How To

Budgeting for Baby

In the first year alone, BabyCenter.com says that an infant costs $10,158. This figure doesn’t even include the supplies you need to stock up on before your little bundle of joy arrives. That’s some serious dough! How could something as small as a baby cost so much?

My baby hasn’t arrived yet, but I’m already adjusting my budget for the first year of her life. After all, that $10k has to come from somewhere. So, how did I find five figures in my budget? Here’s what I carved out of my budget to make room for baby:

Killed the luxuries.

Do I still indulge in hour-long massages? Not anymore, unless you count rubbing a tennis ball into my tight shoulders by leaning against a wall. Is it excruciating? Yes. Is it cheap? Absolutely! We couldn’t justify the relatively high cost of massages, though I fully intend on sprinting to the spa if there is ever any wiggle room at month’s end. (Hasn’t happened, so far.) When I need a deep stretch, I go to yoga.

Minimized student loan payments.

Instead of doubling my student loan payment each month, I lowered it to the minimum payment. I’ve already been paying it for 10-plus years, so what’s a few more? Also, at 3.25% interest, I’m not worried about loads of interest stacking up. Of course, if your interest rate is higher, this may not make as much sense.

Reduced charity.

We cut out our cash donations to local charities, instead opting to donate items that we could have sold at a garage sale or on Craigslist. Our contributions to our alma maters took a hit, too.

Limited cell phone plans.

My husband dropped his data plan when he switched to a simple phone (I hesitate to call it a dumb phone out of fear he’ll return to his Droid), and I reduced my text message allotment. Still, my fantasy of a sub-$100 monthly cellular bill remains just that.

Raised deductibles.

We reviewed our car insurance policies and noticed the deductible for our 2005 Honda Element was just $250. We raised it to $500, saving a sizable chunk of change. If pressured, we may raise the deductibles for both our cars to $1,000. Selling one of our cars doesn’t make sense because both are paid-off and relatively inexpensive to insure and maintain.

Eat in.

I miss dining in restaurants, but not so much that I’m willing to charge something that I can’t pay off immediately. If we go out, we eat first and split an appetizer, only get dessert, or just stick to drinks. We’re are also saving money when eating out right now because most bartenders don’t charge for seltzer.

Pin-pointed costs.

We created breathing room in our budget by figuring out exactly how much certain bills are, instead of estimating. For bills that vary month to month, we took a three-month average. Now, we’re more confident in our final tally. I can’t stress how important using a household budgeting tool has been for making sure we stay on track.

Added life insurance.

We recently increased our life insurance plan. The additional $275 monthly bill tipped our budget closer to the red, but we decided the security was worth it.

We also are saving money by using cloth diapers, saying no to baby products we don’t need, and getting a lot of baby stuff for free!

Julia Scott writes the money-saving blog BargainBabe.com. She is due in January.