They don’t really.  There’s a myth out there that having a baby is going to cost you a fortune, but for the first year they actually need quite little.  And when you look at the equipment objectively instead of putting on your greedy consumerist glasses it’s mostly junk to fill your house.  Also, like all cost cutting measures, you have to compromise something I find is far harder for the parent’s-to-be than for the baby.  The baby could care less how fashionable the diaper bag is or how new their clothing might be.

When I added up everything on my registry, which is everything I intend on getting for my child, it came to under $2000.  And that is including a few cute splurg items and some over-priced organics & if I were to buy everything new.

Frugal rules for stuff: take hand-me-downs (as long as they’re in good condition, useful, and still meet safety standards).
Buy second-hand (as long as they’re in good condition, useful, and still meet safety standards).  Just because someone has gotten rid of their baby items doesn’t mean they can’t be cute, fashionable, trendy, and exactly what you’re looking for.
Be thankful for presents.  Your shower could likely contribute 90% of everything you need for baby, so choose your registry wisely.
Make stuff.  Can you sew a straight line?  Then you can already make several useful baby items for much less than buying brand.  There are tons of free online tutorials for everything from simple wet pouches to cloth diapers.
Don’t buy into the hype.  Babies need very little, but places like Babies R’ Us would have you believe they can’t do without change tables, travel systems and more, more!  Nobody wants to spend more than they need to, and you’ll feel even worse if a friend buys you something expensive from your registry that it turns out you never use.

What does a baby need?
A place to sleep.  This is most often a crib; however, many parents are looking for alternatives to the ‘baby jail’ 🙂  Some other options are co-sleeping, bassinette (only until they can pull themselves up), mini-cribs, portable cots (pack ‘n’ play or travel cribs).  You can also often find someone getting rid of their crib (or willing to lend one).  So long as it still meets safety standards, it’s a great option as cribs can be one of the most expensive items on your list.
Food.  If you’re breastfeeding, this costs $0 and is the healthiest option for your baby.  As they get older, making their food is very in-expensive, and much easier than many realize.  Tight on  time, how about a mix of bought and made~ you don’t have to choose one or the other.
Diapers.  Cloth is a higher initial expenditure, but again if you’re having a shower and ask each guest to buy one as part of their gift, you’d be set.  Cloth diapers have changed a lot, so don’t just brush them off as too much work or gross.  There are now a ton of options, including one size fits all meaning you don’t need to buy more as they grow.  While I absolutely will not recommend using traditional disposables, I will say that there are a few environmentally friendly brands out now that are made from eco-friendly materials and are compostable/biodegradable (they are pricey though).
Clothing.  If you are having a shower, absolutely do not buy any clothes until afterwards.  Ok, maybe one newborn onsie that’s super cute 😉  You will get a ton of clothes, and likely all in the smaller end of sizes.
Transport.  It’s mandatory that you own a car seat, even if you don’t plan on a hospital birth or don’t drive.  Because they have such short expiry dates this is likely the one item you will have to buy new.   I’d also recommend getting a baby carrier of some sort for the first 3 months and then a simple umbrella stroller for after.  Travel systems, in my opinion, are huge money wasting gimmicks.
Toys.  Don’t go crazy.   Babies start out interested in you and the world and don’t need a ton of toys.  Then it’s Christmas and people buy them toys, then it’s their birthday and they get more…. you don’t need to buy too many of these as you can imagine.
LOVE.  Absolutely the most important thing on this list, and it’s free.