The Hidden Costs of Having a Baby

costs of having a baby

Last Monday I wrote a response to an article claiming that the first year cost of having a baby was $12,000. The overriding point of my response was fairly straightforward: $12,000 is simply an average across US households and really doesn’t reflect your personal situation. I used a few examples from my own household to show how you might actually end up spending much less than that. But the main point is that you shouldn’t let news reports or national averages dictate how you live your life. There are many people raising incredibly well-adjusted children on much less than $12,000.

But there were two commenters who brought up important points that I had either missed or miscalculated. In both cases, the points they raised could easily add to the cost of having a child, and potentially push it well beyond $12,000. These points are important for anyone thinking about having a baby to consider, so I wanted to discuss them in more depth today.

The cost of pre-natal care, labor and delivery

Holly Johnson brought up a great point about the cost of medical care associated with childbirth. According to WebMD, the average cost for pre-natal care is about $2,000. For a regular uncomplicated birth it’s $9,600, and for an uncomplicated cesarean section it’s $15,800. Just as with the $12,000 above, these are simply averages and your actual costs may be more or less than this. But these numbers are helpful simply in that they demonstrate that the medical part of having a baby is expensive.

Depending on your health insurance, you may be on the hook for some, none or all of this. You can check with your hospital to get a sense from them what the expected labor and delivery costs will be, and you should definitely check with your insurer to understand what they will and will not cover and what you may have to pay. Depending on your coverage, even a totally healthy, uncomplicated birth could set you back $10,000 or more right from the start.

It’s also important to keep in mind that your birth may have some complications. Anything that deviates from the norm will likely cost more money. Whether that actually costs you personally more money again depends on your insurance plan, but whether or not there are complications is completely out of your control. If you might be on the hook for these costs, you should have a plan for handling them.

The inevitable cost of daycare

Another big point I missed, and the one that pushes our actual costs well over $12,000, is the cost of daycare. I did address daycare in the article, explaining that it accounts for almost $4,000 of the total average cost, but that it’s an expense we’ve avoided by having my wife stay home. I argued that bypassing this cost significantly lowered out first-year expenses.

But my friend Mrs. PoP asked an important question in the comments:

Did your wife work more before she stayed home with your little one? Do you consider lost wages as a childcare cost in that manner even if you guys don’t pay daycare?

This is a great point, and one I had totally overlooked. See, we had considered the fact that she was losing income, but only in the context of comparing the cost of daycare to the lost wages. In that comparison, things came out pretty even, especially considering the part-time work she’s able to do now. But that’s not the real question here.

The real question when considering the full cost of having a baby, is how much more income we would have if we didn’t have a baby and my wife was therefore still working full time. When we look at it that way, our first-year costs are MUCH higher than $12,000. By deciding to have a baby and have my wife stay home, we sacrificed a significant amount of income. That’s a real cost that has to be considered.

The same thing is true when looking at maternity leave, another point that Holly brought up. She was only paid half her salary during her 6-week maternity leave, which again is a real cost in the form of lost income that should be counted.

Unless one of the parents had no income before the baby is born, or unless you’re somehow able to handle the daily childcare yourself without sacrificing income (yeah right!), you are paying for daycare one way or the other. Either both parents are working and you’re directly paying to send your child to daycare, or one of the parents stays home and you’re paying in the form of lost income. Failing to consider this, as I did, can lead you to dramatically underestimate the financial cost of a baby.


The spirit of my original article was meant to be optimistic. I didn’t want people to be scared off by big numbers and think that parenthood wasn’t attainable for them. I also didn’t want them to think that they had to spend a certain amount of money to be a good parent. I wanted to point out real examples of people raising children on less, to show that it was possible to be different and still give your children everything they needed.

I still agree wholeheartedly with all of that. But there’s also a reality to face that raising a child can be expensive and that reality shouldn’t be taken lightly. Bringing a child into the world means you suddenly have someone who is 100% reliant upon you to take care of them. You don’t need to be Warren Buffet before tackling this challenge, but understanding the responsibilities and crafting a plan for financial security will certainly give you a head start towards building a happy, opportunity-filled life for your family.

Photo courtesy of andrewmalone

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42 Comments... Read them below or add one of your own
  • Great follow-up piece. I think one of the big take-homes for me in these discussions is that family is a huge asset when it comes to raising kids without huge costs. Having retired grandparents willing to look after a little one a couple days a week definitely eases the child care cost burden.

    • Matt @ momanddadmoney August 20, 2013

      Oh yeah, family is definitely huge. Even if it doesn’t allow one of you to work full time or anything like that, it’s still such a big help to have trusted and willing family members when you need some help. It’s been priceless for us.

  • DC @ Young Adult Money August 19, 2013

    Hey Matt I appreciate you going over some of these additional costs, as they were things I was thinking of as well. My wife nannies part-time for another young family and being on the receiving end of that deal is definitely nice, but also makes me realize how much of an expense daycare or a nanny will be. My wife is pretty set on not being a stay at home Mom so this will definitely be an expense we have to factor in.

    As far as health care, isn’t it fair to assume you will max your out-of-pocket costs? Even if the entire birth went towards a family out of pocket max, I can’t imagine it would be more than $8-$12k (which isn’t anything to sneeze at). If I was having a kid, I would assume my wife’s out of pocket max would be what I’m paying.

    • Matt @ momanddadmoney August 20, 2013

      I don’t honestly know enough about the different variations between health plans to say for sure that you would max out the out-of-pocket costs. It’s certainly a good thing to know to get an idea of a worst-case scenario, but it’s definitely worth talking with your insurance company directly and possibly the hospital as well.

  • MyMoneyDesign August 19, 2013

    Good point about the daycare expenses. At one time I was almost spending more on daycare than my actual mortgage. Now it all goes into our Roth IRA’s and 529 plans.

    • Matt @ momanddadmoney August 20, 2013

      Daycare is certainly a worthwhile expense, but I’m sure it’s nice to have that money flowing into savings these days.

  • Alexa Mason August 19, 2013

    Childcare is my biggest expense but I still don’t think raising a child is expensive as most people make it out to be. It’s as expensive as they want it to be! I do pay $150 a week for private babysitting for my two kids which comes to about $7800 per year. Which is definitely my biggest expense.

    • Matt @ momanddadmoney August 20, 2013

      $7800 is a pretty significant amount of money. And it’s not something you want to completely skimp on because it has such a big impact on your child’s quality of life.

  • Holly Johnson August 19, 2013

    The most expensive part of having kids for me was the medical costs. I hated having a 4K deductible then having to take 6 weeks at half pay and 6 weeks with no pay off of work. Ouch!
    With that being said, kids are totally worth it! I would do it again in a heartbeat. It was the best money I’ve ever spent =)

    • Matt @ momanddadmoney August 20, 2013

      I definitely agree that they’re worth the cost, but I also think it’s important for people to evaluate whether they’re worth the cost to them. You have many choices about how much you spend as a parent, but no matter what it’s going to be a significant amount of money. Some people will be happy to do it, and others might not or might really struggle because of it. Knowing some of the realities, such as your medical and maternity leave expenses, is helpful in making the decision.

  • grumpy rumblings August 19, 2013

    Yup, the income she’s not getting is what economists mean when they talk about “opportunity costs”.

  • Edward - Entry Level Dilemma August 19, 2013

    I’ve been told I had a couple babysitters when I was very young, but mostly, my mother just took me to work with her. When you are the head of a motel’s housekeeping staff and you are married to the boss, you can get away with those kinds of things. 🙂

  • Laurie @thefrugalfarmer August 19, 2013

    I agree with Alexa here. There are often ways around some of these bigger expenses, as you pointed out too, Matt, last week. I think the point is to really understand the basic costs, and then the potential higher costs that could come, like Holly pointed out, with birth complications or whatever. Prepare for the worst, work toward the best, I guess.

    • Matt @ momanddadmoney August 20, 2013

      “Prepare for the worst, work toward the best”. Completely agree. But I also think it’s worth pointing out that Alexa’s childcare costs are $7800. That’s a significant amount of money. Depending on where you live and how you choose to do it, it could be less, but there are very real costs involved too. I think that having a sense of those realities is invaluable if you want to be truly prepared for the experience.

      • Laurie @thefrugalfarmer August 20, 2013

        Exactly, and Alexa’s childcare costs are pretty low compared to what many cities charge for care for two kids, but then again, compared to her income, they are very high.

  • Andrew August 19, 2013

    Well this is a timely post for me! Originally we were going to become a one income family as it didn’t make financial sense for my wife to go back to where she worked, but now that has changed. It was still a tough decision though. Now we have to look into childcare. I may also take some time off…I have no paid paternity leave but I do have a good amount of sick/annual leave I can use. As for costs of labor/delivery…I’m waiting for that bill. If they try to charge me for that or even the health insurance for that, I will be sure to remind them they sent us home where we eventually delivered the baby ourselves!

    • Matt @ momanddadmoney August 20, 2013

      You guys are in an incredibly interesting position in terms of the costs involved with labor and delivery. I’d be very interested to hear how that turns out.

      Good luck looking into childcare. I know it won’t be cheap in NYC, but it will be interesting to hear the different options you guys evaluate and what you eventually decide on.

  • Budget & the Beach August 19, 2013

    It seems like the US healthcare system and also work laws make it even harder for parents. I don’t know all the exact facts and figures, but I think in outer countries the blog is softened a lot more with company policies that support parents more, and better healthcare costs to parents as well. It’s tough!

    • Matt @ momanddadmoney August 20, 2013

      I’ve heard of that too, though like you I don’t really know the facts on it. It would be interesting to evaluate the benefits vs. the extra costs in premiums or taxes. I do think that it’s important to support a parent’s rights, especially moms. I think it’s great when companies have policies that really give parents some time to adjust without negatively impacting their status at work.

  • Grayson @ Debt Roundup August 19, 2013

    Daycare is what costs us the most by far. There is nothing that even comes close to that cost.

  • Debt and the Girl August 19, 2013

    Having a child has always scared me a little bit. The costs seem so astronomical. I know people do it but I get stressed just thinking about it.

    • Matt @ momanddadmoney August 20, 2013

      I don’t think it has to be astronomical, but there are definitely some significant costs to consider. I do think that it’s a good idea to make sure you feel financially secure before diving in, but I think if you run some of the numbers yourself and find ways that your personal situation might be different from the norm, you can find a way to make it work. With that said, some people simply don’t want to have those extra expenses, and that’s totally fine too. To each their own.

  • Shannon Ryan August 19, 2013

    Great points, Matt! I didn’t think about the prenatal and delivery costs, which can vary like you said. We had higher costs with Taylor as both of us had to stay in the hospital longer than I did with Lauren. The girls are definitely worth it but it’s smart to calculate the cost so you are as prepared as much as possible.

    • Matt @ momanddadmoney August 20, 2013

      Our hospital bill with our first son wasn’t bad, but you never know. I definitely agree that having some idea of what the different costs might be is incredibly helpful as you prepare.

  • John S @ Frugal Rules August 19, 2013

    Good points Matt! There are so many hidden costs with little ones that it’s crazy. That said, you just have to prepare as best you can and look for ways to cut costs in other areas. Our insurance was pretty good at the time and only had to pay about $1500 per delivery. I’d hate to know what it’d be now with our HDHP.

    • Matt @ momanddadmoney August 20, 2013

      I’ve always thought that I’d want an HDHP, but you make a good point that it might be much more costly while you’re in the pregnancy years. I don’t have the option anyways, but it’s a great reminder that if you do have choices for health insurance it’s important to compare the characteristics with your family’s specific situation. Each kind of plan is going to be better for different circumstances.

  • Done by Forty August 19, 2013

    Man, puppies instead of babies are sounding better all the time…

    The TCO of children does seem to add up pretty quickly, especially when you factor in child care & lost wages. But if you’re going to spend money on something, might as well be progeny. Like Holly said…it seems like money well spent.

    • Matt @ momanddadmoney August 20, 2013

      Haha, you want low cost? Stick with cats. Low cost and low maintenance. Hard to beat.

      Totally agree that it’s money well spent.

  • femmefrugality August 19, 2013

    And those are just the costs for the birth itself. Don’t forget about AT LEAST two nights in the hospital for a normal, uncomplicated vaginal birth. Mom and baby get charged separately. And then there’s food and other misc hospital expenses. I mean, insurance usually covers this, but if we’re going into how big that hospital bill can be…

    • Matt @ momanddadmoney August 20, 2013

      I think those numbers from WebMD include the entire hospital stay, though I’m not 100% sure. But you’re absolutely right that you need to consider the stay as well as the actual delivery. And that stay can be longer than normal if you have any kind of complication. As you say, the costs can really start adding up.

  • Pauline @ MakeMoneyYourWay August 20, 2013

    I would consider the lost income as a daycare cost but it is usually less than the full salary (no more commute, reduced taxes, no more dressing for work etc..) that often ends up being less than the cost of daycare on a normal salary.

    • Matt @ momanddadmoney August 20, 2013

      It’s definitely less that the full salary, just because of taxes alone. That’s one of the reasons that having a parent stay at home is typically less of a financial impact than people think. For us, beyond taxes, there weren’t that many additional expenses that went along with my wife’s job. But you’re absolutely right to consider all of the costs involved, not just the absolute salary number.

  • Tie the Money Knot August 20, 2013

    I recall a guy without kids expressing absolute disbelief in the costs I shared involving daycare. He really thought it was like $100 or $200 per month, as a norm.

  • Alexandra @RealSimpleFinances August 21, 2013

    Factoring in lost wages is a very good idea. Unless your spouse makes less than child care would cost (I make about $100 less per week than it would cost us for a decent day care around here), then you’re right; you aren’t saving money!

    There are cheaper child care options out there, of course I signed up for a babysitting website to make some side money, and I was shocked to see how many people expect to pay $5 per hour (my rate is $15). I don’t understand it, but apparently they do find people!

    • Matt @ momanddadmoney August 22, 2013

      On your first point, what I’m really trying to say here is that it’s not just about comparing wages to daycare. That’s how you decide whether it makes financial sense to have one parent stay home, but even if you save money over daycare by staying home you’re still paying in the form of lost income. If you didn’t have a child, you wouldn’t have to stay home OR pay for daycare, meaning you’d have your full income. That is lost or at least decreased one way or the other when you have a child.

      • Alexandra @RealSimpleFinances August 22, 2013

        Good point. We’re planning on having a child soon, so I really think you for all these tips! I may have been heading into the process a bit disillusioned with how much everything would actually cost.

  • Pretired Nick August 21, 2013

    The medical costs for our birth cost over $100,000! Fortunately we had awesome insurance at the time that covered 100% of everything. We didn’t spend even a penny on anything medical related, except my parking at the hospital and some food while we were there.
    We did pretty well keeping other costs down as well, but we went a little crazy on some things that we’re now trying to sell on Craigslist. The hard part with a first baby is you don’t know what you don’t know and you have to wade through a lot of fear-based marketing to make the right decision.

    • Matt @ momanddadmoney August 22, 2013

      Wow, $100k? With that bill I’m just glad everyone is ok (I assume). It’s pretty awesome that your insurance picked up the entire bill. I think a lot of people would have to foot at least a few thousand there.

      I completely agree with you about being a first-time parent. I went a little crazy with all of the safety precautions. As you say, there’s so much marketing material out there that’s meant to scare you into buying something. It’s a very predatory business.

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