How to Afford a Baby

What is more expensive than a house yet weighs only about seven pounds? A: A baby.

One parent may decide to reduce work hours, job-share or even resign when the baby arrives. This requires some additional planning and close attention to your budget to accommodate the loss of income. Your employer might grant a leave of absence or allow you to work at home while you adjust to your new status as parent.

Taxes and Savings

A new baby brings some tax breaks that can put a small dent in that hefty price tag. The additional exemption and new child tax credit will save a middle-income family about $1,300 per year in federal taxes. The childcare tax credit can save $480 in taxes for the typical family, but you'll probably do better by running the expenses through your employer's flexible spending or cafeteria plan.

Outfitting a nursery can be a temptation to overspend. Saving $25 or $50 a month while you are expecting and searching for good used baby furniture (as long as it passes safety standards) can ease the strain.


  1. Check that your health insurance covers maternity and baby care
  2. Make sure pre-existing conditions are covered
  3. Get disability insurance before you're pregnant
  4. Make sure the non-working parent is insured
  5. Get a will or update your old will
  6. Figure out how much life insurance you'll need
  7. Review your employer's leave policy
  8. Investigate child care and flexible work options
  9. Be aware of tax breaks for children
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