The "We're Expecting" Financial Checklist

Having a baby can be a transformational time for you and your family.  It can also transform your finances so anticipating upcoming challenges can make the whole experience a little easier.  Below we explore some of the considerations you should make before and after your new baby arrives.  Whether this is your first or not, it never hurts to revisit your finances each time your family grows. 

Countdown to B-Day

Expert Tip: The more you can plan before you’re sleep-deprived the better.

General Financial Preparation

Consider any large financial and lifestyle changes that are required when your child arrives.  The changes you can expect when transitioning from zero children to one or more children can be substantial.  If you already have a child, you may not require some of these changes.  

Your sporty Mazda Miata might not cut it anymore. Equal consideration should be given to how a new car (or cars!) will grow with your larger family and how it will accommodate 1+ car seats. 

Your new roommate has some expectations. Both setting up your current home for a new baby or shopping for a new home to better accommodate your family will have costs.  How will you finance renovations?  Which homes are in your price range given competition and mortgage rates? 

A new home will involve credit checks and financial disclosures which can require some preparation.  

Your family needs you. In case of death or disability, are they protected?  Life and disability insurance are designed for protection against these very risks. You (and/or your partner) may have some coverage through your employers but it may be beneficial to supplement that coverage with your own policies. 

Completing the purchase of a new insurance policy can be a lengthy process, and if you are the mother, getting your required medical exams before pregnancy can be beneficial for your premium costs. 

Reach an agreement with friends and family on whether they will be able to help support you in the first few weeks or months after the birth of your child. Help around the house, at night, or offers of financial assistance can be a huge benefit.  If these are not available, consider what additional support you need.

Frequent doctor visits and the volume of diapers you buy in the first year can add up. Increasing your cushion of cash can help minimize financial anxiety. Aim for at least three months of anticipated expenses in savings.  If your household will be on a single income post-birth, you may need more.  

Take stock of your monthly expenses and consider how you can improve your financial situation through accelerated debt repayment in the months before your child arrives.  Focus on your highest-interest debt which will be the largest drain on your cash flow.  

If building an emergency fund and paying down debt are competing priorities, discuss how best to solidify your financial preparation with a trusted financial advisor who can offer you recommendations on how to structure your priorities.  

Explore childcare options and budget for the option(s) that fit you best. Whether you are lining up daycare, a nanny, family help, or caring for your child yourself full time, making plans early can improve your success.  Many daycare providers have months or years-long waiting lists which may require a hybrid strategy.  

Plan for any adjustments to your current budget including food costs, infant necessities, retirement contributions or other goals.  

Tip: Start “practice payments” where you set aside the amount you’d be paying for childcare or other large costs months beforehand to test out how living with this added expense impacts your lifestyle.  It is an easy way to save for and prepare your budget for the higher costs of a child. 

Consider how a child will impact your tax situation.  Additional deductions or credits may change your tax planning strategy. 

Larger workplaces have diversified their child-related benefits and may offer support or contributions toward care programs or other services like doulas, lactation consultants, or breastmilk shipping services.  Some benefits may be taxable or partially taxable.  

Even before your child arrives, you can open a 529 account.  An account can be opened under a parent’s name and be transferred to the child upon birth (once a Social Security number is assigned). 

Many states offer their own state-sponsored plan that might include certain savings or tax deductions. If not, a general 529 will offer the standard benefits for school savings.  

Healthcare Benefits Planning

Having a child can be an intense experience and often brings people closer together.  Those people are usually you and your HR representative(s).  Make sure both you and your partner discuss your options, benefits, and responsibilities well before your due date.  

Discuss your options and intentions with your employer for how much leave you plan to take and how to coordinate the best way to hand off your work.  Many employers have very defined procedures for how leave will be recorded such as using the Family and Medical Leave Act (FMLA) or short-term disability as part of leave. You can count on paperwork being involved.  

Splitting your leave into multiple parts or balancing leave with your partner is an option more people have take advantage of in recent years.  Explore your options for a flexible situation that fits your needs.  

Consult with your OB/GYN if you have questions about procedures and use this information as you discuss your coverage and plan options. If you can prepare ahead of Open Enrollment, consider which plan tier may be best suited for you given this new information. 

Suggested Healthcare Questions

Homecoming

Expert Tip: Seems like you are kind of busy…so only focus on the important things

Paperwork Makes the World Go ‘Round 

Ask a representative from the hospital how they can assist with filing forms for your new child.  Forms will be:

More Health Insurance

Time to reconnect with your bestie in HR. If both you and your partner have health insurance, consider which plan is most beneficial for your child. Depending on your plan coverage, it may be more cost-effective to include the whole family in one plan. 

529 College Savings Plans 

If you didn’t open a 529 account before your child’s birth, you can open one now with their new Social Security Number.  If you already have a plan created, you can now switch the beneficiary to your child.  Many states offer their own state-sponsored plan that might include certain savings or tax deductions. If not, a general 529 will offer the standard benefits for school savings.  

Parents, grandparents, uncles, aunts, etc. may be reaching out to start a 529s for your new child. They will need your child’s Social Security Number. Use this as an opportunity to discuss coordinating school savings so that everyone can work together for the benefit of your child. 

Update Beneficiaries

Include your new child as a beneficiary or contingent beneficiary on your financial accounts. This should include but not be limited to bank accounts, brokerage accounts, retirement accounts, and life insurance.  If you are creating a formal estate plan, follow the advice of your attorney. 

(Re)Consider Your Trust & Estate Plan

Write a will and discuss whether a trust or guardianship document will be necessary for your family. Follow the advice of your attorney and review and update your beneficiaries according to the will and/or trust documents.