Financial Planning for a Growing Family

How often do families really plan for a new baby? Studies show not very often, which is surprising considering the U.S. Department of Agriculture found the average cost of raising a child in 2018 through age 17 exceeded $233,610.

While the decision to expand your family cannot be evaluated by numbers alone, sound financial planning is key to peace of mind. The addition of a child will affect your budget, so it’s wise to revise spending habits and reallocate funds towards your growing family in advance of baby’s arrival.

Awaiting the Stork

Adding a child to your family can come in many forms. Whether you are considering traditional methods, IVF, surrogate, fostering, or adoption, there are a variety of costs to consider.

In 2018, the average cost of delivering a baby was between $5,000-$11,000, including regular check-ups, tests, procedures, and prenatal care. A typical C-section delivery ranged from $7,500-$14,500. In vitro fertilization or IVF is a multi-step process that averages $7,000 per cycle, not including the required medications which are an additional $1,500-$5,000 per cycle.

Pregnancy and maternity care are covered by health insurance plans by federal law, but this does not extend to delivery and newborn care. Check with your preferred doctors and specialists in advance to be sure they accept your current health insurance plan. Ask about deductibles, copays, and coinsurance so you can budget accordingly. Finally, be prepared for the possibility of increases in your health insurance premiums.

If your family turns to a surrogate to help bring your child into the world, allocate $50,000-$80,000 for an overseas surrogate or $80,000-$95,000 for one in North America. Don’t forget to account for travel and related expenses throughout the process. Adoption is another lovely way to expand your family. Costs range from $40,000 for newborns adopted in the U.S., to $44,000 for international adoptions, and vary based on travel, agency, and attorney fees.


As your family expands, you may find you need a larger space to accommodate the kids and all of their things, as well as to have ample room to host gatherings for birthdays and special occasions. Helpful advice on planning for a new home can be found here.

Keep in mind, the child tax credit increased from $1,000 to $2,000 in 2018, offering a dollar-for-dollar reduction on your total tax bill. Also, consider adjusting your withholdings with your employer to account for the little one.

Spreading Their Wings

Childcare, whether with a nanny or at a daycare facility is often between 10 and 20% of a family’s total income. If your employer offers a dependent-care flex spending account, you could save money by using pre-tax funds for child-care expenses.

Don’t forget to plan for extra-curricular activities too! Team sports, music and dance lessons are central to your child’s development and a significant portion of your budget. Eventually, your little one will be driving and need a car of their own, which brings with it increased insurance premiums and fuel costs. Creating separate savings accounts for each of these items early on and making regular, automatic deposits can help minimize expenses down the road.

Leaving the Nest

The cost of college tuition is soaring and therefore one of the most critical items in a parent’s budget. Develop a college savings plan to ensure you’re prepared to send them off. A robust budget should also include expenses incurred during middle and high school years such as tutors, practice tests, and entrance exam fees. Remember that generally kids can remain on their parent’s health insurance plan to age 26.

Sound financial planning can help you prepare for your growing flock and ensure your future family is ready for anything that comes your way!

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