First of all congratulations on the imminent birth of your child!

The answer to your question comes in three parts: short-term, middle-term, and long-term costs. If you think in these terms, the enormous costs of rearing a child become a bit more manageable. Some you will need to save for, some will come out of wages (so keep building your earning-power), and some you may need to borrow for.

Short-term expenses involve all the gear you need to welcome a child. Essentials include a good car seat (which will need replacing 2-3 times as the child grows), a baby carrier, a small cot, a crib, a playpen, a stroller, and high chair. If you walk into Babies R Us, there will be thousands of other things that you will think you "need," but if money is tight, keep your focus. Many of the essentials can be had second-hand. Yard sales are a great place to find them.
I would, however, recommend, that you buy some things new: the car seat, for instance, and the baby's sleeping gear.

As for mid-term expenses, the Department of Labor estimates that it costs as much as $250,000 to raise a child until age 18. This estimate includes housing which is not necessarily an "extra" expense, unless you need a bigger house because of your larger family. This seems like a lot, no doubt, but if you break it down over the eighteen years, it comes out to about $18000 a year before taxes. Use that number to motivate you upward in terms of your career. In this case, don't plan just for the baby, but start career planning for yourself.

The long-term costs involve college or university expenses. These, too, are huge, but the good news is that there are a lot of ways to pay for college, not all of which require additional savings on your part. Your child may be eligible for loans, grants, or scholarships. If you do want to contribute, use a 529 plan, as suggested, where the investment can grow tax-free, if used for approved college costs. For more info, go to www.savingforcollege.com.

Honestly, I do not think there is a specific amount that anyone could say outside of “a lot”.

After recently having two children, I would say - "Save as much as possible", I would encourage you to look at what you spend monthly and think how that is going to change once the baby arrives.

For me - my social life changed drastically - because you have to focus on the baby and the baby’s schedule - which free up some money, however you spend more on things you currently do not spend on now - like diapers and formula - there is a lot of juggling and balancing in your future.

Try to keep track of everything, before purchasing anything for the baby (from Balmex to Wipes); look for coupons and discounts. Baby product marketers have tons and tons of offers to incentivize your purchase of their product; in some cases - they are almost giving their products away. Do not be bashful asking friends and family for coupons. Coupons that you cannot use have a secondary market/ use - you can trade or share with your friends, or even sell on eBay (I kid you not).

Also, do not ashamed to ask your friends who have babies - if they would share their baby clothes that their child has grown out of. You will be amazed how much clothing you will get and chances are you will even get clothing that has never been worn before and has the tags still on it, because babies grow so fast.

Babies - do not come with manuals - so the more questions you ask, the more answers you will receive, which will help you make better decisions.

Welcome to parenting; you are going to do great!

My kids are now in their 20s. One thing we did from birth (that worked out well) was to save each money gift they received from when they were born until around age 7 (when we 'let' them spend half and we saved half).

We invested the funds in custodial accounts at Vanguard or Schwab in broad based US market index funds (it wasn't much, but the minimum in a custodial account was very small).

While the kids grew up, we told them that the money was for college and they would take responsibility for it. When they went to college it was enough to pay for room & board and a bit of travel expenses, so that was the agreement - we would pay tuition and they would pay everything else. Both children chose to take jobs to supplement their funds and they are both comfortable with day-to-day money handling.

This may not be the most tax efficient way to save for college but the financial lessons were invaluable.

When it is 'their' money they are much more thoughtful about spending and saving. Both children started getting annual allowances and checking accounts in seventh grade so they were familiar with money handling before heading for college. They had to pay for their own clothing, entertainment and gifts for others.

All of the information that everyone is giving here is great! I almost wish I had it when I was pregnant. However, you can save, save, save, save, and still not have enough sometimes it seems. There is always going to be something else that pops up that you are going to need that you didn't plan for. Always try and plan for the unexpected - I know easier said then done. Overall, congratulations, it is a wonderful experience.

We wrote a very basic guide to having a baby here. It's a good place to start your research about how to prepare your financial life for a baby: http://www.filife.com/guides/guide-to-having-a-baby

In terms of how much to save - I'd suggest socking away as much as you possible can while your living costs are low.

Sounds like you're well on your way to being a responsible parent. nice job.

The cost of a college education increased by about a factor of 3 over any 17 year period. But you shouldn't try to save the full college costs, or you'll get sticker shock. Instead, think of spreading the costs out over past income (savings), current income and financial aid, and future income (loans). This yields the 1/3-1/3-1/3 rule, where you'll aim to save about 1/3 of college costs. Multiply the 3 and 1/3 and you get a savings goal of the college costs the year the child is born.

I'd suggest setting up a 529 college savings plan and make automatic monthly contributions. Start off saving what you can, and gradually increase it as your earnings increase. I'm saving $250 a month for each of my children.

You should also look into loyalty rebate programs like Upromise.

See www.finaid.org/savings for more information about saving for college.