Planning for a baby? Tips for managing finances

27 April 2023 dot 4-minute read
Plan Well Feature Financial management Healthy Finances Parenting
Expectant parents often wonder, "How much money should I save before having a baby?" (Credit: Shutterstock)
Parenthood is an exciting journey full of unexpected joys. Although nothing can fully prepare you for it, planning ahead, seeking advice, and managing your finances can create a secure future for your child. Building a strong financial foundation early on can set the stage for success. Here's how to get started.

1. Determine a budget

It's important to keep in mind that investing in essential items can greatly benefit both the baby and its parents. Here's a list of necessities for the first six months.
  • Diapers
  • Cot (including a mattress, sheets and blankets)
  • Changing table
  • Car seat
  • Stroller
  • Baby monitor
  • Baby clothes
  • Baby bottles
  • Breast pump or formula milk
To understand how of much your money to budget, consider the cost of consumables like infant formula and diapers.
If you assume your baby goes through an average of seven diapers a day, costing roughly US$0.28 – US$0.40 apiece, you can expect to spend around US$58.80 – US$84 each month on diapers alone.
For infant formula, a baby may need around 10 servings of milk per day, each at 4.6 g. This translates to an average of US$72.60 – US$83.10 spent on formula per month.
The approximate monthly total for diapers and formula alone is US$170.

2. Assess your financial situation

Once you have a realistic estimate of the costs of raising your new arrival, you can include those figures in a comprehensive review of your household budget. Doing so helps create a stable financial plan that accommodates your growing family's needs.Taking proactive steps to manage your finances will not only benefit your family in the short-term but also secure a prosperous future for them for years to come.

3. Identify saving opportunities

Members of online parenting communities often share tips on where to find affordable baby essentials. (Credit: Shutterstock)
While the cost of diapers and formula may seem daunting, parenthood is an opportunity to start managing your finances. There are plenty of ways to save money and still provide for your child. With a little bit of research and planning, you can find alternatives that suit your budget and ensure that you are fully prepared for the arrival of your bundle of joy.

Accept hand-me-downs

New parents often struggle with the significant cost of baby gear, with items such as strollers ranging from $500 to $950 (and potentially even higher). To reduce these expenses, accepting second-hand items can be a practical solution for them.
While some parents may be hesitant to use second-hand items, the financial savings are undeniable. From strollers to highchairs and changing tables, these hand-me-downs can help alleviate the financial strain of raising a child, as babies quickly outgrow these items. Embracing this approach can be a wise decision for new parents looking to manage their finances effectively.

Shop second-hand from online communities

Parenting communities on social platforms can be a valuable resource. These communities often feature members who offer shopping advice. In addition, they sell preloved goods at reasonable prices, ranging from baby monitors and shoes to bathtubs.
However, when considering purchasing second-hand items such as strollers, playpens and car seats, it's crucial to exercise caution. First, check their model numbers and product names then verify if it is not part of a product recall. For instance, only strollers manufactured after 2015 are considered safe to buy second-hand.
Ensure your child's safety by doing some research before purchasing items. Each country has their own safety standards for baby products, but the US Consumer Product Safety Commission is a good place to check for guidelines.

3. Invest in financial security

Most people prioritise life insurance after becoming parents to provide financial protection for their baby. (Credit: Shutterstock)
Building an emergency fund is one way to provide a financial safety net to protect your family in case of illness or other unexpected expenses. The fund should cover your basic living essentials for at least six months. You may also consider creating a separate emergency fund for your child, especially for unforeseen healthcare expenses.
Put a portion of your emergency savings in medical protection insurance. Healthcare bills can quickly eat up your emergency fund, while insurance can help cover some of these costs.
You can also look into other coverage to secure your child's financial future, such as life insurance. For example, in Singapore, AIA offers a maternity plan that comes as a participating whole-life plan or an investment-linked one. Both can be transferred to your child within 60 days of birth, guaranteeing coverage for them up to the age of 100. It also covers the baby from congenital illnesses, with hospitalisation benefits.
Nothing changes your life like a new baby. Preparing for a newborn requires planning. Managing your finances is the most efficient way to prepare for your baby and build a secure future for your new family.
Equip yourself with the financial skills to achieve the future you want. Finance expert Lachlan Campbell shares his advice on planning for life's significant moments in this episode of AIA Voices.
AIA Voices is a community of influential and educational voices from around Asia to talk about life, health and wellness. A platform to educate, motivate and inspire people to make positive behavioural changes on their health and wellness journey. Providing an opportunity for communities across Asia to connect, collaborate, and learn from each other. Designed to drive AIA One Billion, our ambition to engage a billion people to live Healthier, Longer, Better Lives by 2030.
National Library of Medicine. 2016. Review of Infant Feeding: Key Features of Breast Milk and Infant Formula. [online] [Accessed on 09 January 2023]
Health Policy and Planning. 2016. The cost of not breastfeeding in Southeast Asia. [online] [Accessed on 3 February 2023]
Parents. 2022. Baby Essentials That Are OK to Buy Used. [online] [Accessed on 3 February 2023]

This is general information only and is not intended as financial, medical, health, nutritional or other advice. You should obtain professional advice from a financial adviser, or medical or health practitioner in relation to your own personal circumstances.

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