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Financial Planning Part I: Expenses During Pregnancy & Baby's First Year
For many expectant parents, pregnancy is an important time to put finances in order. The average family spends between $7,000 and $14,000 a year to care for an infant or young child, according to a 2004 USDA estimate.

For most parents, this requires a serious look at finances. It's important to consider short-term and long-term budgetary needs. Along with the obvious expenses of maternity wear, infant clothes, diapers and baby gear, you'll need to consider the cost of healthcare and childcare. Longer-term financial needs include your child's future educational expenses and your own retirement. What follows is a compilation of some of the expenses you'll be facing in the near future.

Maternity Wear
It's inevitable that you'll need to update your wardrobe during pregnancy. You'll need outfits to accommodate your expanding waistline and bust, as well as comfortable and supportive shoes. You can cut costs if a friend or a relative is willing to pass on maternity clothes or if you shop for used maternity wear. Remember that you'll save money if you choose clothes that will accommodate breastfeeding once the baby's born.

Healthcare
Check with your insurance carrier to learn what your policy covers during pregnancy, childbirth and beyond. You'll probably face co-payments for prenatal care as well as pediatrician visits. Confirm that your delivery and new baby care are covered benefits. Find out if you need to pay a deductible for your hospital stay and whether certain hospital charges are not covered, such as C-sections or anesthesia. Also, find out how to enroll your newest family member for insurance and whether your premiums will be increasing.

Nursery
While your baby only requires a few essentials—such as a crib, dresser and changing table—some parents really splurge on decorating. If you compare prices before making major purchases, you could save considerable amounts of money.

Baby Gear
Included in this category are a car seat, a high chair, a stroller, toys, a diaper bag, an infant tub, childproofing supplies and an infant carrier or sling. These items can vary widely in price and are great suggestions for baby showers gifts.

Personal Items for You and for Baby
Equipping yourself for the first year includes other items such as diapers, baby wipes, diaper rash ointment, baby shampoo and pacifiers. Breastfeeding moms will need nursing bras, nursing pads and possibly a breast pump. Bottle-feeding families will need an ongoing supply of formula, baby bottles and nipples. Later on you'll need to provide baby cereal, baby food and teething supplies.

Infant Clothing
In addition to T-shirts and diapers, you'll need clothes to fit your growing infant. Since babies soon outgrow anything purchased, consider borrowing some of your baby's wardrobe from willing friends.

Childcare
If you plan to use childcare, find out typical charges in your community. One national study suggests the average cost of childcare is $3,000 per year, but there are wide variations depending on the extent of your babysitting needs, the area where your live and whether you choose private or shared child care services.

Some employers have flexible savings accounts (FSA) that allow you to set aside part of your pre-tax income for childcare. However, money that has not been spent in the FSA at the end of the year must be forfeited. Alternatively, you may qualify for childcare income tax credit, which will help reduce your taxes at the end of the year.

Once you estimate your expenses, it's time to assess how parenthood will affect your budget. See Part II of this article for tips on how to evaluate your budget.

Laura E. Stachel M.D. Obstetrician & Gynecologist