A new study says babies are more expensive than many might think.

By Blake Bakkila
Updated May 01, 2017

According to a study conducted by NerdWallet, more than half of people expecting to welcome a child in the next three years anticipate baby’s first year to cost less than $5,000. However, researchers say the cost of basic baby care necessities is closer to $21,000.

“And many parents want to give their babies more than the basics, which we estimate requires about $52,000—with spending on higher-quality cribs, strollers and other basics, high spending on food, life insurance for both parents, and the start of a college fund,” NerdWallet’s insurance expert Amy Danise tells Real Simple.

The study analyzed and compared two different households: one with a $40,000 annual income and another with a $200,000 income. The former represented a family that would not qualify for substantial government assistance, while the latter would likely opt for added costs (life insurance for both parents, in-home nanny care, and the recommended amount of annual college savings).

The survey, conducted in February 2017, polled 2,243 U.S. adults ages 18 and older. More than half of participants (1,247) were parents and 213 were expecting or planning to have a child within the next three years. Along with the poll, analysts used data and information collected from the 2015 U.S. Bureau of Labor Statistics Consumer Expenditure Survey, the December 2016 U.S. Department of Agriculture Food Plans, and the NerdWallet Baby Checklist, among other materials.

"One of the most troubling findings was that many people are going to be unprepared for the cost of child care,” Danise says. “It’s likely to be one of the biggest expenses for new parents, so it will be financial shock.” Danise adds that only 35 percent of survey respondents knew that child care would be one of the biggest expenses. Findings showed that the $40,000 household could expect to pay approximately $21,248.22 for such services in their baby’s first year, while the $200,000 household would likely spend about $51,985.37.

The study also found that many current parents experienced financial regrets about the decisions they made during—or in preparation for—their child’s first year. More than 30 percent said they regretted not starting or contributing more to their child’s college savings, 24 percent said they regretted not starting or contributing more to an emergency fund, and 18 percent said they regretted not starting or contributing more to their own retirement savings.

“It’s useful to look at the regrets that parents have and learn from their mistakes,” Danise says. “Interestingly, the biggest regrets were around failure to make long-term financial moves—like not starting a college fund or saving more, and not starting or contributing more to an emergency fund. New parents are distracted by immediate needs like diapers and wipes, and, of course, it’s not until many years later that a lack of long-term financial planning can come back to bite."