The Finanical Effects of Transitioning To Parenthood

When we sit down and think about it, our transition to parenthood has really had a snowball affect on our finances. While before our child I would have easily recognized the expenses of a hospital birth, diapers, formula etc, with a baby there have been a lot less obvious effects on our finances.

Loss of 1 Income- My wife did not pursue a full-time position when we returned from China. Since we were expecting and we both believed it was very important for at least one of us to stay home with our daughter, my wife decided not to look for a full-time teaching position when we returned to the US.

Bigger House, Bigger Mortgage - We were living in a 2-bedroom townhouse whose monthly mortgage payment was only about 2/3rds what we are paying now. We thought our townhouse wasn't big enough to raise our family and felt a strong desire to purchase a family home. We bought a bigger house and with it came a much bigger mortgage, bigger utilities, more maintenance.

Time is More Valuable -With our child we have a lot less time available (if you can't tell by the reduction in blog activity). The value of our time has gone up significantly and as a result we are spending more money to save us what little time we can. Some examples include our robot vacuum cleaner and automatic shower cleaner.

Furniture/Decor - We setup a nursery in our home complete with furniture including a crib, changing table, glider, baby swing, bouncy seat. We also had to get all the essentials for babies these days including Pack & Plays, breast pump, car seat, strollers, and other things to keep our baby busy. My wife did a great job keep costs down by buying almost everything used at consignment sales or on craigslist. One of the few things we did buy new was our glider rocker at significant discount.

Family Car - Our car ended up dieing on us last year and we had to quickly buy a replacement vehicle, but we upgraded to a SUV to accomidate our growing family.

Baby Supplies - Baby consumables have been a hard expense to measure because then tend to get mixed in with grocery purchases, but they have been a constant expense for us. Diapers, baby wipes, formula, baby food, baby clothes, and toys need regular replenishment.

College Savings - Something I put a high importance on is building a sizable college savings fund. At one time I had a lofty goal of putting $5,000 away for each child of mine when they were born. That didn't happen, but we managed to put about $2,000 away so far in our 529 plans for our daughter. We also setup regular contributions of $75/mo and hope to grow that to a larger monthly contribution as our finances permit.

Heating/Cooling Costs - Probably a small drop in the overall bucket, but we have nudged our thermostat down in the summer and higher in the winter to make our baby more comfortable. Hopefully once our daughter is a little older we will adjust our thermostat back to more cost-conscious energy usage, however it has certainly had an impact on our current utility bills.

Medical Costs - The cost of a hospital stay for the birth and other associated medical expenses was obvious. The cost of medical insurance for not only for our daughter, by my wife (since she no longer has insurance through her work) and the regular doctor checkups was not.

Some other areas that have directly affected us yet, but I suspect will are additional life insurance, babysitting, and other expenses as our child gets older.

Overall the effect on our finances has been transformational. Almost every area of our budget has been affected by the addition to our family. When I stop to think about it I really wonder how folks who haven't built up savings as we have can cope with these adjustments. My wife and I are very fortunate to be in the position we are in.

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Comments (12)


Great job on recognizing the changes that will occur. Some comments to add for list.
Loss of income is the big issue. Hopefully you set up efund and will allocate some of your income for her for spending. She will have playdates/get together with other moms and will need funds. For baby supplies, go bulk (costco, Bj's etc) For college savings, good start, don't sacrifice retirement savings for wife and you. For medical, hopefully you increased healthcare savings plan for work for all those baby dr visits. There will be many.
Good luck.

Hi 2million,

This might be a bit too personal, but could you tell me what your approximate take-home pay per month is? Reason I ask is because I want to compare my own pay to yours and see if I can afford a baby. LOL

I second everything in this post.

With the exception of the upgraded house, I could have written a very similar story.

Last year, when we got the gas bill, my reaction would be to turn down the heat. But now if I did that, I'd end up waking to a cold crying baby at 2am.

I'll pay for the gas.

Do you plan to have more than one? If you do, of course many of your expense increase, and some do not, like the utilities. What goes through the roof is the value of time. It is incomprehensible until you experience it.

Another great post 2million. I will say that the impact to our ability to save was most felt during ages zero to five of our baby. After that, we managed to get underneath the expenses and were able to start saving again. We even managed to afford private school tuition for a full 8 years! A primary reason was that we had increased salary over time -- which you will also experience. Our biggest expense at this time is saving a minimum of $10K/year for college.

See, this is exactly why everyone says that if you wait until you can "afford" to have a baby, you never will!

This is exactly why they're not so obvious...if everyone sat down and considered all this ahead of time, NO ONE would think they could afford children.

Even if you choose not (or cannot afford) to become a one-income family, then you are paying exorbitant child-care costs. Not something you're inclined to skimp on, since you have to pay quality people quality pay to love on your baby all day.

It's scary to think where we'd be if I didn't already have a significant savings and an established career before we started having kids.

In Debt, how much in savings did you have before you had kids and what was your age when you had them?

Steve, we currently take home roughly $4.3k/mo.

Excellent article! I couldn't agree more with everything you wrote. My wife and I had a baby a year ago and I am going through the exact same process as you mentioned with the exception of a bigger house...It is amazing how some parents managed to raise 5 or 6 kids with a very limited income. Also, I value time alone now much more than I did when I was single with no baby. The most I value is a good night sleep which I haven't had in almost a year! :-)

Hi 2million,

Thanks very much for responding to my question about your take-home pay. Mmmm, I thought your take-home pay would be higher than 4.3k/month. Just assuming you make 100K gross per year, after tax (25%) that would translate to 75K net per year, or $6.3K/month. Am I missing something or are you calculating your net take home AFTER taking out cash for your 401K, etc.? My wife and I together make a combined gross salary of 90K per year. Out monthly take-home is 5.5K/month.

Steve, Yup that would be after all the deductions on my paycheck - 401k, charitable donations, etc

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,574,185

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