According to Department of Agriculture statistics, raising a child to age 18 can cost over $475,000—the price of a few luxury cars, a sizeable home in a middle-class neighborhood, or at least five years’ worth of paychecks. From birth to age two alone, you can expect to send about $11,000 per year. The costs do add up; there’s no way around it. But if you’re smart with your money, you won’t feel the pinch as much.
Formula is one of the biggest baby costs, if not the biggest. It can run you back more than $100 a month, or as much as $500 if your baby has allergies and needs more expensive brands. Obviously, the best alternative is to breastfeed as long as possible. It’s free, and several studies have proven that no formula can match the nutritional value of breast milk. If that’s not an option—some moms have conditions that make breastfeeding impossible, while others simply do not produce milk—buy powdered instead of liquid formula, and buy in bulk to save money.
Next comes diapers. According to Baby Center, this costs about $72 per month on average. But like any other baby product, the price points are all over the scale. You’ll be surprised at the price differences between department stores, supermarkets, and pharmacies. Look into reusable cloth diapers instead—most babies will need only three or four, assuming you wash them every other day.
If both parents are working, child care would also figure in the budget. In some areas babysitting costs as little as $10 per hour; in others, it’s $20 and up. Send them to a daycare center and you’re looking at a bill of $1,000 or so per month. Governments sometimes offer public daycares with discounted rates, so look into them as well. Of course, there’s also the option of asking a friend or relative to sit in, or having a neighbor do it in exchange for a favor.
Finally, you’ll need to invest in baby gear. This includes strollers, car seats, cribs, clothes, and diaper bags. Since these will all be outgrown, it usually doesn’t make sense to put too much money into them. Look online or ask around for hand-me-downs; even if you don’t get them for free, you’ll get a considerable discount. Make sure to save them for your next baby, and take good care of them so you can sell or give them away when the kids are bigger.