Pre-baby financial planning: get your baby budget worksheet so you’re prepared for maternity leave and beyond
I am SUPER passionate about planning and protecting your finances. Nothing can make you feel worse than not being able to pay your bills. AND money is one of the top things couples fight about. This is magnified tenfold when you’re planning for a new baby. But, it doesn’t have to be the case if you’re prepared. This article, plus the baby budget worksheet template, is set to get you 100% on track with pre-baby financial planning.
Since being a new mom is stressful enough, you don’t want to add finances to the list of things to stress about. When you have a new baby your budget WILL need to adjust. However, if you plan for this upfront and create a pre-baby budget, it’s something that you can implement even before the baby arrives.
If you haven’t thought a lot about pre-baby financial planning – you’re in the right place because I’m going to break it down for you step by step. And a huge part of this is preparing for unpaid maternity leave if that’s your situation. So, let’s dive right in.
This post probably contains affiliate links. That means if you buy something using one of my links I may receive a small commission – at no additional cost to you! How cool is that? It’s kind of boring, but feel free to read myfull disclosureif you want more info.
Here is what we did to create our pre-baby and maternity leave budget. There are five critical steps to consider as you’re making sure your budget is ready for baby.
1. Start your baby budget by asking yourself hard questions about income
The first step to create your financial plan for baby’s arrival (ideally even before you’re pregnant) is to ask yourself some hard questions.
- Do you plan to go back to work after the baby arrives?
- If you don’t plan to go back, are you 100% sure you can survive on one income?
- What are the discretionary expenses that you can cut out to make room for baby items?
Going in blind and just *hoping* you figure it out isn’t the best strategy. You really need to figure out your income needs and expectations as the foundation for your baby budget. This will also be critical to understand as you’re planning for an unpaid maternity leave.
Your first step is to finalize your income needs for both the short and long term, which leads me to step two. It’s almost impossible to understand income needs without having a great handle on your expenses.
2. Layout your financial plan and baby expenses in a spreadsheet
Childcare is the largest expense you’ll face if you choose to go back to work. For one child it was about 15% of our monthly expenses, surpassed only by home costs and about equal to food. With two kids in daycare, it will far exceed our monthly mortgage payment. You’ll need to make sure you have the cost of reliable childcare factored into your monthly expenses if you’re going back to work.
Add a line item in your budget for new additions like diapers and formula if needed, baby clothes, and accessories — anything you will need once you have a new little one. This includes diaper rash cream 🙂
Related: Here’s how we save on diapers. If you start stocking up on diapers during pregnancy, you’ll never have to pay full price.
If you want to get a general overview of what you’ll need and how much it will cost, check out the baby registry guide. You’ll get a lot of this stuff off your registry, but it’s helpful to set a baby budget before you even register.
You’ll be able to estimate what you’ll need to buy if you don’t get it at your baby shower, or as a gift. This is another big step in your financial plan for baby. You will then add these costs into your baby budget worksheet.
The good news is, some items you’re currently spending on will naturally decline (entertainment out, dining out, etc.) when you have a newborn. Even though some areas are obviously increasing, others will decline without a lot of sacrifices.
3. Revisit your budget and incorporate baby items and an unpaid maternity leave
Once you have a good overview of your new expenses, add them into your budget spreadsheet (or you can use my maternity leave and baby budget template by popping your email in the form above) and see where you land.
At this point, if you’ve previously balanced your income and expenses (by offsetting income with expenses and savings goals) your expenses will be above what you make. Now, we can make adjustments.
The good news is you’ve hopefully been saving each month, and you’ll now incorporate some natural adjustments I mentioned above.
Here are a few great places you can cut to prepare your budget for a baby:
- Revisit your entertainment and dining out spending
- Food is also a good place to cut out waste. If you don’t already meal plan, starting can save you a bundle. We also saved a TON by starting to shop at Aldi
- You may need to reduce your savings in the short term until your income grows. Childcare is a massive expense and most families can’t just absorb the cost and continue the pre-savings rate they had before baby. This is NOT a long-term strategy, so to protect yourself work to increase your savings every 3 months gradually so the budget shock isn’t too painful
- Start looking for other ways to grow your income (side hustle, planning your next promotion at work, etc.) This phase isn’t permanent, and the increase in expenses can be offset by additional income you generate
4. Don’t forget about longer-term expenses
So many people focus ONLY on saving money for maternity leave. Or figuring out how to afford the baby items and the costs of having a child for the first few years. While this is just a reality of having children, you can’t abandon all your other financial goals.
There are some expenses that will pop up with children that just aren’t a factor the first year. This doesn’t mean they shouldn’t at least be on your radar. Things like activities, classes, birthday parties, etc. should all be factored into your budget as the baby grows.
Additionally, saving for college can begin even before baby is born. If you haven’t started thinking about this yet, check into a 529 account ASAP.
Ideally, your income will grow as your baby gets older and these items enter the picture. However, it’s good to at least be thinking about how you’d cover extra classes, etc. within your current budget.
It is NOT an effective strategy to reduce your 401k or retirement contributions or not begin saving for college and say you’ll get to it later. News flash. Later won’t happen. All the aforementioned activities will pop in, and you’ll always end up spending as much as you have. Make long-term savings a priority now.
You can’t take out a loan for retirement. Don’t neglect your long-term financial goals because you’re having a kid today. You can take out a loan for college. That said, we weren’t thrilled with the idea of our kids having thousands (or hundreds of thousands) in debt for education, so we began saving early.
Long-term expenses (and potential growth in your kids/baby budget line item) can all be factored into your baby budget spreadsheet and template. Just create a line item for each of these long-term goals and ensure they’re a priority as you make your financial plan.
5. Begin making budget adjustments before your baby is born
One of the best things you can do to ease yourself into this new budget is to begin making adjustments and changes even before the baby arrives. If you’re covering daycare costs by cutting down your food budget, begin eating out less NOW before you have to.
The gradual changes you make before the baby gets here are less shocking than making a change all at once.
{Real-life example: We didn’t have any idea how we would pay my $1,500 student loan bill on top of $1,000+ monthly for daycare. This was something we needed to address before the baby arrived. We looked into refinancing to lower our rates, paying less monthly, switching to a longer-term and/or any combination of the above. The key was that we knew we needed a solution BEFORE we were hit with both bills in one month.}
Although having a new baby (or adding another to your family) is a huge adjustment – thinking through your budget before baby is born will relieve you of a LOT of future stress. Making a plan to fit major costs into your monthly expenses and living that life now will be incredibly helpful down the road.
Download your baby budget worksheet template
Now that you’ve thought through your big expenses, it’s time to put everything into action. Grab your maternity leave budget spreadsheet and calculate where you are with your income versus expenses.
You may be surprised to find out that with a little creativity and small adjustments to your current spending habits, it’s not as hard as you once thought to afford a child.
Prepare for unpaid maternity leave by creating a maternity leave budget in advance
Sometimes the biggest challenge when creating your baby budget is figuring how you’ll afford an unpaid maternity leave. Many times it’s not too challenging to make small adjustments and fit in the cost of raising a child. Often it’s harder to absorb these costs with a reduction in income.
The easiest way to afford an unpaid maternity leave is to begin saving now. While you might not be able to survive multiple months without your salary, you can divert savings in the months prior to having a baby so you can live comfortably while you’re off. I have a maternity leave budget template already pre-populated that you can easily customize with your own salary and expenses in the maternity leave budget spreadsheet.
I have an entire post that will tell you the exact steps you need to take to prepare your finances if you’ll be taking unpaid maternity leave after your baby arrives.
Related: How to prepare for an unpaid maternity leave.
Tools you’ll need to make your baby budget worksheet a success
The main thing you’ll need is your baby budget spreadsheet, some time, and an honest conversation with your spouse or significant other. However, there are a couple of things that will make life a lot easier.
A quick way to understand your current spending
We use Quicken to aggregate our expenses into major categories. This saves us SO much time, and allows us to update our budget spreadsheet every month in just under an hour. You can absolutely manually aggregate everything, it just takes a lot longer.
Recent pay-stubs and a copy of your recent bills
Grab your most recent pay stubs and monthly bills. This will get you started as you create your baby budget spreadsheet. You can populate your expenses and income if you don’t already have a budget created somewhere. This will help you as you work to add in other line items like childcare and maternity leave.
A general idea of baby costs, like childcare and baby items
If you haven’t already registered for your baby, check out this post to get an understanding of the cost of some of the bigger ticket items for babies. Ideally, you’ll get a lot at your shower or from family and friends. However, it’s always better to be prepared to foot the bill yourself.
Do some shopping around by calling local daycares to get an estimate of childcare costs. Nannies will be more expensive, family watching your child will be cheaper. It’s just good to have a baseline estimate if you haven’t fully decided on childcare just yet.
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Hope this inspires you to create your own pre-baby financial plan, and get budgeting before your addition comes!
Related: Your ultimate pre-baby checklist: Everything you need to do before your baby arrives
Pre-baby financial planning: get your baby budget worksheet for maternity leave and beyond
