How To Make A Financial Plan Before Having A Child

financial plan before having a baby

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Having a child is an exciting milestone and exciting time in every parent’s life, but the process of giving birth itself – especially in a hospital – can be extremely expensive and derail much-needed financial planning.

To avoid being caught off guard by a hefty medical bill, here are all the costs involved with giving birth, as well as average costs in the U.S.

Key childbirth statistics

  • The highest average birth rate in the United States occurs in September.
  • According to CDC data from 2017, 73 percent of babies are born before their due dates.
  • It is estimated that the average cost of vaginal childbirth without insurance is approximately $9,000 to $17,000, while the average cost with insurance is $300 to $5,000.

How much does it cost to have a baby?

Several factors play into the cost of having a child in America, including the birthing facility costs and location, the delivery type, the length of stay, and any medication used – such as an epidural – and complications during birth.

Whether or not the birthing facility accepts health insurance also affects the total cost. For example, many women opt to give birth at a birthing center instead of a hospital, which may not accept all health insurance plans.

Cost of a birthing center vs. a hospital

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As birthing centers focus on holistic births and typically don’t offer the same medical services as hospitals, like epidurals and labor inductions, they are a wise choice for women with low-risk pregnancies.

It is important to note that birthing centers are not ideal for women with pre-existing conditions that may put them at risk of complications since hospitals are considered the safest places to give birth. Although birthing centers are typically run by midwives and may have a resident OBGYN or pediatrician on staff, they are not medical facilities. In most cases, they are separate buildings from hospitals, but some may be attached to them.

Due to the comfortable and serene environment, the increased control over the birth process, and the lower costs, women often choose these centers to give birth. With no insurance, birthing centers typically cost around $3,000 to $4,000 for prenatal care and delivery without complications. In most cases, the majority of the cost comes from midwifery services.

Low-risk women who are able to take on the risk of a doctor not being available and who prefer a more natural birthing experience can save thousands of dollars at birthing centers.

Vaginal vs. C-section costs

It is common for women to deliver via vaginal delivery, as it is the least expensive delivery option. According to a study published in 2020, only 33.8% of live births are delivered via cesarean (C-section) in the United States.

Due to the fact that C-sections are considered an intensive surgical procedure and require a longer hospital stay than vaginal births, they are typically more expensive than vaginal births. Additionally, there are additional surgical resources associated with C-section procedures, such as anesthesia, and additional fees.

Here are the average costs of both delivery methods with and without insurance:

ProcedureAverage cost (with insurance)Average cost (without insurance)
Vaginal delivery$300 to $5,000$9,000 to $17,000
C-section$300 to $5,000$14,000 to $15,000

Despite the higher costs and longer recovery, there are medical reasons why someone might choose a c-section over a vaginal birth. When complications during pregnancy occur, there may be an emergency during delivery or a birth parent has a pre-existing condition, like diabetes, a c-section may be necessary to protect the birth parent and the baby.

Additional hospital delivery charges

When giving birth at a hospital, knowing what you’re paying for is vital. Between the fees, room costs, and blood work, the costs can add up quickly.

The following are some examples of what you might see on a post-delivery hospital bill, depending on your preferences.

Mother’s hospital charges (equipment, room, etc.)$2,700
Lab Tests$500
Obstetric care$2,100
Baby’s hospital charges (equipment, care)$900
Certified nurse midwife$5,202

According to the ancillary resources a mother chooses to pay for, the charges and cost breakdown will be different. Those mothers who elect to have a nurse midwife will be charged for anesthesia, while those who elect to have pain management will be charged for a nurse midwife.

Additionally, it’s not uncommon to receive two bills – one for the birth parent and one for the baby. As the Newborns’ and Mothers’ Act of 1965 covers newborns’ births, the baby must be enrolled in the birth parents’ health insurance plan within 30 days of birth to be covered for pediatric care.

Breakdown of costs by states

The average cost of birth varies widely from state to state, making it difficult to have a financial plan for the cost of labor and delivery when looking at the national averages.

In the U.S., these are the top five most and least expensive states for giving birth without health insurance, considering that no complications are involved.

Most expensive states to give birth

StateVaginal deliveryC-section
New Jersey$17,504.25$21,294.88
New York$16,057.74$22,059.22

Least expensive states to give birth

StateVaginal deliveryC-section
Rhode Island$10,385.63$14,088.87

State-specific childbirth costs vary due to a combination of provider prices and the intensity of births in that state.

Other costs to consider

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Being a parent comes with a plethora of costs, including delivery costs and hospital bills. According to a study, the average cost of raising a baby for the first year is $11,195. This cost depends on how many children you already have and how many resources you have available, but it’s no secret that children are an expensive investment.

  • Baby clothes: $360
  • Baby food: $300
  • Baby formula: $821-$2,920 (worth noting current formula shortage and inflation)
  • Baby room furnishings: $1,500 (including crib, mattress & bedding, changing table, rocker, dresser, and other decor items)
  • Diapers and wipes: $300
  • Stroller, car seat, and carrier: $500
  • Toys: $150

How to pay your hospital bills after giving birth

Despite our best efforts, births don’t always go smoothly. If you get surprised with a higher bill or have to stay longer than expected, it can be an anxiety-inducing experience. However, financing options can help.

  • Health insurance: A qualified health insurance plan covers routine prenatal, childbirth, and newborn care. Depending on your plan, health insurance can save you thousands on your hospital expenses.
  • Medicaid: All states offer Medicaid to qualifying low-income people, including pregnant women, in order to cover prenatal care, labor and delivery, and medically necessary expenses.
  • Personal loan: It is possible to break up a lump sum hospital bill into monthly payments with a personal loan, making it more manageable. It can be used as a tool to offset lost income due to unexpected expenses. However, it shouldn’t be the first resort due to the potential high-interest rates. You can also use a loan calculator to estimate expenses before applying for a loan.
  • Alternative financing: The federal government, state governments, and local governments offer alternative financing solutions to new parents who are not eligible for Medicaid. These organizations can assist new parents with a range of issues, such as finding affordable medical care or helping them with food security issues.

Ways to plan ahead for having a child

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Having a financial plan for every possible scenario during childbirth is the best thing expectant parents can do for themselves. It is important to plan out the birth method and facility so that there is no financial hardship down the road due to the high cost of labor and delivery in the US.

  • If planning for a pregnancy, start making space in your monthly budget for the anticipated birthing costs as soon as you see those two pink lines or as soon as possible. Take a look at your weekly expenses and decide what expenses you can cut out so that more money can be put towards a column dedicated specifically to childbirth.
  • Whenever possible, choose pediatricians, hospitals, and doctors who are in-network. You will be covered, at least partially, by your insurance if you select in-network providers.
  • Know what your insurance covers regarding childbirth, and keep an itemized list of your potential out-of-pocket expenses when preparing your financial plan.
  • Don’t forget to think about your other accounts for your child, such as a future savings or college fund. You can do this by setting up an account that earns interest after the child is born. Set up an automatic deposit that deposits a set amount of money into your child’s future account every month to ensure each payment is submitted.

The bottom line 

There are many factors that affect childbirth costs in the U.S., but even the cheapest hospitals still charge a considerable amount of money. With careful financial planning and plenty of research, these costs can be significantly reduced.

When you are taking care of a newborn, you shouldn’t have to worry about paying your bills. Knowing your needs and resources are key to a stress-free, smooth repayment process following your baby’s birth.

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