Family Finances: What to Consider When Becoming Parents

Do you have a little one coming into your life soon? Whether you are pregnant or adopting, having a baby on the way is exciting and life-changing for your family. Knowing how to financially prepare for this change can be a challenge with the many unknowns of how to prepare for your first child. As you begin to get ready for your baby’s arrival, it’s essential that you have a plan in place, so you can be financially stable for them now and in the future.  

What Are the Most Important Financial Steps to Take When Expecting a Baby? 

A child entering your home can change a lot of things about your financial situation, and it can be overwhelming to know what to consider for their needs. Include the following in your list: 

Adjust Your Budget 

Your baby will make several major changes to your finances, and these changes should be reflected in your budget. No budget needs to be perfect, and it will take time for you to find the right rhythm for your financial situation. Be sure you and your spouse are on the same page for what you need to remove or add to your budget.  

Have a Strong Emergency Fund 

There’s enough unknowns when becoming a parent for the first time, so the last thing you need to worry about is if you have enough money set aside for unexpected expenses like a car accident or weather damage. Put as much as you can in an emergency fund before your baby arrives, even if you are starting from scratch. Since emergencies happen suddenly and can be expensive, this fund will serve as your safety cushion to help you be ready to tackle any payments that comes your way. It will also protect your growing family and keep you from becoming overwhelmed by the financial adjustment of your new child. 

Open a Savings Account 

Whether your child is arriving in a few months or you are hoping to have a child in the next few years, it’s a great idea to begin saving money for your child’s future now. Opening an interest-earning savings account is a great strategy for ensuring you can afford everything you need to welcome your little one into your home. Some great options for a savings account could be a high-yield savings account or even a certificate if you have more time to save. 

Along with saving for the immediate needs of your baby, you’ll also want to save for their future. Investing in your child’s finances now can make a huge difference for their financial well-being. Try setting aside some money each month for your child to grow their savings account. This account could be for general savings or a specific goal. Regardless of what you choose to save for, having money growing over time could make a huge impact for your child in the future when it’s time for them to buy a car or go to college. 

Pay Off Debt 

One of the greatest obstacles you can face in any financial transition is debt. If possible, try to pay off as much debt as you can before your baby arrives. Strategize a game plan to calculate how much you can realistically pay off and give yourself a timeline for when you plan to have it fully paid. A useful tool you can use to help you keep track of your payments is a loan monthly loan calculator.  

How Much Should You Budget for Your First-Year Baby Experience? 

As your excitement grows for your new role as a parent, your list of what you need to buy, what to consider for insurance, and how to adjust your living space will grow as well. To make things easier for you, here is a checklist of what you’ll need to include for your budget. 

Bedroom 

• Crib 

• Rocking chair 

• Bedding & sheets 

• Changing table 

• Changing pads & cover 

• Sleep sacks 

• Baby monitor 

Bathroom Supplies 

• Diapers 

• Wipes 

• Sensitive skin soap 

• Baby bathtub 

• Diaper rash cream 

• Trash can  

• Scented trash bags 

• Baby nail clippers 

 Food 

• Formula, if not breast feeding 

• Baby food 

• Bottles 

• Breast bump 

• High chair 

Transportation 

• Stroller 

• Car seat 

• Baby carrier 

Clothes 

• Diaper bag 

• Day-to-day outfits  

• Shoes 

• Socks 

• Burp cloths 

These are just some of the key items you will need for your new baby. While there are a lot of items that are needed, be sure to keep in mind that several items might be given to you if you register for them on a registry if you’re planning to have a baby shower. 

Why is Important for New Parents to Consider Their Health Insurance? 

Before diving into what insurance will look like for your family, the first step is to be sure that you have health insurance and know what your policy does and doesn’t cover. Each plan will look different depending on the state you live in, the size of your family, and if you are self-insured or insured by your employer. Now that your family is growing, you’ll want to list your new baby as a dependent and add them to your coverage plan within 30 days of their birth or adoption.  

 If you are giving birth, costs for delivery can vary and be expensive. On average, vaginal births can cost $14,768 and C-sections can cost up to $26,280 out of pocket. Insurance can bring these costs down substantially, since out-of-pocket costs are around $2,655 for vaginal births and $3,214 for C-sections. Regardless, if you have insurance through your employer or pay for it yourself, health insurance is crucial to have for your family as you enter into this new milestone of parenthood.