Babies are awesome. But money wise getting ready for baby can seem like a huge challenge. Saving money on baby and preparing your finances for baby’s arrival are almost a part-time job for expecting parents! And with estimates on the average cost of raising a child from birth to age 18 coming in at $250,000 or more(!) you better believe I encourage you to find ways to prepare financially.
While we may not be in this phase of life anymore (my youngest is now 9!) we have a ton of experience with both smart strategies and the not so smart mistakes we made when preparing for our children.
Before you get stressed about money and worry you won’t be able to provide your baby with everything you can follow these tips to get ready for baby financially whether it’s your first baby or your fourth.
29 Ways To Prepare For Baby Financially
1. Make a will.
The #1 thing you need to do is make a will. As parents your responsibility shifts and you need to make sure should something happen that you have left guidelines about what should happen in case of death. It’s morbid stuff, but so important. I included a section about getting a will in my post titled what to do before you die.
2. Choose guardians for your baby.
Speaking of wills, you’ll also have to choose guardians. This may also be challenging as it seems like such a huge ask, but at the same time it’s so important.
3. Purchase life insurance.
When you’re married or single with no kids life insurance isn’t on the top of your list. Once you’re prepping for baby it should be though. It makes sense to have insurance in case something happens to you or your spouse so that you’ll be able to pay off debts, replace lost income, and more. If you have more questions read what I wrote about how much life insurance is needed.
4. Save more for emergencies.
Stockpiling money for emergencies now is extremely helpful in any scenario, but before baby it’s essential. Costs associated with a complicated delivery or early term delivery can run into the tens of thousands. The more you save now the better off you’ll be should an emergency arise. Don’t know where to start? Read about the 3 steps to make an emergency fund.
5. Research parental or maternity leave.
Research parental leave or maternity leave at your workplace. While the US lags behind many other developed countries for maternity leave some companies are catching on and offering up at a year of parental leave with pay and promise of a job on your return. Many US workers have NO maternity leave, if you are in those shoes start saving vacation days and money now so you can take time off.
6. Live off one income.
Whether you choose to have one parent quit working or not living off of one income is always a smart idea. You can read more all our living on one income pieces here.
7. Cut unnecessary expenses.
Start cutting unnecessary expenses now so you free up room in your budget for baby. Read about how we cut $17,000 in expenses to give you some ideas to get started. You can also check out one of my most popular money-saving ideas: our year-long menu plan that can save you $1,000s each year.
8. Estimate baby expenses for the first year.
Estimating baby expenses can be tricky, but there are a few main categories: childcare, diapers, food or formula, and clothing. Talk to parents you know to get an idea of what to expect financially.
9. Pad your budget.
Padding your budget is always important, but with baby it’s even more so. For instance, you may have stockpiled diapers before baby only to find they don’t fit your baby and cause leaks. So that stockpile is suddenly useless and you have to restock.
10. Stockpile meals.
While you’re cooking make extra to save in the freezer for post-baby. It will make those first few weeks and month that much easier. While it costs a bit more now for the extra groceries it will help you adjust to the higher spending you’ll have when baby is born.
11. Figure out childcare.
One of the biggest expenses for working parents is childcare. If you’re both working now it’s helpful to start looking at childcare costs, talk to friends or family who may be willing to help out, or consider alternative arrangements with your work (such as changing to a second shift or work virtually for several days a week). You might even consider giving up one income. Did you know that it’s common to tip your babysitter or nanny at the end of the year?
12. Learn about adding baby to your healthcare.
Read online or ask your HR department for more info. (Assuming you already told them you’re expecting.) There are often a few simple steps, but if you forget to add them (it happens!) then you’ll be stick with the bills.
13. Start a 529 plan.
Assuming your retirement savings are on track you can set aside money in a 529 Plan now for your child(ren)’s college education. Read more about 529 plans and college savings.
14. Ask for advice from trusted friends.
Ask friends what ways they prepared financially for their children. What did they wish they hadn’t purchased? Do they wish they had stayed home with their baby for longer? Find out what they would recommend you do to financially prepare for baby.
15. Have one parent be the money manager.
With a new baby at home you’re sure to be tired, distracted by cute baby coos, and finances go on the back burner. Have one parent be the designated money manager-responsible for paying bills, submitting paperwork, managing expenses, etc.
16. Set aside funds for mom’s clothing.
One of the biggest expenses an expecting mom has is clothing. As her body changes she’ll need larger sizes, maternity clothes, and then eventually post-baby clothes. Set aside a decent budget for clothing since she’ll need it.
17. Shop used.
Shopping used or consignment is a great way to save on baby expenses from baby gear to maternity clothes.
18. Acquire hand-me-downs.
While shopping for baby stuff can be fun consider asking friends, neighbors, and on community sale groups for hand-me-downs anyone might be willing to give.
19. Make friends with other expecting moms in real life and online.
One of the best things I did as a new mom was to connect with other moms in the classes we took pre and post-baby as well as online. Whenever I had a question about an expense or an idea that I thought might save money I was able to ask about it, learn about it from them, or share it. One mom showed me how to make homemade baby wipes that saved us a few hundred dollars in our oldest son’s first year.
20. Rack up credit card points.
Whether you’re shopping for baby gear, maternity clothes, or diapers using your credit card to rack up credit card points is easy to do. You can use those point’s for a vacation, baby’s 1st birthday party, or splurge on a night out for mom & dad.
21. Avoid big purchases.
As tempting as it is to purchase a bigger family car or a larger home-even if you do need those things wait until baby comes. The reason? You can spend 9 months saving up and once baby arrives you may find you don’t need that nursery or family car after all.
22. Check your credit.
Since you’re doing a financial checkup and getting things in order anyway you might as well check your credit, too. You don’t want any surprise bills or spending that shows up because someone stole your identity. Here is more information about how to track your FICO credit score.
23. Check delivery costs.
No, not of your takeout, but your cost out-of-pocket for childbirth. Assuming you have a healthy delivery and all goes well you should be able to estimate what your out-of-pocket costs will be and save up. Should you or baby need special medical treatment or care those costs will skyrocket, but you’ll be in good shape since you already have extra savings in place (see emergency savings above).
24. Check disability coverages.
This could go under insurance in general, but since you’ve already bought life insurance and checked on your health insurance you should also check disability coverage. This could be helpful should mom have complications that require time off work or a future accident or illness cause you to not be able to work.
25. Shop for healthcare providers.
While you may have set costs when it comes to your-pays or deductibles not all providers charge the same amount of money. The goal is to find high-quality care for less. For pregnancy care consider a certified midwife. They offer affordable care that’s often more hands on than a large OB/GYN practice. For many women bedside manner is just as important as cost, so don’t be shy about switching providers.
You’ll also want to consider where you give birth. Not only can you shop around for providers, but you chose between a home birth, birth center, or hospital if you’re considered low-risk. If you’re considered high-risk you may want to look at area hospitals to find the one that’s best equipped to deal with your needs and any potential complications. Lastly, I always recommend looking at not only their numbers (number of patients, number of doctors/providers, C-section rates), but also talk to previous and current patients.
26. Create a baby registry.
People will want to give you things, and while it would be ideal if everyone contributed to baby’s 529 Plan some folks will want to buy baby things. I mean who doesn’t love to buy baby clothes? Creating a registry allows you to share what you need without having to field tons of emails and calls.
27. Only buy the essentials.
All that stuff you need? Most of that stuff you don’t need at all! Pare down to the essentials. Read my baby-tested, mom-approved list of 15 baby essentials.
28. Find ways to save big on baby gear.
Finding ways to save on the essentials that baby will need is key! Read 5 ways to save the most on baby expenses.
29. Take advantage of sales.
Take advantage of sales whenever possible when buying baby gear.
What other ways did you financially plan for baby or are you planning to?