Personal Insights
9 budgeting tips for welcoming a second child

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Reuse what you can from your first child and keep other costs to a minimum, if possible.

When you have a growing family, it can be easy to get caught up in the daily hustle and bustle of raising kids (and managing careers and social lives). So if you are welcoming a new kid into your family soon, take a moment to look at the bigger picture. Kids cost money, and creating a budget that works to their benefit can benefit you as well.

News reports frequently update the total cost of raising a child. One highlighted a recent calculation that today it costs just over $310,605 to raise one child born in 2015 to age 17. Some of those costs will come later, when your kid grows toward college and their needs expand, but if you do the simple math of dividing that huge number by 17, you get about $18,270 a year.

That’s a lot of money—per child—to save.

Look at annual costs

A 2023 study calculated the average annual cost of a first child at $20,814 nationwide and $17,413 annually for the second child. The daunting expenses may dissuade some couples, though in another survey, 1 in 5 respondents acknowledged costs for the first child were more than subsequent children. Thank hand-me-downs, big jars of peanut butter and other shared expenses.

One of the biggest costs to keep in mind is child care. For Americans who decide to pay for care instead of having one parent stop working, a survey reveals full-time child care today has an average monthly cost of $631 per child, with 21% reporting they pay more than $1,000 a month per child.

Nine ways to keep costs in check

Of course, adding a second child to the family will inevitably impact your finances—from your pool of available savings and investment dollars to where you spend date nights and vacations. But it’s possible to stay within a realistic family budget. Start with these tips:

Stay put.

Having a new baby doesn’t mean you should automatically up your mortgage costs with a larger home. Bunkbeds are a wonderful thing!
Wait on the SUV or minivan.

Aim to make your current vehicle work for all your car seat and booster seat needs. Start stocking away savings for the bigger vehicle you’ll probably need when the kids are bigger and carpools come into play.
Exchange baby gifts.

After the baby shower, consider returning the ones for credit that can help you acquire items you really need. Poll friends about essentials.
Take advantage of sibling discounts.

From child care facilities to summer camps, save by letting institutions know you’re enrolling siblings. Shop around for child care before you commit.
Save on nursery expenses.

You may be tempted to deck out your child’s new bedroom with all new gear. Instead of buying a costly nursery glider at a baby boutique, find one at a second-hand store. Or better yet, use a hand-me-down from a relative or a friend.
Reuse baby gear.

You might need to buy a new double stroller after your second child arrives, but try to cut down on other gear. Recycle toys, clothes and car seats. (Check to make sure any hand-me-downs aren’t damaged, recalled or expired.) As the kids grow, shop at children’s consignment shops.
Buy groceries and diapers in bulk.

That big-box discount store membership is worth the cost. Stock up on big boxes of different size diapers and pull-up style diapers instead of buying them only when you run out. Save by packing lunches with bulk-bought items rather than buying the school’s daily cafeteria fare.
Consider bundling insurance.

You’ll likely increase your life insurance coverage with a second child, and health insurance may increase. But while life insurance and health insurance costs may rise, you may save overall by bundling different types of policies with a single carrier.
Take advantage of tax credits.

Counter new expenses by taking advantage of child care tax credits and exemptions. For 2024, the IRS allows $2,000 for each child, and $1,700 of that is potentially refundable.