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By the time baby number three arrives, you know what to expect during those first few, sleepless months. But some of the costs of having a third baby are easy to anticipate while others may be more surprising. The extra costs can be handled by making adjustments to your family budget. Here are a few items related to your growing family to consider for financial planning purposes.


According to the U.S. Department of Agriculture (USDA), housing expenses account for 29 percent of child-rearing costs. The third child may be a motivating factor for you to finally buy a new home. When you have three kids, you may quickly realize how much you've outgrown your current home. If you decide it's time to buy something larger, saving for a down payment will become a priority.


As your kids become more active, you may also notice an increase in gas and other transportation expenses. In fact, the USDA reports that 75 percent of family transportation expenses were related to child-rearing costs. In addition to other parenting responsibilities, moms really do run a virtual taxi service for their kids. Driving three kids around town may mean that it's time to give in and buy a more practical vehicle, such as the enduring symbol of family transport — the minivan.

College Savings

You can never start a college savings plans too early for your kids. Look into state-sponsored plans that may also offer tax advantages. Set up a direct deposit to the accounts each month, guaranteeing that this important savings account isn't forgotten. Start small by adding to the account each month, giving the money ample time to grow before your child will use it.


As a parent, you'll find everything from hotel rooms to family discount passes often cater to families. Vacation planning can be more important when you have three kids, because the costs can quickly pile up when you're paying for everything times five. Pay attention to the limitations placed on "child" or "infant" theme park tickets and try to plan vacations before your oldest child ages out of certain categories and you wind up paying full price.

Career Changes

When you're having a third baby, you should also look at your budget from an income perspective. By the time the third child arrives, you or your partner may be considering scaling back your work hours, or even going part-time. Try living on one salary for a few months to determine if a reduction in income is manageable for your family.

Budget Areas Where You’ll Save

By the time the third child comes along, you probably own most of the baby gear you'll need. High chairs, cribs, strollers and possibly even some clothing that was rarely or never worn in baby sizes can all be passed down. However, you'll still need to budget for items like diapers and baby food. Your entertainment budget may also decrease, because with three kids you may be choosing Netflix over the movies, or takeout over a nice restaurant.

Advanced planning can help make the transition from two kids to three as easy as possible. Chances are you've been thinking about buying a home or a larger vehicle before you decided to have three kids. To manage your family budget and find ways to save, financial tools can help you track current spending and highlight changes in your income and expenses before and after the new baby comes along.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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