Posted: 11 Jan 2009 07:51 PM CST

The first year of a child is perhaps one of the most challenging times for new parents! The steep learning curve coupled with the excitement, fear and doubts that come with every new issue related to parenting is truly an unforgettable experience.

Recurrent Expenses (Costs of Input/Process/Output)

The delivery and prenatal medical expenses before your child is born is already significant. But those are one-off charges. What’s to come are the costs for the inputs, processes and outputs that your baby will go through:

Inputs

Infant formula or breast milk are the two major sources of nourishment for your baby. Breast-feeding is cheaper relative to infant formula. Depending on whether you breast-feed or use formula, there are associated expenses related to each.

Formula can cost $20+ to almost $40 for a 900gm tin. This lasts as little as 1 week to 2-3 weeks depending on how much your baby consumes. Even if you choose to breast-feed, you would need to buy feeding bottles, teats and related cleansers etc. Bottles can cost from $4 to $8+ depending on brand and type. Baby bottle cleaning liquid are about $5-7 for 500-700ml.

Breast feeding is cheaper but you would still have to invest in a steam steriliser ($100-150) unless you want to use the old method of boiling which is cheaper but more time consuming. Steam sterilisers get the job done in 8 minutes. The choice of breast-pump is also bewildering. You can get manual ones for around $40 up to the Medela ones costing $300ish. Manual pumps are cheaper but tiring to operate. Electrical ones are easier to operate but costly to buy.

As your baby grows older and starts to be able to consume semi-solids, cereals ($3-$5 a box) and baby food ($2 – $3 a small jar) can be factored into the baby budget.

Process

Your baby needs to sleep, wear clothes and bathe. These require a cot and mattress, baby clothes and baby washing tub. Cot prices vary depending on material and size. $200-$500 will get you different types. A visit to Baby Kingdom will allow you to see the various models and pricing.

Output

Wipes and diapers are the two major cost drivers for baby’s output. Diapers are the main cost and each diaper can cost from $0.20 to $0.50 depending on the brand. Different brands have different qualities and prices. The most cost-effective way is to get a brand where your baby won’t get nappy rash and is affordable to you. Unfortunately, if your baby has sensitive skin, chances are the expensive brand (Pampers) will be the one as I’ve encountered myself. On average, in you day you may change from 5 to 8 times the diaper depending on frequency of your baby’s bowel habits. Infants on breastmilk tend to poo more so be prepared for the initial high use of diapers.

Medical Insurance

Other than the day-to-day costs of baby consumables, you may want to consider medical insurance for your child as part of budgeting for baby. Healthcare costs are one of the major emergency types of expenditure that may occur and the cost of top-quality healthcare is not low. In order to help reduce the impact of any of such emergencies, I decided to get my daughter a hospitalisation policy that costs $112 a year that covers 85% of qualifying hospitalisation costs subject to co-payment of 15% after a deductible of $3,500. This would help defray costs of any hospital stays. In addition, I bought a little more coverage through a per-day type of coverage that has no deductible. That costs me an additional $200+ a year.

Many financial planners would recommend life policies, education policies etc.. for the child. I decided against it as my child needs life insurance only when she starts working. In the meantime, the major risks are that of medical emergencies according to my own assessment.

Getting the Best for Junior (Enrichment Classes)

Besides the expenditure on feeding, clothing and taking care of your baby, the other costs that hit the wallets are the ones for educational and enrichment classes. Personally, I am somewhat skeptical of some of these as basically they are teaching your child what he or she can pick up by herself through trial and error. Of course, such lessons help the child through socialisation with other children, getting used to being in a group or classroom having group activities. But how much it helps the child develop their fullest potential is still questionable.

However, like many parents, the spouse was quite keen to enrol my daughter in one of these programs and I agreed to give it a try so long as my daughter enjoys it rather than be dragged to it kicking and screaming.

Such courses do not come free. It can cost from $10 to $50 or more an hour for each lesson and each term typically covers 2-3 months. So this can get up to hundreds of dollars a month depending on the type of program.

Babies can be expensive

As my daughter gets closer to her 1st birthday, I realise that it can cost a lot to bring up a child! However, the intangibles are priceless. When I rock her to sleep and see her innocent face lying on my chest, the wave of protectiveness and love that flows is something that money cannot buy.

The $3,000 baby bonus for the first child is NOT ENOUGH. I’ve spent much more on the delivery and maternity expenses before the whole sum even comes in from MCYS!

Ultimately, having a child is a 20 year responsibility (and more…) but it’s really a life changing event. If you are budgeting for baby, remember that your time is going to be something you would have to invest and it’s not just your money.

Be well and prosper.

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