There is nothing in life that I’ve experienced quite like finding out you are bringing a new life into this world. Not a single thing could wipe the dopey grins from our faces. Not even the reality of the fact that kids are expensive. The smiles were there to stay. But we also knew that we needed to craft a plan to save for baby. Enter the Baby Fund. Here’s how we grew our baby nest egg from nothing to over $10,000 in less than 40 weeks.
Create a Separate Account
There once was a time when our emergency fund lived all by itself in a high-interest online savings account via Discover. That e-fund was very lonely, so we decided it needed a friend. Or something like that.
Instead of opening a separate savings account, we decided to make a note of what our e-fund number was and then continue building beyond that to save for baby. While this may sound messy to some of you, the ultimate goal for us was to save well beyond what it would cost to be pregnant and to deliver the baby, allowing us to have extra funds for any unexpected medical expenses or for our other financial goals. Still, if I wanted to be more of a savings account purist, I could have easily opened another account with Discover. The key in either situation was to keep the money away from any other accounts we have. Out of sight, out of mind. Or at least, out of easy spending range.
Add All the Extras, Even Small Ones
This past week, I made $10.10 on Poshmark. In terms of baby gear, I’ve officially afforded us a pack of diapers. It almost seems laughable to gather up all of these little windfalls (Breezefalls? Breathfalls? What’s the right word for pennies found on the street?), but that’s exactly what we’re doing. In addition to the biggies, like year-end stipends and side hustle money, we are saving everything extra that we can get our hands on. This savings includes:
- Cashback rewards from apps like Ibotta
- Found change and spare change
- Anything I sell online or at consignment shops
- Online rebates thanks to Ebates
- In-store rebates like the $10 vodka rebate I scored for Mr. P, which was the most tongue-in-cheek deposit I’ve made into our baby fund
While we haven’t emptied the change from our piggy bank or claimed the cash back on our credit card yet, we’ve already socked aside $226 from the other little odds and ends. That money, coupled with our extra income, allowed us to add a few thousand dollars to the baby fund relatively painlessly.
Stop Extra Payments
As much as it pains me–and if you follow me on Twitter, you know it pains me A LOT–to say this, one of the best decisions we made was to stop paying extra on our mortgage after the first quarter of the year. In pregnancy months, that was right at the start of month five. That allowed us to easily come up with an extra $1,000 a month to the tune of $5,000 (or about $6,000 if you’re really smart and you’ve figured out that 40 weeks of pregnancy is actually closer to 10 months than 9. LIES! All lies!). While we hope this additional $5,000 is well over what it will cost to have this baby, we’re also not naive to the fact that no one is guaranteed their health–moms or babies. Or the dad who ends up with broken fingers as a result of mom’s brute strength. (Don’t worry: We took the class. Mr. P’s one takeaway is to never offer me less than three fingers to hold onto.) As a result, we’d much rather have a hefty surplus in our Baby Fund than scramble to cover any unexpected expenses. If nothing else, we plan to make a whopper of a year-end payment on our mortgage if we really have saved too much.
Trim The Budget Again
Our budget is fairly lean to begin with, but like most middle-class families, there’s always a little bit of fat we can trim. After reviewing all of our line items, we realized that gearing up to be a single-income house for a few months was the perfect time to make the switch to a discount cell phone carrier. Hence the Great Boost Mobile Experiment of 2017. Mr. P is still loving the service, so I’m about to switch over my phone now that my contract is finally up. When that’s all said and done, we will be saving $90 a month combined. Instead of moving that money into savings, though, it has allowed us to create more wiggle room in our budget for Half Penny’s arrival. Will I nurse or bottle feed? Who knows. Will we use disposable or cloth diapers? The jury is still out. There are so many unknowns that I can only guess at in terms of cost, we figure having almost an extra $100 cushion every month is a good starting point. (Feel free to HAHAHA all you parents out there.)
Save for Baby to Focus on Baby
Our strategy is far from perfect. In fact, it seems silly that we didn’t save for baby much sooner. But a combination of setting aside extra income and getting crafty with our existing expenses has allowed us to create a comfortable cushion and add some wiggle room to our budget. Not only does it help us sleep easier, it also lets us do more of what we really want to do: focus on enjoying our baby.
So Tell Me…How do you save for baby (fur babies included!) or any other big expense on the horizon?
PS – If you’re curious what we’ve racked up so far in expenses, swing by at the same time and same place next week.
As the medical bills started rolling in (I think It took 3 rounds to get them correct) I was pretty happy we planned ahead and could cover everything.
We started a FSA at the begging of this year so we will be able to pay for a little over 2/3 of our bill with tax Free $.
Hopefully you don’t have any insurance issues, it is a pain in the ass!
I think the only insurance issue we will have is the pre-registration/pre-certification. I’m pretty sure that you and I talked about this on Twitter. I dodged a $200 fee just by being persistent. I already have a breakdown of exactly what HP *should* cost in terms of medical expenses and our deductible and co-insurance maximum. But you never know what else could crop up. So until then, save, save, save.
Good for you for using an FSA. We (stupidly?) don’t have one. The only thing I’m looking forward to regarding the bills is to post a breakdown online. It’s so fascinating to me to see what babies cost in different states/countries and even on different types of plans.
Great job with the baby fund!
When we adopted Zap, we had budgeted $400 for his adoption, supplies, and first vet appointment. Since we adopted from a shelter, we actually got quite a steep discount, so we came in under budget with our fur baby. 🙂
We do plan on having kiddos, but our plan is to pay off our student loans first. Once that happens, we want to do a few home improvements, and then we’ll start building the Picky Babeh Fund.
I love it! Though I will say, we never felt like the “time was right” in terms of money. There was (and still is!) stuff to do around the house and more grad classes to take. But then we finally realized we weren’t getting any younger (how old do I make myself sound?!) and how this is one of the things in life that you can’t really plan the timing of necessarily.
Still, crossing off as many things from your money lists as possible is really smart!
What a great job you guys are doing! You’ve made some good choices, and that should hopefully cover you guys for quite a while.
I was pretty lucky in that my boss decided to offer paid maternity leave for his management team (although unfortunately, he did not extend it to his hourly workers.) That combined with a low deductible and good health insurance meant our regular savings had enough money to cover everything, even after a C-section.
That’s incredible that your regular savings covered everything. That’s definitely our hope. Then, we’ll be left with a nice chunk of savings to kick off college savings and to add to our own money goals. But just in case 🙂
$10.10 will get you roughly 3.5 diapers. One of the things that made the biggest impression on me working at Toys R Us was how freaking expensive diapers are! $39.99 was actually $43.94 with tax. Yikes.
Haha, yes! This baby will be wearing Aldi diapers, I think! I’ve actually heard really good things about them.
Thankfully, we received FOUR diaper cakes from family and friends. So we have a good start with newborn, 1s, and 2s. Though it did kind of pause my cloth diapering considerations. But I’m honestly OK with putting that experiment on hold for a few weeks or months.
And you should probably be well on your way to sainthood for working at Toys R Us. Holy moly!
Actually, $100 a month is sufficient for baby consumables if you manage to keep formula to about 20-25% of feedings. Daycare is the real killer cost, but you might escape the killerness of it due to Grandma daycare which will probably also keep half pence from getting sick all the time too.
Yes, we will do grandma and grandpa daycare for a while. We are going to pay them (if it kills me or if I have to bury the money in their backyard), but I know we won’t be able to get them to accept anything near what an actual daycare would cost.
And that’s really good to know about baby consumables. We are going to try to limit formula, but I have no idea what the reality will be, especially when I go back to work.
It’s been a long time since I’ve had babies in my household, but believe it or not, I don’t recall doing any special saving for them. As far as I remember, insurance covered the medical costs (yes, this was a different era), family and friends gifted us lots of goodies, and the kids had a stay-at-home mom to take care of them. It sounds like you’ve made some smart moves in saving up for baby, and I’m sure that will serve you well. These days when I want to save up for something big, I pretty much follow the same system you do…throwing all extra income and rewards toward it and paring down the budget.
I think my insurance is actually going to be quite reasonable. I plan to share the expected cost next week, and then I’ll do an update after the bills actually arrive. Glad to know my plan works for other expenses, Gary!
Wish I was as smart as you guys when we started having babies. We had a little savings, but certainly not even close to a fully funded emergency fund, let alone baby savings. It would have made life sooo much easier overall (not to mention less stressful in an already life altering time of life). Congrats on the great savings! 🙂
Thank you, Amanda! The emergency fund is great, and everything else is just icing on the cake. We’re probably going overboard with the extra savings, but I’ve never not collected a paycheck before. So we are going to stretch some of that money through my maternity leave as well!
Great job at saving that much in your baby fund. I was thinking about starting a babyfund but we don’t plan on having a little one for at least another two years. I might just start saving because I like to be prepared.
Your talk about the cost of delivering a baby in the US makes me once again really thankful to live in a country with universal health care.
It sounds like you two are doing an amazing job of preparing financially for the arrival of Half Penny! He or she is going to pick up some great financial wisdom from you.
The diaper cake was one of the best gifts I received! Formula, diapers, and wipes cost us at least $200 a month (and this was buying those items at Sam’s–we did go with brand names because I found that the cheap diapers gave baby a rash and didn’t work as well, and the formula was the only one that sat well with her).
Congrats on meeting an amazing savings goal that you will most definitely need and use!
BTW, my OOP costs for my unplanned C-section and hospital stay, etc., were at least 10K. Hoping yours are much less!
Biggest mistake we made was not taking advantage of my wife’s HSA. Biggest thing we did to help was calling the hospital to arrange payments over two years. So technically we still don’t own or baby yet ?.
Ha! That’s a hilarious way to look at it. I was just joking that I wonder if we have enough time to apply for a new credit card to get some points or miles for Baby 😉