Expanding your family can be exciting, but it can also usher in major changes that impact your family finances. An additional child comes with added costs that will undoubtedly change the way you spend and save money.

According to a 2025 LendingTree study, the annual cost of raising a small child (from food and apparel to transportation and childcare) is $29,419. Of course, this is just an average, but it highlights the need for growing families to carefully review and adjust their budgets.

So, if you’re planning to grow your family, it’s a good idea to be proactive and ensure your budget can handle this major life change. Here’s how.

In order to get your budget in shape to accommodate a new member of the family, it’s important to think through how your everyday expenses will change. It’s unlikely that all of your spending categories will increase, but some likely will. This could include:

• Transportation: Adding a new member to your family might require you to get a bigger vehicle or even buy a second car, which means you could end up spending more money on your car payment, fuel, and/or auto insurance premiums.

• Housing: If your current home is at maximum capacity, a larger home with extra room may be necessary. However, this could mean higher monthly bills for rent or a mortgage, utilities, insurance, and property taxes.

• Health insurance: With a larger family comes additional insurance needs, and that usually means higher premiums.

• Childcare: According to a Care.com survey, parents spend a whopping 22% of their household income on childcare, with the average parent depleting nearly one-third (29%) of their savings on childcare costs alone. That’s why it’s important to factor childcare costs into your budget and start setting aside extra funds ahead of time, if possible.

• Food: An extra mouth to feed will increase your grocery bill. However, smart budgeting and meal planning can help reduce costs.

Once you’ve identified which expenses will increase, take a look at how you’ve been spending so far. This will give you an idea of how to adjust your budget so your income (including any bonuses or side gig income) covers both essentials and future goals.

Start by reviewing the last three to six months’ worth of credit card and bank statements. “Take the time to track your income and your expenses — not just for the past month but also for the quarter — and make sure to make note of once-a-year expenses as well,” said Bobbi Rebell, CFP and personal finance expert at CardRates.com.

Be honest with yourself about how much you can expect to spend on each category and which discretionary expenses make sense to keep (or cut). You may need to dial back spending on areas like dining out, subscriptions, and entertainment or travel to accommodate the higher costs associated with adding a child to your household.

“If costs go up, income has to go up to meet the needs, and that is a challenge families do face,” Rebell said. “In many cases, families save money by eating in more and going out less in general because of the needs of the new member of the family. In other words, the entertainment and recreation budget tends to shrink almost by default when a new member is added to the family.”

In addition to daily expenses, you should also be sure to prioritize saving. Whether you need a bigger emergency fund or want to start saving for your child’s college education, savings contributions should be line items in your budget as well.

Read more: How much of your paycheck should you save?

Budgeting for a new family member is not a “set it and forget it” exercise. Your first attempt may not be perfect, and that’s OK.

As you’re taking on new expenses and adjusting the way you save and spend, it's important to be flexible. Check in regularly to make sure your budget is still working for you. Ultimately, your budget is meant to help you afford the things that are important to you — if it feels too restrictive, it’s perfectly acceptable to make adjustments.

And you don’t have to reinvent the wheel. There are plenty of resources available to help make budgeting and saving easier, from budgeting apps to valuable workplace benefits. So, seek out guidance when you need it.

Read more: How to choose the best savings account for your kid