9 Financial Steps to Take Before Having a Baby

• Author: Kelly Cooke
• Posted: 2024-04-12

Having a baby is the biggest and most essential long-term financial investment a family can make. Many parents wish that raising children was not so expensive because you have to pay for so many baby supplies and other costs down the road. Here are nine steps to take financially before your baby arrives, so you can have the best monetary peace of mind afterward.

Save Up For Upfront Costs

The costs of childbearing begin even before your baby is born. You will likely need to purchase a whole wardrobe of maternity clothes, as well as some hospital fees along the way. After birth, the costs of buying baby supplies such as clothes, food, and diapers are steep. Before you reach the point of needing to pay for all of these essentials, you should save up money far in advance. This way, you are not scrambling to fund your baby at the last minute.

Adjust Your Budget

Having a baby will force you to redirect a lot of your existing budget to new costs. You should plan accordingly in advance to change your budget to accommodate the new child. For example, some expendable money you have for travel and leisure should be diverted to the costs of infant supplies, as your baby needs those things, and you likely will not be able to travel for the first several months anyway.

Consider Long-Term Expenses

Many successful people had their parents start a 529 account when they were born so they could get their education seamlessly. If you have the financial means to start a 529 account, it is very beneficial for your child's future to create one at birth. After that, you should add a little bit of money to it monthly. Additionally, you should look into saving for long-term expenses other than college.

Redo Your Life Insurance

Since you will now have a child, you have someone close to you to add as a beneficiary to your life insurance policy. It is smartest to add your child to your life insurance policy from birth, just in case something tragic were to happen. If your child is young, they will not be able to handle finances on their own, but they still will possess the assets in the eyes of a court.

Save Money Shopping Smartly

Since having and raising a baby is so expensive, you will likely need to cut your existing budget down to meet your new financial needs. To do this, you should try to do your everyday shopping somewhere that is less expensive, and try to buy cheaper products. With the savings from reduced everyday expenses, you will have more money left over to care for your child.

Get Used to Living on a Single Income

Since most people in the United States do not have long-term paid maternity or paternity leave, you might need to live on a single income, so one parent can stay home to take care of the child. The benefits of this may outweigh the steep costs of child care. If you need to live on a single income, try to adjust your budget accordingly to make sure you have enough to meet your basic needs.

Go Over Your Maternity/Paternity Leave and Insurance Policies

If you have paid family leave in your job, you should review your company's policy to see how long you can be home to take care of your new baby. Companies have varying policies, so your family should plan in advance regarding who will be home and for how long. Additionally, you should review your health insurance policy to see which childbirth expenses will be covered and what options you should choose.

Gauge Your Needs After Your Baby Shower

If you practice the tradition of baby showers, you may receive a lot of the supplies you need for your baby as gifts. Therefore, you should not make a plan for baby shopping until after you know what you already have. It is a waste to have duplicate baby clothes, so plan accordingly.

Update Your Estate

Much like with your life insurance policy, you need to add your new child to your estate plan to ensure proper inheritance in the future. While nobody plans for a tragedy, it is important to be prepared even while your child is very young in case of an unlikely disaster. It is easier to add people to your estate when they are born than when they are older.