Ask an advisor: I'm having a baby. How should I financially prepare?

Raising a child costs hundreds of thousands of dollars in the U.S., leading some couples to wonder how they'll afford it.

Welcome back to "Ask an Advisor," the advice column where real financial professionals answer questions from real people. The topic can be anything in the world of finance, from retirement to taxes to wealth management — or even advice on advising.

For millions of people, having a baby is one of the most rewarding experiences of their lives — and one of the most expensive. The U.S. Department of Agriculture has estimated that raising a child to age 17 in the United States costs $233,610. The Brookings Institution thinks it's even higher — with today's inflation, the economic think tank clocked the total cost at $310,605. And neither of these estimates includes college tuition.

How can parents-to-be prepare for this massive expense? A public relations worker in Portland, Maine is anxiously pondering this question. She and her husband are expecting their first child this summer, and they're wondering how to get ready for the bundle of bills heading their way. Here's what she wrote:

Dear advisors,

My husband and I are going to have our first baby this summer. How should we prepare financially?

There are so many expenses to get ready for, it's a bit overwhelming. For the long term, we want to save for our child's college education. I know there are 529s and other accounts for that. What do you recommend? And how much should we put into it?

READ MORE: 5 financial tips advisors can offer for expectant parents

For the shorter term, we expect to spend upward of $7,000 on the delivery. And I'm sure we're about to spend lots of money on diapers, baby formula, strollers, toys, etc. How do you recommend coping with those expenses? Should we start saving for those now?

My husband and I make a total of about $180,000 per year. Can we raise a child without breaking the bank?

Thank you for your help,

Mother-to-be in Maine

And here's what financial advisors wrote back:

Think short-term

Larry Luxenberg, certified financial planner and owner of Lexington Avenue Capital Management in New York City

There's no better investment than a new baby. You do want to have some liquid savings available because lots of little expenses crop up. But with your income, these expenses should be manageable. You can cut some expenses by acquiring things like a stroller at Freecycle or similar sources and by letting family and friends know what you need. Everyone will want to give baby gifts. It's natural to worry about long-term needs like college, but you have time for that. If I were you, I'd focus on the short term: getting some extra sleep and enjoying every minute of one of life's highlights.

Remember to choose a guardian

Jessica Hultberg, CFP at Keeler & Nadler Family Wealth in Dublin, Ohio

You can definitely raise a child making $180,000 a year in combined income. Saving for a 529 is a great idea, but you don't need to be aggressive with this in the beginning. Better yet, open a 529 and let family members and friends contribute to it if they want! 

Diapers will be expensive; I suggest asking for diapers in your baby registry. 

The most important thing to worry about once your baby is born is that the baby is taken care of if something were to happen to you or your spouse. You will need to make sure you have a living will, so you can assign a guardian. Also, you will likely want to apply for life insurance. If you were to pass away, you want to make sure someone you trust is taking care of your child and has the financial resources to do so.

Don't forget retirement

Kashif Ahmed, CFP and president of American Private Wealth in Bedford, Massachusetts

First of all, heartiest congrats on the blessing that is coming! I love babies! Before you think about college funding, you need to ensure you are on a great path toward securing your own financial future. You can borrow for college, but no bank in their right mind will lend to you to live in retirement, when you don't have any income to pay back the loan.

Without knowing your full picture, I can say with a $180,000-per-year income, you should not be stressing about child expenses. Yes, children are expensive to raise (I raised four), but you can also be reasonable with purchases. For example, a $100 crib from Walmart is just as good as a $2,000 one from a "fancy" name. It's a crib.

Here's a tip: Tell all friends and family not to give toys, but to make contributions to the baby's 529 plan instead. It will add up quickly, and the gift is far more meaningful that way.

Start saving now

Ryan Salah, CFP and partner at Capital Financial Partners in Towson, Maryland

My reply is especially timely, as my wife gave birth to our first child just three weeks ago! You're right, it can certainly be overwhelming to think about the financial impact of your newly expanded family. With that said, you're already doing exceptionally well by thinking ahead on all these items! 

I would recommend saving as much as you can between now and the birth. In my view, there is no benefit to delaying these savings. In addition, if you plan to have a baby shower, put the bigger items on a registry. That's what it's there for. I wouldn't worry about too many toys, especially in the first several weeks (you'll get a bunch from friends and family anyway). Focus on putting money away for the hospital and immediate expenses. 

Also, depending on when your open enrollment is (unless it's in the fall), consider getting a better plan if you don't already have one, maybe one with a lower deductible. This all depends on what the offering is, as you might already have great coverage for birth. 

In sum, get in the habit of saving additional money now. That way it won't feel as financially stressful once the baby is here.

Check for tax credits

Ryan Derousseau, CFP at United Financial Planning Group in Hauppauge, New York

Yes, you can definitely succeed in raising a child without breaking the bank — but many of your expenses may change in the near term. If you're certain about the $7,000 for the delivery, then start saving up for that now. You might add the big expenses, like a stroller or car seat, as well, if you're not getting them as gifts. Since you know those expenses are coming either way, it gives you a very specific number to save for. Start incorporating that into your monthly spending, and it'll be good practice for the expenses that arise when your child comes.

For other stuff, like diapers and toys, it'll be a mix of gifts, secondhand items and purchases. If you have family, involve them in the process and share the things you need — often they want to share in the joy through gifts. And diapers are always needed — you won't believe how much you'll go through! The 529 can also be a good option for gifts, if you're set in other ways. 

Finally, make sure to take advantage of the tax benefits of having a child. There's a $2,000 tax credit for most new families federally, and you also might have a tax benefit in your state. It's worth a look!

Baby's first sinking fund

Leanne Rahn, financial advisor at Fiduciary Financial Advisors in Grand Rapids, Michigan

As a mama of two myself (including a newborn, so I'm right there with you!), I know how overwhelming this can feel. Between the birth, doctor visits, baby supplies, childcare, etc., it can feel like you are starting from a blank slate with no reference points. 

Here is my advice: Sinking funds will be your new best friend. A sinking fund is where you set money aside each month with the ability to spend from it along the way. I would recommend a few specific sinking funds like "baby supplies," "clothing," "medical expenses" and "toys."

For baby supplies, use Amazon's subscription services for things like diapers and wipes, since you will need those no matter what. By signing up for this, you often get a discount and don't even have to think about when you need more diapers — a win-win!

For clothing, this amount will be up to you and unique to your situation. My tips would be to shop at thrift stores, look for mothers selling bundles of clothes on Facebook Marketplace or ask to borrow clothes from another mom friend. You can definitely save a lot of money here. 

Also, start setting aside money each month for medical expenses. Between the monthly scheduled appointments, unexpected urgent care visits, medicine, etc., these costs will definitely increase. Better yet, save for them in a health savings account or flexible spending account to save on taxes!

Lastly, there are a few different options regarding future education-saving vehicles. Some of my favorites are 529 plans, Roth IRAs and UGMA (Uniform Gifts to Minors Act) or UTMA (Uniform Transfers to Minors Act) accounts. The biggest thing I'd encourage parents to consider before deciding on a vehicle is what they want the savings to be intended for. This is where working with a fiduciary financial advisor can provide confidence, structure and guidance on how to best grow your child's savings and ensure the plan is aligned with the timeline, risk tolerance and overarching goals.

Focus on your "right now" costs like birth, newborn essentials and any savings needed for unpaid time off. Once those are in order, use my tips and tricks above to confidently go into the fourth trimester (and beyond!) without stressing about money. Welcoming a new family member does not have to break the bank when you plan accordingly. Congratulations and enjoy the special gift of being a mama!