● Money & small business
How much to save before a baby: the first year, month by month (worked example)
Most baby budgets are shopping lists. The shopping is the easy part. What decides whether the first year is comfortable is three things that change your monthly cash flow at once: leave pay, new monthly costs, and childcare. Here's one example family's first year, month by month, from the sample file of our baby budget planner. The prices are examples, not averages: use your own.
The family
- Take-home pay: $7,400 a month ($4,100 + $3,300). Usual spending: $6,100 a month, so they save $1,300 a month now.
- Parent 1 takes 4 months of leave at $2,460 a month; parent 2 takes 1 month at full pay.
- $4,500 saved already, with 6 months to go before the due date: that's $7,800 more.
- One-time costs of $3,850 after gifts ($1,290 of it before the birth), monthly baby costs of $335 rising to $575, and daycare at $1,450 a month from month 5.
Month by month
| Month | Take-home pay | Total spending | From savings | Savings left |
|---|---|---|---|---|
| 1 (due month) | $5,760 | $8,235 | $2,475 | $8,535 |
| 2–4 (leave) | $5,760 | $6,435 | $675 each | $6,510 after month 4 |
| 5 (back at work, daycare starts) | $7,400 | $8,065 | $665 | $5,845 |
| 6–12 | $7,400 | $8,125 to $8,425 | $725 to $1,025 | $70 after month 12 |
They start the due month with $11,010 ($4,500 + $7,800 − $1,290). Month 1 is the heaviest: leave pay plus a $1,800 hospital bill. The leave months cost $675 each. Then pay comes back, but so does a $1,450 daycare bill.
The number that matters: after leave
The savings last the year, with $70 left. But look at month 12: the family is spending $725 a month more than it earns, and that doesn't stop when the first year does. Daycare alone costs more than the $1,300 a month they used to save. Leave is a temporary dip; childcare is a permanent change to the monthly budget. A plan that only asks "do we have enough saved?" misses it.
Running your own numbers
- Start from take-home pay and what you actually spend now, not a budget you intend to keep.
- Put leave pay in month by month for each parent. Unpaid or partly paid leave can be the biggest swing in the whole year.
- Separate one-time purchases (with the month you'll buy them) from monthly costs (with start and end months). Subtract gifts and hand-me-downs you're sure of.
- Add childcare as its own line from the month it starts.
- Check two things: the lowest your savings get, and the monthly gap once everyone is back at work. If the gap is positive, the budget needs to change before the baby arrives, not after.
All figures are from the sample file of our baby budget planner, where every month was recomputed independently. Not financial advice.