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Can you afford kids? How to prepare for a baby financially

Can you afford kids? How to prepare for a baby financially

13 min read

Almost half of the people we surveyed (who want kids one day) for our 2020 Modern State of Fertility are delaying parenthood — and the top two reasons why were both money-related. After all, financial planning is a crucial part of any fertility (and life!) journey. There are expected and unexpected costs each step of the way, from reproductive healthcare before, during, and after pregnancy, to emergency funds, food and housing costs, and medical appointments once a new baby arrives.

Unfortunately, current parents, new parents, and prospective parents aren’t always offered the social services and financial assistance they deserve to make sure their families thrive. So, to help you prepare for a baby financially, we’re looking at the average costs of pregnancy and parenthood, the kinds of financial assistance available, and advice from financial experts so you can start providing for your future family.

The biggest takeaways

  • Delivery expenses can range from $8,361 to $19,771 with insurance, and there may be anywhere from $1,077 to $2,473 in out-of-pocket spending.
  • Fertility treatment can range from a few hundred dollars per cycle (intrauterine insemination) to $12,000 per cycle (in vitro fertilization), without medication.
  • Donor sperm may run you $500-$1,000 a vial (excluding associated legal costs with using an anonymous donor).
  • The average yearly cost of raising a child is $13,186 per year (with a median cost of $6,000).
  • You can start taking steps toward financial preparedness for parenthood by reviewing your health insurance coverage and benefits, setting up a Health Savings Account (HSA) or Flexible Spending Account (FSA) if you can, budgeting for a dedicated "Baby Fund," exploring your financial assistance options (which we'll outline here!), and leaning on your community for recommendations and secondhand items.

A note before we dive in: Financial costs for having and raising kids are 100% unique to your circumstances, so let this guide be a starting-off point (rather than a strict blueprint) for your planning!

First things first: How much does it cost to have and raise kids?

Several factors influence the cost of having and raising kids, from where you reside to whether you need fertility treatment and more. Let’s dive into the average costs so you can start thinking about your financial plan.

Having biological kids without fertility treatment

The cost of receiving prenatal care, giving birth, and receiving postpartum care in the US depends on your state of residence, whether or not you have health insurance, whether or not you give birth at a hospital (and which hospital), and what your specific health insurance plan covers:

  • Delivery expenses can range from $8,361 to $19,771 with insurance, and there may be anywhere from $1,077 to $2,473 in out-of-pocket spending. Why the range in delivery costs? Vaginal births are less expensive, while C-sections (31.9% of deliveries in the US) are more.
  • However, in 2020, the University of Michigan reported that people spend an average of $4,569 out of pocket on pregnancy, delivery, and three months of postpartum care — even if they have health insurance. (While this study was released in 2020, its data is based on 2015 statistics — so things have likely only gotten more expensive since then.)

Having biological kids with fertility treatment

If you undergo fertility treatment, you’ll pay $4,569 to $8,802 at least for the delivery, plus the cost of assisted reproductive technology (ART). Similarly, the cost of fertility treatment changes based on your state, your health insurance (or lack thereof), and your specific clinic. For reference, only 19 states require insurance companies to supply coverage for infertility treatments. And even if they do cover treatments, what they cover varies. Your health insurance plan may only cover expenses related to diagnostic testing to locate the source of fertility issues or some combination of diagnostic testing and treatment, or you’ll be able to get full coverage of treatments like in vitro fertilization (IVF).

Let’s get into the average costs of ART:

  • Average cost of intrauterine insemination (IUI): Each cycle can cost anywhere from a few hundred dollars to $2,000. To get a better understanding of expected costs, it's important to talk to your clinic about how many cycles to expect and possible medications.
  • Average cost of in vitro fertilization (IVF): This can range from $11,000 to $12,000 per cycle without medication, plus $5,000-$7,000 for medication. If combining IVF cycles with egg freezing, you could pay up to $60,000. Reciprocal IVF typically has the same costs per cycle, plus any expenses associated with donor sperm.
  • Average cost of genetic carrier screening: The cost of pursuing genetic carrier screening, whether it be through your doctor or through a direct-to-consumer (DTC) option, depends on your health insurance and on which screening option you go with. Some DTC options may cost as little as $100.
  • Average cost of donor sperm: The cost of donor sperm through a sperm bank can be around $500 to $1,000 per vial — on top of the costs of ART. If you're using a known donor, costs may also include legal fees so an attorney can draft documentation eliminating the sperm donor’s parental rights.

Even when fertility benefits are available through an employer, not all of them apply to partners who were assigned the same sex at birth or people looking to have children on their own. That’s because many reference the clinical definition of infertility, requiring couples to try to get pregnant through intercourse for 12 months before getting coverage — which isn't an option for those who aren't trying to conceive with a partner who has sperm. In these situations, unfortunately, most costs will be out of pocket. That said, some employers do offer (or are open to offering) pretty comprehensive fertility benefits that avoid these pitfalls.

Exploring alternative paths to parenthood

  • Surrogacy: Using a gestational carrier may cost around $110,000 on its own, excluding IVF costs leading up to that.
  • Adoption: Adopting from the foster care system is typically free, but using a private agency to adopt or adopting internationally may cost anywhere from $5,000 to $40,000 (though some agencies have sliding scales).

Raising kids

According to a 2019 study by LendEDU, the average yearly cost of raising a child is $13,186 (with a median cost of $6,000). Based on 2015 statistics from the US Department of Agriculture, here’s how that yearly spending breaks down:

  • Housing: 29% of yearly spending
  • Food: 18% of yearly spending
  • Childcare and education: 16% of yearly spending
  • Transportation: 15% of yearly spending
  • Healthcare: 9% of yearly spending
  • Clothing: 6% of yearly spending
  • Miscellaneous: 7% of yearly spending

How can you prepare financially for having and raising kids?

It’s impossible for any person to expect themselves to be completely prepared for the financial aspects of getting pregnant, having and raising a child, and affording any unforeseen issues. However, there are some steps you can take to achieve more long-term financial goals and be as prepared as possible.

1. Check in with your personal finances.

“Personal finances are just that — personal," explains Brian Walsh, the chief financial planner at SoFi. "That means everyone’s situation is different, but at a high level, there are some key indicators of having a solid financial foundation.” Here are Walsh's recommendations for financially preparing before having kids:

  • Have enough cash on hand to cover unexpected expenses: This typically means having between three- and six-months’ worth of expenses in a deposit account.
  • Try to get rid of "bad debt": This typically means that all your debt has an interest rate less than 7%.
  • Protect your income: This typically means having appropriate life and disability insurance to make sure, no matter what happens, you and your family are protected.
  • Save enough to maintain your lifestyle in retirement: This typically means saving between 15% and 20% toward retirement.

2. Budget for healthcare throughout pregnancy.

You’ll want to review your health insurance (hopefully before trying to conceive) in order to completely understand if your doctors are in network and what specific out-of-pocket expenses you can expect through copays, coinsurance, and deductibles. (You can do this by asking your insurance company for an Explanation of Benefits, or EOB.)

As we mentioned earlier, delivery costs can range from $8,361 to $19,771, but this will vary greatly depending on numerous factors, and understanding your projection as soon as possible can help you start saving up enough money. Even if you have effective health insurance, the costs for adding a dependent to your plan once your baby is born can be high, so that might also be worth looking into.

Are there ways to save on healthcare costs? Yes, according to Raya Reaves of City Girl Savings:

  • Contribute to an Health Savings Account (HSA) or a Flexible Spending Account (FSA): "These are health-savings accounts offered by employers that allow you to contribute pre-tax funds into accounts designed to help cover health-related expenses," Raya explains. "You are not taxed on the money that goes into these accounts, but you can only spend on health-related costs. This also allows you to have funds dedicated to health-related items before they come up, which helps protect your budget."
  • Do your research: "There are plenty of stores that offer a variety of services at low costs. Walgreens and CVS offer complimentary or low-cost flu shots. Target does eye exams. Local fairs may give complimentary screenings and shots," she says.
  • Understand exactly what your health insurance includes and what your employer benefits cover: "By law, Affordable Care Act-compliant insurance plans offer a variety of different screenings without copay requirements from the insured. This means you can get specific doctor visits covered by your insurance plan," Raya says. Also, "do your research to confirm if your employer offers any medical or health benefits to employees. Some companies may provide free therapy sessions, contribute to an HSA or FSA on your behalf, or offer many other forms of healthcare savings."

3. Explore financial assistance for fertility treatments.

Many clinics offer shared-risk options and packages, as well as loans and other financing options to help you afford fertility treatment.

Numerous grants and scholarships exist to help cover IVF and egg freezing costs as well. You can apply for fertility treatment grants from organizations like:

Many grants also exist specifically for cancer patients who aim to preserve their eggs before cancer treatments or undergo IVF after a cancer diagnosis. You can find more information about those grants at:

Even more grant opportunities can be found at the Alliance for Fertility Preservation, The Samfund, and Fertility Within Reach.

4. Prepare (as much as you can) for anything that may come up.

Preparing for a baby is largely about financial preparation, yes, but it’s also about preparing for potentially tough times. Brian Walsh, the chief financial planner at SoFi, recommends taking the following steps:

  • Make sure that you have enough life insurance in place — just in case something happens. It's important to understand the added joy of being a parent comes with the added responsibility of protecting your child.
  • Get your estate planning in order. This means getting a legal team and documentation together so you’ll be ready for anything once the baby arrives. Documents include:
    • Durable power of attorney: A document that allows someone else to make financial decisions on your behalf.
    • Healthcare power of attorney: A document that allows someone else to make healthcare decisions on your behalf.
    • Living will and beneficiary designations
  • Increase your cushion and emergency fund. Once you enter the phase of life as a parent, you’re working with a new budget to take care of your new child and prepare for their future. Also, if you have a partner and plan to stay home from work to care for your baby, keep in mind that you'll be shifting from two incomes to one.

5. Set financial goals to provide for your child.

  • Discuss childcare strategies and feeding approaches before your baby arrives: Childcare strategies might include being a stay-at-home parent, relying on a relative, sending your child to daycare, or hiring a nanny or au pair. All options come with varying direct and indirect costs, but also depend on your unique preferences. Feeding approaches typically include deciding between formula and breast/chest milk. Finances will certainly come into play, but it's important for you and your partner (if you have one) to understand each other’s values and priorities.
  • Update your budget to prepare for new baby expenses: This includes ditching unnecessary expenses to accommodate the increased spending (up to $13K!) over the next few years. And once again, remember to consider any lost income throughout this transition, especially if one parent in a two-parent household is going to stay home with the child.
  • Save money to pay off as much debt as possible: Paying off as much of your student loan and credit cards as you can before you start budgeting for pregnancy and childcare expenses can alleviate stress and help you better prepare for your family’s needs. If paying your student loan is (understandably) too difficult during maternity leave, you can defer or forbear payments during your first months of parenthood.
  • Set a timeframe and work backwards: "For example, if you want to start trying to have kids in two years and want to have $10,000 saved in preparation, you need to set aside $416 per month," advises Tori Dunlap, founder of Her First 100K. "Having a specific plan of attack ... can make your goal seem less overwhelming.”
  • Automate your savings: "Have a percentage or dollar amount of each payment set to automatically transfer into a high-yield savings account named 'Baby Fund,'" suggests Tori. "Even if it's only 1%-2%, that will make a huge difference in saving money without you having to think about it. And yes, we do want to name that account. Psychologically, it'll help keep you motivated towards your goal!"

How much should you put in your "Baby Fund"? AShira Nelson, the founder of Savvy Girl Money, says to estimate your total fund based on expected medical costs and the time you plan to be on parental leave, then divide that number by how many months you have to save. "This number will let you know how much you need to deposit each month into your sinking fund (or 'Baby Fund') to accomplish your saving goal," she explains.

Here's an example: Let's say you're going by the top-end average of out-of-pocket spending for delivery ($2,473), you plan on taking an additional month off of work on top of a three-month paid parental leave, and you'd like to save for your baby's first year of life. You can add up $2,473 + one month's cost of living + ~$13,186 to get to your saving goal.

5. Save on childcare costs.

Use that USDA breakdown of yearly childcare costs to figure out where you can save money. For example, if 6% of yearly spending goes to clothing, you can rely on hand-me-downs for at least the first few years of your child’s life.

"We got so much baby stuff used, secondhand, or for free. We really waited until we truly understood what our child needed, before buying something," explains personal finance blogger and management consultant Shang Saavedra. "We are part of strong communities (church, mommy groups) where resources are shared."

If 16% of yearly spending goes to childcare and education, you can enroll your child in public school and associated after school programs so can avoid the added financial burden of tuition.

6. Check for benefits provided by your employer.

Review the parental leave and disability policies at your job. In most cases, US-based employers are not required to grant this leave unless you work at a company with at least 50 employees within 75 miles of your work site. If eligible, you can take up to 12 weeks of unpaid leave under the federal Family Medical Leave Act (FMLA).

As we already mentioned, some employers may also offer fertility benefits for ART and other fertility care. "Some employers have fertility costs built into their healthcare plans," says financial coach Keina Newell. "If you're in the market for a new job, you may also consider whether your new employer and or state has fertility-related benefit costs."

What if you’re unemployed or your job doesn’t provide benefits?

If you’re unemployed, underemployed, or work at a job without benefits, it can be especially (and unfairly) difficult to access any kind of affordable care — including parental and infant care. What can you do to potentially ease the financial burden?

  • Understand what will be covered by the Affordable Care Act (ACA): The Affordable Care Act (ACA) considers care for the birthing parent and infant essential, meaning that both must be covered in all health insurance policies. This care includes preconception and prenatal doctor's appointments, as well as required tests, procedures, and screenings (e.g., gestational diabetes). (Giving birth or adopting a child is a qualifying life event for insurance enrollment, so if you don't already have health insurance throughout your pregnancy, you'll have the option to enroll after having kids.)
  • Talk to human resources (HR) at your workplace: Assuming you have a job that does provide some health insurance — but poorly covers ART or pregnancy care — consider having a conversation with your human resources (HR) department. Dr. Roohi Jeelani, MD, FACOG, suggests reaching out to them with examples of companies that do cover the procedure you need, as well as to ask about loans or HSAs.
  • Research Medicaid and other state services: If you’re pregnant but don’t have health insurance and/or are low income, you may be eligible to receive care in your state through Medicaid. Even if you think you otherwise wouldn’t qualify, being pregnant makes it likely that you’ll be eligible. Additionally, once baby arrives, you can get insurance for your infant through the Children’s Health Insurance Program (CHIP). For example, In California, you can enroll in the Medi-Cal Maternity Insurance Plan. To see what pregnancy care and children’s health insurance programs are available in your state, search this database.
  • Apply for grants: If you need help affording ART, look into the financial assistance programs we discussed earlier in this article.

So, how do you know if you're actually ready, financially speaking, to have kids?

While financial situation shouldn't have the power to bar anyone from having the family they want, financial stability undoubtedly makes creating that family easier. But it's up to you to decide what that looks like for you — whether that’s paying off your student loan or your credit card debt before trying to conceive, or increasing your savings account or emergency fund before you have children.

"I don't fully believe in the concept of the 'right time' for having a baby. While some times may feel better than others, the only thing we can count on with life is how unexpected it will continue to be," says career coach Ashley Stahl. "I believe that when life calls you forward, and you want something enough, its status can change from a yearning to a non-negotiable need. When a woman can make starting a family a non-negotiable for her, I trust she will do what it takes."

For all things fertility and planning ahead, Modern Fertility is your neutral, judgment-free resource for building the life you want. We're here to support you as you go after your goals — whatever those goals may be, and however you plan to achieve them. Explore our free fertility tracker to see how finances fit into your ideal timeline for kids.

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Rachel Sanoff

Rachel Sanoff is a writer and editor in Los Angeles. She was previously an essays editor at O.school, a digital sex education platform, and the features editor at HelloGiggles.

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