Bringing up Baby on a Budget

You wouldn't trade your baby for a million dollars, but do you know that you may spend half that to raise him or her? According to the US Department of Agriculture, it can cost up to a quarter of a million dollars to raise a child born in 2004 through age 17—statistics that don't even account for growing college expenses. While this number may seem astronomical, there are ways to control and manage the costs that confront you as a new parent—other than just buying stock in diapers.

One of the best ways to get a grip on your expenses is by using a budget. "Have a budget that's accurate, review it monthly, and eliminate the hundreds of dollars wasted every month," recommends Mary Staton, CEO of the Staton Institute and coauthor of Worry-Free Family Finances: Three Steps to Building and Maintaining Your Family's Financial Well-Being. Many people are uncomfortable with the notion of a budget—it almost sounds like a diet. But a budget is the best tool you can use to determine how much you're currently spending and where you can make cuts to save money.

Begin by creating an accurate budget to see what your pre-baby expenditures are and looking for ways to trim those costs before the baby comes. "The earlier you get used to spending less, the easier the transition will be when junior comes along," points out Bard Malovany, certified financial planner at Financial Council, Inc. in Annandale, Virginia.