Our experience saving money for pregnancy is that you can never be fully prepared for what will happen, including the creation of a foolproof budget. There are just too many factors to take into account.
As shown in the very first article on this site that highlighted my fatherhood journey, my wife and I are, by our very nature, planners. We don’t care too much for surprises, so you can imagine our annoyance when we’d hear different variations of “don’t wait for pregnancy just because of money” from family members of friends. I love my family and friends, but this is quite possibly the stupidest piece of “advice” I’ve ever received.
Yes, waiting for a ‘perfect’ situation, whatever that is, may be unwise. After all, no matter how much well you plan, things are always going to happen outside of your control. But throwing all caution to the wind without any planning? That too is unwise.
The average cost to raise a child from birth to age 18 is this country is nearly $300,000. That’s around $16,000 per year! So what can you do to prepare for that the two decade commitment you’re about to make? I’ll show you how we planned the budget and our experience saving money for pregnancy.
Health Insurance
The first piece of information I HAD to possess before we tried for our have our first child was the out-of-pocket costs related to insurance that we’d incur after getting pregnant in the first place. The average cost of childbirth in the United States is nearly $19,000, and the average American with insurance pays a little over $2,800 for delivery alone. At the time, both my wife and I worked in state government, so we had exceptional insurance.
However, the out-of-pocket maximum was $5,000, and we figured with delivery, tests, ancillary costs (pre-natal vitamins, things to make my wife more comfortable during pregnancy, etc.) and doctor appointments we could easily be on the hook for all of it. So we made sure to have $5,000 in an account ready to go. The absolute worst case was that we wouldn’t spend all five grand and we could instead allocate it elsewhere.
We were extremely fortunate to find out a couple of days before the positive pregnancy test that our insurance plan was changing and all pre-natal care would cost $0 out-of-pocket. That fact alone made our experience saving money for pregnancy unique. The money we socked away went immediately to our ‘baby fund’ and allowed us much more breathing room than we had planned. That’s the kind of surprise I can live with!
Flexible Spending Account
Part of the money that was in savings for the out-of-pocket costs was the Flexible Spending Account (FSA) that I have my wife and I contribute money towards every year. I included a link in the previous sentence that explains FSAs, but the short description is that enrolling in one allows you to have pre-tax dollars go into an account that is specifically used for medical expenses. As this article highlights, an FSA allows you to pay for the obvious things like delivery and doctor appointments, but it to affords the opportunity to purchase items like vitamins, a doppler radar and belly bands for cheaper than you would by using after-tax dollars.
The yearly contribution limit is $3,050 per FSA account. If we didn’t have such great insurance I would’ve elected to put the $6,100 maximum into our account. However, we ultimately decided to put $1,000 into the account and our employer allows up to $500 to rollover each year. Make sure to contact your HR department to understand their policy.
TIP: Pay for all medical expenses with a cash-back credit card, then get reimbursed from the FSA provider. You save money because of pre-tax contributions, and you get a percentage point or two back in rewards.
Unplanned Expenses
Our baby, throughout the first 9 months of the pregnancy, was growing too slowly. Until the last ultrasound two or three weeks before delivery, she was always under the tenth percentile. She quickly gained weight the previous two weeks prior to the last ultrasound and got all the way into the 20s before birth. At her two-month check, our little piglet was much larger, registering in the 70s!
I have two reasons for mentioning that. 1) Don’t freak out like I did if your doctor tells you that the baby is growing too slowly. It is perfectly common for them to register a smaller weight and then rapidly grow while in the womb and/or quickly out of it. 2) Because she was measuring so small, my wife had to undergo twice weekly NST (nonstress tests) and get an ultrasound every two weeks. As you can imagine, those bills to our insurance company were through the roof. While we never got a bill because of our insurance plan is so great, looking through our ‘explanation of benefits’ (EOB), it became clear to me that had we had a $7,500 or $10,000 out-of-pocket maximum that we would have hit our limit easily.
The out-of-pocket total of my wife’s pregnancy was a smidge over $200. That is because we opted to go forward with genetic testing. That goes back to the whole planning thing. If we were going to have a child with special needs we wanted to ensure we’d have everything set up to care for him or her.
Do What You Can Do
Some of this article likely seems daunting. That’s because the simple reality is that less than half of Americans could pay a $1,000 emergency expense without going in to debt. But my advice is to not let money be the sole determinant whether you have a child.
Getting into the habit of saving and budget can be tough to get started in normal circumstances. Trust me, I understand how much more difficult it can be to begin while trying to get pregnant.
Save what you can. Contribute to a FSA or Health Savings Account. Communicate with you doctor’s office and hospital to learn more about their payment plans. Consider getting a new job with better insurance. There are plenty of options out there to ease your mind and create an environment where having a baby hits your wallet a little less than you though. You can do it!
