a job I love last year I realized I'll mostly likely want to return to work after having a baby. It also made the possibility of affording a baby seem within reach. So that's the scenario we started planning for once we got a positive pregnancy test. This past October we opened another joint savings account so we could start socking money away.

Right now our plan for when the baby is born is for both Chris and me to stay home for 3 months. I will have 6 weeks of paid parental leave and then I'll use an additional two weeks of sick time making one month of my leave unpaid. That will be two paychecks, or about $3,000, that we'll need to make up. Chris will use accumulated sick time through the end of the semester after which he'll be on summer break and so we don't have to make up for any of Chris's paychecks.

I'll return to work after 3 months but Chris will be on summer break so he'll stay home with the baby for an additional month or so until he has to return to work in mid-August. At that time we'll enroll our son in 3-5 days per week of day care. Chris's mom has offered to care for the baby one day per week and Chris will try to work from home one day per week so we are hoping not to have to do 5 days per week.

We haven't decided on a day care yet but we did tour one that we loved which would cost $740/month for 5 days/week or $480/month if we are able to do 3 days/week. This is also the most affordable place we've found; another day care we toured costs $1,250/month for 5 days/week. 

Currently we have $3,600 in the baby account and our goal is to save at least $6,000 by April. That will give us $3,000 to cover one month of my salary and will help defray the cost of day care for a few months as we work that expense into our monthly budget. We also still need to pay the other half of our doula's fee ($225 of $450, due at the end of the pregnancy). We are very, very, very lucky in that my health insurance covers all costs for my prenatal care and the birth. Our total out-of-pocket cost is $10, a co-pay that I had to pay at our very first appointment.

Right now we're not contributing a set amount to the baby account out of each paycheck but just adding in chunks here and there. We usually have a sizable ($1,000 - $2,000) tax return so most of that will likely go right into the baby account.

Because we already had saving into our emergency savings account built into our budget it's been relatively easy to just shift the savings from that account to the baby account and our other non-saving line items (groceries, entertainment) haven't been affected. It does mean that we aren't saving as quickly into our emergency savings. However, we have an $11,000 cushion should anything happen and I feel comfortable with that as long as we keep saving bit by bit into that account to reach 6-8 months of living expenses.

Our big entertainment spending, like travel, will also be affected. In years past Chris has had extra money from summer teaching and research and we've been able to put that towards traveling to new places. For the next couple of years we'll be focusing on visiting my family in Austin and taking shorter road trips to get out of town. We've had incredible travel opportunities since we've been together and I know we'll take bigger trips in the future together - as a family!

Other ways that we're already offsetting the expense of having a baby include planning to cloth diaper (and purchasing a set of gently used cloth diapers off Craigslist), planning to breastfeed for at least a year, and buying used whenever possible. 

So that's where the baby and our budget stand for now. There's more tinkering to do but we're off to a good start on saving and we *should* be able to ease into the expense of adding a Wharton to the household.