Will Our New Baby Bust Our Budget

Waking up many times at night to care for a newborn, gives you lots of opportunities to come up with new ideas. As I sat in the rocking chair last night feeding our baby, an idea popped up in my head: Forget about tracking our monthly expenses for a month, how about tracking how much money we spend taking care of our new baby for a WHOLE year? It’s a good time to start, he’s only 10 days old, so I don’t have a lot of receipts to compile yet. What do you guys think? Does this sound like an interesting exercise? I have a couple of dilemmas though:

  1. This is baby #2, so I already had all of the furniture from baby #1. Should I assign zero cost to baby #2 or allocate half of the cost to him? The accountant in me says that I should only account for any marginal or additional costs incurred. This means I would consider the passed down furniture and clothing as a sunk cost and not bother adding it to the accounting for the new baby.
  2. At the same time, even though I have stockpiled a lot of diapers, I feel I need to include this in my expenses. Even when I spent the money over the past few months. I think that the cost of diapering is very relevant to the final accounting of how much this baby is going to cost us this year and should be included.

These are the expense tracking categories I have thought of so far: diapering, feeding, clothing, gifts and medical care. I do not think I should include the cost of delivering the baby because I want to focus more on daily expenses over the next year. Have I missed any category?

This article put a tag of $10K or so spent by the time baby reaches his first birthday. I hope I am able to beat it, not only because I didn’t have to incur any big ticket items but also because I don’t foresee spending that much. Umm, I hope this exercise is not another eye opener as the monthly expense tracking one was.