Dec 11, 2023

Financial planning, Parenthood

Building your family: financial planning for future parents

Building your family: budgeting and financial planning for future parents
Building your family: budgeting and financial planning for future parents

Emily Luk

CPA, CFA - CEO and Cofounder of Plenty

Whether you two are planning for a baby or already expecting, you may be wondering how you’ll be able to afford it all. Wherever y’all are in your future family journey, now is a great time to start thinking about how much money you want to save for medical expenses and quality care for you and your baby. 

We’ll cover:

  • Typical medical expenses to expect before and after having a baby 

  • How to plan for parental leave 

  • Common expenses to save for during your baby’s first year  

Medical expenses: Before & after having a baby

How much you could end up owing in medical expenses will largely depend on whether or not you're insured, and what your insurance covers. 

Let's dive into some common expenses when you have a baby. Plus, we’ll look at ways to maximize care while minimizing spending.

How much does it cost to have a baby? 

It's helpful to think about medical costs in terms of prenatal, delivery, and postnatal care. 

Prenatal: Expenses that occur during pregnancy fall under prenatal care. Examples include routine blood tests, check-ups, and ultrasounds. Depending on your insurance coverage, prenatal care can cost anywhere from a few hundred dollars to several thousand dollars. 

Delivery: Delivery expenses happen once a mother goes into labor and gives birth. They may include hospital stays, medications such as epidurals, exams and procedures, and surgery. Costs can vary widely depending on the type of delivery and where you give birth. 

According to a recent report, the average uninsured cost of a vaginal delivery in the US is around $12,000, while the average cost of a C-section is around $22,000. These costs increase if there are complications during delivery.

Postnatal: Costs that occur after delivery fall under postnatal care. Examples can include follow-up appointments for mom and baby, lactation consultations, prescription medications, and any necessary procedures. Costs can range anywhere from a few hundred to thousands of dollars.

Ways to save money while still accessing the care you need

The good news is there are ways to make having a baby more affordable. Here are a few things we recommend to help save money while still accessing high-quality care. 


Talk to your insurance provider. Reach out to your insurance company if you’re planning on having a baby, or as soon as you test positive. Here are some helpful questions to ask.

  • What prenatal, delivery, and postnatal services are covered, and how much?

  • What is your deductible? (aka the amount you may need to pay out-of-pocket before the insurance company pitches in) 

  • What is your out-of-pocket maximum? (aka the upper limit you may have to pay in a calendar year; after you reach this point, your insurance company may cover any remaining covered health care services). 

  • Are costs for the baby included in this maximum and for how long? (They usually aren't, but it’s worth asking).

  • Are there particular hospitals or doctors you're required to use in order for your insurance to cover them, such as in-network providers?

  • Is any out-of-network care covered? (This can help you choose your care providers for pre- and post-natal care and delivery. It could also be important if you need to see a specialist for any reason.)

Employer benefits

Get strategic about open enrollment. If you’re planning to start a family, or if your expected pregnancy due date will take place in the renewal year, use the open enrollment period to estimate how much you’d pay for baby-related care under different plans. Understand the different out-of-pocket maximums and chat with HR if you have questions. 

It may make sense to pay a higher monthly premium if it can help you save thousands in medical expenses. And be sure to insure your baby as soon as possible by contacting your insurance provider. Most plans allow for this as an exception outside of open enrollment periods. 

Use a Health Savings Account. If you have a high-deductible health plan, you may be eligible for a Health Savings Account (HSA). If you're not sure if your health insurance makes you eligible for an HSA, read the policy for coverage details or contact your insurance company. If the insurer can't confirm that your plan is HSA-eligible, assume that it isn't.

Some of the HSA qualification requirements for health plans include:

  • A deductible of $1,500 or more for an individual plan or $3,000 or more for a family plan.

  • A maximum out-of-pocket limit of $7,500 for an individual plan or $15,000 for a family plan.

In addition, you can’t be on Medicare, be claimed as a dependent on someone else's tax return or typically have any other health coverage. 

If you qualify, you can use the funds in your HSA to pay for medical expenses related to having a child, such as prenatal care, delivery, and postnatal care. 

Not only can using an HSA help you save money on medical expenses, but it can also offer tax benefits. This is another consideration during your company's open enrollment. 

Research & Due Diligence

Look at local options for prenatal care and delivery. Where you receive prenatal care and deliver your baby can have a significant impact on your medical expenses. You may find that some facilities offer lower prices than others, without any reduction in the quality of service they offer. Ask around for others who’ve experienced these facilities and call them directly to understand their costs and services. 

Become a member in a parents group. Networking with other parents is not only a great way to build a new social network, it’s also a fun way to get ideas on cost savings and local resources. You can get helpful recommendations and insights on local doctors, hospitals, childcare expenses, schools, and more.

Double check your bills and don't be afraid to negotiate. If you receive a large or unexpected medical bill, ask for an itemized version and check for errors. Medical providers make mistakes sometimes too. So check to be sure you weren’t charged for anything you didn’t receive. It’s also a great opportunity to ask if they offer any discounts or payment plans.

With a little research and planning, it is possible to reduce some of the medical expenses around having a baby. Understanding your insurance policy, shopping around for care options, and taking full advantage of discounts and employee benefits can provide peace of mind that you’re saving money while receiving quality care for you and your baby. 

How to plan for parental leave

As early as possible in your pregnancy plan, learn about your employer’s parental leave policies and disability insurance options to understand what choices are available to you. 

Even if your employer doesn't offer paid leave, the federal Family Medical Leave Act (FMLA) provides up to 12 weeks of unpaid leave during a 12-month period to care for a newborn, adopted, or foster child (as well as a number of other care options). 

This means that no matter what state you live in, your employer must hold your job for you during those 12 weeks, even if they don't pay you. 

An additional 11 states offer paid family leave. See if your state has its own benefits, which can be tacked onto FMLA and what is covered. Once you know all of your options, it’s easier for you and your partner to decide how much leave you each want to take and when. 

Some couples take leave together, while others stagger their time off from work. The benefits of staggering are that you can each get precious 1x1 time to bond with your baby and delay hiring childcare for longer, which can be a significant savings. 

Expenses to budget for in the first year 

Before having your first child, it's helpful to see how much you’re spending each month, because that number is about to go up. How much money you’ll spend raising your baby during the first year will vary based on your family's decisions and where you live. 

If you’re unsure yet how much to budget for, a helpful starting point is to aim for at least $12,000-$14,000 or about $1,000-$1,170 per month in ongoing expenses for the first year and $1,000 in baby gear upfront. 

Keep in mind this is separate from the cost of delivery, which averages about $10,000 but can vary a lot depending on your location and insurance coverage. And just like how wedding budgets can span a large range depending on how personal tastes and preferences, so can baby budgets.

Some higher end couples end up spending between $20,000 and $50,000 on their baby in the first year (Source: NY Life, 2023). That sure adds up fast, doesn't it? 

Here's a rough breakdown of where all those baby costs can come from. 

  • Baby gear - If you're unable to get free hand-me-downs or buy gently used items second hand, plan to spend about $1,000 up front on essential supplies like strollers, cribs, and carseats. 

  • Diapers and wipes - When you gotta go, you gotta go and babies go a lot. Babies typically go through 2,500-3,000 diapers in their first year. Expect to pay between $50-85/month for the first twelve months.

  • Food - It costs roughly $1,200-2,200 to formula feed for one year. And while many people think that breastfeeding is free, there are actually costs involved too. Nursing supplies and time away from work can cost upwards of $1,000 a year. Then, once you introduce solid foods for baby, expect to pay another $50/month.

  • Bottles and pumps - Whether you're pumping or using formula, you'll want to invest in bottles and potentially a breast pump (this may be covered by your insurance), and infant formula. Bottles will be a bigger up-front cost, but you’ll need to replace them occasionally. Plan for $50/month for bottle-feeding-related expenses.

  • Clothing - Babies outgrow clothes quickly and are somehow always losing their little socks. Clothing expenses can run roughly $50/month on average, but how much you spend depends a lot on clothing brands and if you have a great source for hand-me-downs. 

  • Childcare - Many modern couples are made up of two full-time working partners. If you’re one of them, a large portion of your family planning budget will involve childcare. The most common options are daycare or hiring a nanny. On average, costs can run around $900/month for daycare and $2,300 for a nanny. Keep in mind, pricing in expensive coastal cities like San Francisco can easily cost two to three times more. Even if you’re not returning to work, you’ll likely want to budget some hours for a babysitter. Sitters cost roughly $20-30/hour on average for 1 child.

How to start saving for parenthood

Ready to get started with your saving goals for family planning? Plenty makes it easy to build savings for a baby. We help you prepare for the expected, and the unexpected.

When you set up a Baby goal in the Plenty platform, we’ll walk you through your savings goal step by step. Some things we take into account include your location, whether or not you're insured, and when you want to have a baby. 

If you or your partner decide to take unpaid leave, we account for that too. We’ve done the due diligence for you and estimate medical expenses using:

  • State-averages for prenatal expenses including doctor appointments, ultrasounds, and testing (hCG, Chorionic Villus, and amniocentesis tests)

  • State-averages for vaginal or cesarean birth expenses including anesthetics, delivery room usage fees, testing, IVs, and more. 

Once you have a total savings target, we create a plan and make it easy to contribute to that savings account to give you peace of mind. Regular contributions add up faster than you think, especially if you’re doing it with a partner. And our Direct Indexing investing portfolios are designed to help you earn more money, faster. 

With careful planning, smart choices, and a good support system, you can achieve a strong financial foundation for your family.

Start your free trial with Plenty today.

-The Plenty team 



Emily Luk

CPA, CFA - CEO and Cofounder of Plenty

Emily is the ceo and cofounder of Plenty. Started by a husband and wife team, Plenty is a wealth platform built for modern couples to invest and plan towards their future, together. Previously, she was VP of Strategy and Operations at Even (acquired by Walmart/One) and a founding team member of Stripe's Growth and Finance & Strategy teams. She began her career as a VC, and was one of the youngest nationally to complete her CPA, CA and CFA designations.

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