How Does Having A Baby Change Your Budget?

About 2 years 3 months back, my LO (Little One) came home. As any first time mom, I took the little time I had reading up on how to care for a child. I browsed as many parenting blogs, forums, websites and Facebook groups as I could, I bought and pored through many books covering parenting a baby,I spoke to as many moms as I knew, just to know how to take care of this little soul.

I however did not spend as much time reading finance blogs to discover how to plan financially for a new baby, and I wish I had. Today, I would like to share things I have discovered about having a child and its effect on your finances, with the hope that an aspiring parent will plan their finances as well as they do the decor of the child’s room :-). I have encountered these issues over the last two or so years and I have handled them as they came up, I just wish I had prepared beforehand.

1. The real cost of a house help: Whether you are a working parent or not, you probably are going to hire a helper. The ordinary way to plan for this is to factor in the monthly house help salary into your monthly budget. That is what I did.  What I had not anticipated is the actual, extra  cost of having a helper in the house.

First, I decided to use an agency to hire a nanny and this required me to pay a one time deposit and a monthly fee to the agency. This meant that she cost me double for the first month, and a little more every month. Secondly, I had not anticipated that my home food and consumables budget would more than double. See when I was alone, I did not eat lunch at home and on most days I had tea for dinner after a late lunch.  With the house help at home, we had to have 3 solid meals, and this is expensive even if your helper is not wasteful as most are. On the positive side, we are eating much better than I was when alone, I eat out less, and I can carry food to work if I wish to. The final thing I had not anticipated was the cost of a helper’s absence. Whenever I have needed to change a help or my help has gone on leave, I have had to spend a bit more on a temporary helper.

In conclusion, if you are expecting your first child, it is advisable to increase your food budget by at least the equivalent of 1.5 more people, increase your house consumables by 0.5, and budget for at least 1.2 more on house help pay.

2. Your insurance costs are likely to skyrocket:  Having a first child is a nerve wracking experience. You worry all the time, and at the slightest cough you rush to hospital. You may feel the need to increase your insurance limits for peace of mind. Before LO, I had an outpatient limit of Kshs 35,000 , which was more than sufficient because I rarely fall sick. Logically, I should have doubled the amount to cover the LO, but parents rarely act logically. After the first visit to hospital for the LO which cost me Kshs 10,000 for a basic cream and antibiotic, I increased the outpatient limit to Kshs 100,000 for the two of us. This means that my cost of insurance has more than doubled, and this is a real cost if it is not covered by the employer or if you are self employed like I am. Please consider your insurance costs carefully, and if you do not have a medical cover, please get one.

3. If you are not careful, you end up buying a lot of expensive stuff you do not need: Every mother wants the best for their child, and often mothers are unsure of what the baby really needs. Retailers know this, and will exploit this weakness to get mothers to buy stuff. Walk into any baby shop and you panic that you do not have half the items they are selling as “must have” for baby care. These days the baby shops even have lists that you can use to shop. What no one tells you is that most of the stuff that is sold in baby shops is overpriced (and often unnecessary), you can get a cheaper alternative at the supermarket, and a couple of months down the line you will not be using most of these items. If you do not want to overspend on stuff the baby does not need, be conservative and buy only the basic essentials, then buy additional things on a need basis. In addition, compare the baby shop prices with supermarket prices especially on conventional things like buckets, basins etc.

4. They grow really fast! Go easy on the clothes: In line with 3 above, most parents buy more clothes than the child needs/will ever wear. Your mom will advice you to always buy clothes that are several sizes bigger so the child can wear the outfit for longer. I am not a fan of this, because it then means that the child is always in oversize clothes.  I prefer to instead buy fewer, right sized (or a size bigger) clothes every 4-6 months. A helpful tip: For the first 6-8 months, the baby spends 75% of his/her time in rompers and onesies. Save money by not buying elaborate outfits for this age.

Over to you. What do you wish you had known before you got your baby? How do you save money on childcare? Let us discuss in the comments.