How Much Does a Baby Cost? – FIRE Edition

The cost of having a baby in Australia - from pregnancy through the first year of life. How having a baby impacts Financial Independence. [Image: a baby girl lying on her tummy looking up]

Baby Flamingo #2 turned 1 recently. I thought this would be a good moment to share my thoughts on a hotly debated topic in many FIRE Facebook Groups and on podcasts and Financial Independence blogs: the cost of having a baby in Australia!

So, How Much Does Having a Baby Cost?

Spoiler alert: “How much does a baby cost?” really is a how-long-is-a-piece-of-string question. But since there is a lot of misinformation (often presented by people who don’t even have kids) out there, I thought I’d share our experience.

Each family and situation is different, so your costs will most definitely be different from ours. But one thing is certain: Saving a decent amount of money before starting a family is a good idea. This is true whether you are pursuing Financial Independence or not.

I often notice a certain level of arrogance when people in the FIRE community speak about this topic. “Having a baby is cheap – just use the public system, breastfeed and buy a used pram.” On the other end of the spectrum, you’ll find the “Wait until you have kids…” crowd. I probably sit somewhere in the middle. While it is definitely sensible not to waste money, having a baby is not a cheap exercise and some of the costs are hard to predict.

In this article, I’ll cover the expenses we had for Baby Flamingo #1 during pregnancy and the first year. The budget required for Baby Flamingo #2 was very similar (with some exceptions noted below).

We’ll also discuss how having a baby and taking time off work changes the FIRE equation and what you can do to prepare.

Pregnancy, Birth and Doctor Visits – Medical Costs

I had both babies in the public system, which meant that the births themselves and the hospital stays were free. However, I needed very frequent ultrasounds and specialist appointments because of some pregnancy complications. This set us back several thousand dollars before Baby Flamingo #1 was even born.

This was followed by lots of pediatrician and other specialist appointments during the first six months after birth.

Total Pregnancy and Medical Costs: $4,749.18

I often hear people say that having a baby in the public system is free, and some proudly announce that they even found a centre that bulk-billed their 13-week ultrasound. Yes, it can work out like this. But it can also cost a lot if there are complications.

Realistically, the medical costs from conception to a baby’s first birthday could range from $0 to over $10,000.

One-off Baby Purchases

My favourite topic (not). For some reason, this is the number one thing people seem to argue about. Can I buy a used car seat? What about a second-hand pram? Why are baby clothes so expensive? Everyone seems to have an opinion on this topic. Yet, these one-off purchases are probably the most overrated issue when it comes to the cost of having a baby. Yes, you can save a few thousand dollars by buying most things on Marketplace or eBay, but trust me, it’s not going to matter much in the long run.

We bought a mix of new and second-hand items for Baby Flamingo #1:

  • Pram – second hand
  • Bassinet and sheets – second hand
  • Car seat – new (don’t buy a used car seat from someone you don’t know!)
  • Baby swing – second hand
  • Baby clothes – second hand
  • Baby camera and monitor – new
  • Breast pump, steriliser, bottles, etc. – new
  • Baby carrier – new

We went with the second-hand option when it was a) safe and b) easy (I would not drive 20kms just to pick up a used baby carrier for example).

I would say that to this day we probably buy about 50% of everything we need for the kids new and the other 50% used. We did not get any hand-me-downs because we didn’t have any friends with older kids at the time. If you are lucky enough to have friends or family who offer you hand-me-down baby stuff, take it!

I have kept a running spreadsheet since we made our first baby-related purchase. It looks like this:

Spreadsheet with the initial cost of baby equipment listed by date, item, used or new, purchase price, sell price and total cost.

I write down the date, item, purchase price and, most importantly the eventual sale price (I sell all of the stuff we don’t need anymore on Marketplace). This helps me figure out the actual cost of each item. I have noticed that our spending was really high in the first year, but after that new purchases were almost completely offset by sales of items we no longer needed.

The good thing about buying used is that you can usually sell items you only needed for a short period of time (clothes, newborn stuff, etc.) for the same or in some cases even a higher price than you bought it for

Total initial cost of one-off purchases: $4,525.82
Total actual cost of one-off purchases: $3,595.82 (this will likely be lower eventually as we are re-using some of the items for Baby Flamingo #2, so they have not been sold yet)

This line item is a lot cheaper for any future babies as you can re-use a lot of the equipment. For comparison, the total initial cost was only $2,285.21 for Baby Flamingo #2.

Realistic cost estimate for all the one-off purchases in the first year: $200 (if all you buy is a car seat and get the rest for free) to $10,000 (if you buy most things brand new and prefer the more expensive brands).

The Value of Convenience

Just one more thought on these one-off purchases: One thing people underestimate before they have a baby is the importance of convenience. It’s easy to spend the whole weekend going from place to place to pick up all the second-hand things on your list. Once the baby arrives and life gets hectic and busy, collecting stuff from Marketplace sellers is pretty much the last thing an exhausted new parent wants to do when they finally get an hour to themselves.

You may plan on buying everything your baby needs second-hand. But trust me, you will most likely end up just ordering some things online. Simply because you can do that while eating potato chips on the couch in your tracksuit pants when your baby FINALLY naps.

Why don’t you go pick up that second-hand baby rocker 30 minutes away?

Regular Baby Costs

“Just breastfeed, it’s free!” This very common statement really annoys me. Not everyone can breastfeed. Sometimes there are medical circumstances that prevent it (a low birth weight and/or a premature baby for instance). So while it’s great if it works out, it’s not a bad idea to budget generously in case you have to rely on formula.

Both our babies were mix-fed for the first year. Quality formula is expensive ($37 a can in our case) and the cost adds up quickly. Then there are things like nappies, wipes, teething gel, baby food, Panadol, etc.

Overall we spent about $200 a month on regular baby expenses.

Total cost for the first year: about $2,400.

Realistic cost of ongoing expenses in the first year: $1000 (fully breast-fed baby; cloth or cheap nappies; home-cooked baby food; no extras) to $5000 (fully formula-fed baby; expensive nappies and wipes, pre-made baby food and lots of extras).

This is the big one! All the other costs listed above are negligible compared to the loss of income.

Like most companies in Australia, my company did not offer any paid maternity leave, so I was left with a few weeks’ worth of saved up annual leave as well as the Australian government’s Parental Leave Pay (18 weeks of minimum wage).

I stayed home for 10 months with Baby Flamingo #1, so you can imagine that the loss of income was significant. We don’t share our numbers (including our salaries), but let’s assume I make $100k per year. That’s about $6,250 after tax, so a loss of over $55,000 for the nine months of maternity leave. Sure, there is the Parental Leave Pay (about $13,500 before tax), but the loss of income still is a massive factor.

The financial blood loss doesn’t stop after maternity leave, of course. Childcare is very expensive in Australia, so it’s definitely something to factor in when you make a financial plan for your new life as a parent.

Realistic loss of income in the first year: $0 (if you get paid maternity leave or are at FI already – see below) to ∞!

Housing Costs

One thing I wanted to mention is housing. While we didn’t have higher housing costs in Baby Flamingo #1’s first year of life, we did when we had Baby Flamingo #2. Our apartment was too small for a family of 4, so we moved into a bigger, more expensive apartment just before the birth. So in theory Baby Flamingo #2 cost us an extra $15,000 per year in rent.

How To Actually Save Money With Kids

As discussed above the cost of “stuff” you need for your baby is negligible compared to things like the loss of income you’ll have during parental leave. So I won’t give you a list of money-saving tips like “make your own lactation cookies”. Instead, consider the following big-ticket items (most of these become even more important after the baby stage):

  • Childcare: If you have to pay for childcare, your salary will never be the same again. The obvious solution for many people is to live close to family. If you have parents who are happy to look after their grandchildren a few days per week that could save you tens of thousands of dollars over time. Mr. Flamingo and I have no family near by and we are definitely paying for it.
  • Housing: Renting with a growing family is expensive. If you are a renter by choice – could buying a house now make sense?
  • Transport: Can you avoid having to buy a second car by living in a walkable location?
  • Loss of income: Could you realistically achieve a level of financial independence before having a baby? (see below)
Grandparents can save you a lot of money if you don't have to pay for childcare.
Free childcare!

Having A Baby While Pursuing Financial Independence

If are on the path to FIRE, saving and investing will definitely be harder and slower once you have a baby. Your living expenses go up and the loss of income means that you have less money available for your investments. It’s a double-whammy.

In an ideal world, we would all reach FIRE before we start a family. However, that’s probably not realistic for most people in the community. Fortunately, there are other options and milestones that can also make your life a lot easier after having a baby. If you can get to Coast FI or – even better- Flamingo FI you can basically semi-retire and stop investing once you have your baby.

If you usually live on one income and invest the other you won’t actually feel the financial impact of one income dropping away. Plus, you can eventually go back to work part-time, which is the preferred choice for many parents anyway. This way, having a baby serves as the perfect exit from your full-time career and entry into your new semi-retired life.

We reached Coast FI before the birth of Baby Flamingo #1 and Flamingo FI before the birth of Baby Flamingo #2. So the loss of income we experienced wasn’t as painful as it would have been in the earlier stages of our accumulation phase.

Whatever you do, don’t delay having kids just because of financial considerations. Starting a family should be an emotional decision, not a financial decision. So instead of delaying starting a family simply try to get as close to FI as possible before the baby arrives.

I would also recommend putting enough additional cash / baby savings aside to take as much time as you want and need off in the first year. It really is such a special time, enjoy it!

Everyone Is Different!

Everyone’s situation, goals and priorities are different. I always enjoy reading about how other parents in the FIRE community approach parenthood and money in general. I really like Family Finance‘s videos on Youtube. Aussie HIFIRE has a great article about the costs of kids past the baby stage. Frank on FIRE (whose blog I only discovered recently) has a nice post on this topic as well. I also enjoyed Strong Money Australia’s interview with a reader who is on the path to FIRE with a family.

No two families are the same, so it’s a good idea to get inspiration and ideas from lots of different people in similar situations.

The Total Cost of Having a Baby

So, let’s get back to the question I asked in the title of this article: How much does a baby really cost?

Our first baby cost us $11,675 during pregnancy and the first year. Remember, this is just the actual spending, not the loss of income, which was several multiples of this amount!

Will your baby cost the same as mine? Most definitely not. It could be a lot less or a lot more. The takeaway is that there are costs you can’t predict, so it’s better to be prepared.

The total cost of having a baby could be anywhere from $1,000 (if you are at FI or semi-retired already, have a perfectly healthy baby without any complications and lots of friends who give you free stuff) to over $100,000 (in the case of complications and/or medical challenges, feeding issues and a high loss of income).

As far as all the “normal” expenses in the first year are concerned, I think a budget of around $15,000 is probably a reasonable amount to aim for (but more certainly won’t hurt!).

I hope you found this article helpful. Let me know your thoughts in the comments below.

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14 thoughts on “How Much Does a Baby Cost? – FIRE Edition”

  1. One aspect you haven’t mentioned is any change in living costs because of the different lifestyle you live with children. Fewer date nights, movies out, different holidays. For those living frugally before kids this might not be too different, but for others it might.

    • Yes, that’s definitely an important factor too. For the first year we didn’t actually notice a big difference in our spending for these kinds of things because we didn’t really go out that often before we had kids. We prefer outdoor entertainment (mostly free). We took our baby to Europe when he was 6 months old, but he travelled for free then fortunately.

  2. Super helpful, thank you!! We are pregnant with our first due in January, so this article comes just at the right time for us. Great motivation to keep saving as hard as we can until then.

  3. I live in Sweden where we have a slightly different system. Doctor visits for pregnant women and children are free. Furthermore, the birth is free and when the child is older, the preschool is subsidized and you pay according to your income. we pay at the maximum rate which is equivalent to 160 dollars / month.

    We have a parental insurance that allows us to be at home for about a year with 80% of the salary (up to a certain salary). Many workplaces also offer to cover an additional 10% according to collective agreements. We are very spoiled in Sweden but I hardly understand how you financially can even have children in the US!

    We have chosen to buy everything for the children pre-used, but the biggest costs for us have been switching to a bigger home and car. Even greater cost is the loss of income. We are not FIRE yet and have chosen to work less. 75 and 80% of full-time (legal right), it hurts in the wallet but we think that the time we spend with the children are more important! Sorry for my bad English 🙈

    • Yes, working part-time definitely hurts a little finance-wise, but it is so worth it in my opinion. That’s why it’s really helpful to get to to at least a level of FI before kids, it’s not possible for everyone though.

      I’m from Europe myself, the systems are just really different, there is certainly more financial support for new parents over there. Having a baby in the US would definitely scare me as well. Australia is somewhere in the middle between Europe and the US I’d say.

  4. It’s great to see a rare post that counts the true cost of children (bless them of course). Everyone seems to focus on nappies & strollers, not the 18+ expensive years that follow. I am separated (another cost no one wants to consider but happens to 50% of us) and re-partnered with 4 kids. We have a 5-bdr house when we could otherwise make-do with a 1 bdr. So lost income + real estate ‘needs’ have HUGE impact. Yes I am considering if we could all squish into a tiny house but with a relatively newly blended fam it’s not without added pressures!

    • Thanks Ali! 🙂 Good to hear you liked the article. I agree, nappies and strollers get way too much attention. Housing is a big, mostly invisible factor. And yes, after a separation things get really expensive, especially in a blended family situation. We have several blended families on my husband’s side of the family and things are definitely complicated financially.


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