How to Financially Prepare for a Baby – For New Parents

You’re looking for ways you can financially prepare for a baby.

Perhaps you’re not pregnant yet, but you’re going to starting trying soon.

Or maybe you’re eight months pregnant and you’re starting to get a little nervous as your due date approaches.

When I decide on an article I want to write, I usually check out all of the other articles that pop up on a Google search. For this particular topic, there were too many to count.

I decided (as I usually do) to continue writing this article because I wanted to share what I learned from my own experience having two children.

I can think of so many things I would have done differently to better prepare for a baby.

So this is a bit of advice and a bit of my own personal story and what I experienced financially going through two pregnancies.

I hope that you can find something here that helps you on your journey – it’s such an exciting time!

Saving

When I was pregnant with my first child (and unfortunately my second as well), we had a handful of debt.

We had debt that included credit cards and car loans.

When I found out I was pregnant, I immediately wanted to pay off everything as quickly as I could.

What I wish I had done: Paid the minimum on all of our accounts and simply saved every penny possible for those nine months.

I ended up having an unexpected C-Section, staying in the hospital longer than expected, and winding up back in the hospital about two weeks after having the baby.

The hospital bills, doctors visits, pediatrician visits, prescription costs, co-pays, etc… they were all more than I ever imagined they would be.

With my first child, I planned to breast feed, but then couldn’t due to medical reasons.

Whatever you think is going to happen, may not. I truly hope you are able to plan down to the penny for what the actual pregnancy expenses are, but it’s highly unlikely you’ll end up spot on.

Start saving for the unexpected.

Will you be paying more interest on any debt you have for those nine months you’re paying the minimum? Yes. However, you can immediately place that money on your debt once you are home safe with your new baby.

The baby and providing for them once they arrive is priority number one.

I will say that a baby is a fantastic motivator for speeding up savings.

Shift the Emergency Fund

After you have a baby, know that your emergency fund will most likely need to be increased from where it was pre-baby.

Your monthly expenses increase with the added responsibility.

For example, I doubt that diapers were planned in your previous emergency fund. Diapers will still need to be purchased even if you’re out of work.

If one parent is making the decision to stay home, that will completely shift your emergency fund as well.

If the one income job is lost, you will have no additional income to fall back on to make ends meet until another job is found. That being said, the typically 3-6 month emergency fund may need to shift to 6-12 months, depending on your risk tolerance.

Building up your emergency fund will be easier if you’ve paused placing extra money on any debt that you have.

What You Actually Need

Yes, I bought all the things when I had my first child.

And some of those things, I’m thankful that I did purchase. Did I need a gliding chair to breastfeed in? No, but it was nice to have.

Did my parents use a baby wipe warmer on me? No, they didn’t, but I seriously thought it was a must have.

It’s hard to read between all the ads to figure out what is actually needed for your newborn.

I can tell you right now that you 100% need a baby car seat. Beyond that, don’t run out and purchase all the things you think you need.

Put everything on your baby registry and then purchase what the remaining needs are as your due date draws near.

While I’m talking about what you actually need, do not spend a fortune on maternity clothes. See if you have friends or family members that are looking to part with their items.

Don’t feel like you need to buy new.

Baby Registry

Put all the things on the baby registry.

Now that I’m older and my kids are almost grown, I don’t have many opportunities to shop for babies. Baby buying is fun!

There have been people in my life that I knew were expecting, but I didn’t purchase anything for. It’s not that I didn’t want to. We weren’t really close enough for me to be invited to a baby shower.

However, if I had access to their baby registry, I would have purchased something from it.

That being said, put your baby registry all over the place. Put it on your social media. If it comes up in conversation at work, let them know that you’ll send them a link to your registry.

Someone at my office is expecting a child and he asked me a few weeks ago if it would be appropriate if he sent his registry out to some people at the office. I told him to send it to me and I would forward it on so he didn’t feel awkward.

Use your closest co-worker friends to help you spread the word of your baby shower.

I definitely suggest putting some of the items that you really want, but don’t necessarily need on the baby registry.

For me, it was the Bjorn baby carrier. I wanted it so badly with my first child, but it was around $100 and I knew I had so many necessities to buy.

Luckily, someone purchased it off of my baby registry. It was one of the most used items I received off my registry with my first child.

My second child…used it once.

Planning Time Off

So with my first child, I asked for eight weeks off.

Money was tight. I was not a saver and had very little saved and I was concerned about taking too much time off. The company I worked for did not cover any time off for maternity leave.

Fast forward three years later with my second child, I again had very little saved. I asked for eight weeks off but actually returned to work in six weeks.

I also asked to work part time for home and my company allowed that, which helped tremendously.

During weeks two through six, I worked twenty hours from home while taking care of my newborn. I didn’t struggle with this, but I would have if I had asked to do it after my first child was born.

By the second, I knew what to expect with having a newborn at home. I felt like a pro.

My second child was also a super sleeper so that helped.

Plan your time off well ahead of time. Check with your company and know the ins and outs of their parental leave so that you’re taking full advantage of any paid time off.

Plan for more time than you think you may need, as nothing with my first or second child went exactly as expected.

Child Care

Child care was the one thing that hit me hard after having my first child.

I had no idea – nor did I researching – how expensive quality child care is.

After my second child was born, we were spending more on child care than we were spending on our mortgage every month.

According to Care.com, “Parents say they’re spending a whopping 22% of their household income on child care with the average parent depleting a reported one third (29%) of their savings on child care costs alone.”

If you are going to need child care, I suggest looking at it now. No matter what stage of your pregnancy you are in or if you aren’t even pregnant yet.

Know your area and what the going rates for child care are.

The costs for me did not stop once my children hit school age. I still paid roughly $200 per week for after school care until they were old enough to stay at home by themselves until I made it home.

Consider Where You Live

So I purchased a home…then I had a child shortly after.

Three years later, I had another child.

I then realized we were in a horrible school district and we needed to move. Sadly, we were in a declining market and my house was not currently worth what we had paid for it four years prior.

When my oldest daughter turned five and was about to start kindergarten, we had to move and rent for a while in order to be able to get into a better school district.

I did it all wrong.

What I’m telling you is to plan where you will be living and make sure it’s the area that you want your child to go to school.

If it’s not the area you’re currently in, that’s perfectly fine. You’ve got five plus years to map out what the game plan is.

We did have other options, like:

• Home school
• Private schools
• Attempting to transfer

All I’m going to say in this section is that you should know the path to where (or how) you want your child to receive their education.

A move comes with many expenses and planning those expenses sooner rather than later will help you prepare.

I will say that moving simply to have more space once the baby arrives is not a necessity. Babies don’t take up a lot of space.

However, the things you buy for the baby may take up more room than you expected. Again, don’t feel like you need to purchase things just to have all the things.

College Expenses

Yes, we’re already talking about college expenses and your child isn’t even born yet.

New parents usually have enough on their plate to prepare for a baby, however, hear me out…

Start educating yourself now to help you plan early. Like retirement, the magic of compound interest will be so much more magical if you get started early.

I have a daughter in college and utilized a 529 to help us save up for college expenses. Even with that, we are still cash flowing a good portion of her college expenses and will most likely have to do the same for my next child who graduates in two short years.

NerdWallet has a great article about 529 plans: 529 Plans by State: Benefits of a College Savings Plan.

The sooner you have your chosen method of saving planned out and set up, the better.

Once your baby comes along, your hands are going to be full and you’ll have so much more on your plate.

How much to save? This will depend on your current financial situation.

However, to give you some rough numbers… If you save $100 a month for 18 years, you’ll have around $60,000 saved using a 10% rate of return.

I currently spend $24,000 annually for in-state tuition at a really nice college.

There are so many unexpected expenses with having a new baby – college tuition is not one of those. We know it’s coming.

For more information on the annual cost of college tuition, check out this US News article – See the Average College Tuition in 2024-2025.

Insurance

Life insurance is something I didn’t think about until my children were a little older, but I wouldn’t suggest waiting to anyone.

If something happens to you, you want your precious newborn child to be taken care of. Life insurance will help give you that peace of mind.

Although some people will tell you otherwise, I do not believe you need to take out insurance on your newborn child.

Disability insurance? Yes.

I went with term life insurance 10x my annual salary.

Next Up: Health Insurance

You’re going to be spending more on health care costs once you are pregnant.

Once the child is born, you’ll also need to have them added to your health care insurance.

Will this cause your monthly premiums to rise? Is it a good time to look into an HSA?

I suggest getting with your human resource department at your or your spouse’s place workplace (or both) and gather all the facts.

Final Thoughts To Financially Prepare for a Baby

For me, I wanted to give my child everything. I wanted them to have the best and not go without.

Your baby needs you, a little bit of clothing, and most definitely food and shelter.

They do not know (nor would they care if they did know) that you spent $200 on some fancy baby swing.

Try not to get caught up in all the baby gear hype. It’s hard. The things are so cute and sometimes it’s hard to determine what is a need versus a want for a baby when you don’t have other babies.

Plan what your financial goals are and write them down. Put them in a place where you are reminded of them often.

Small final reminder: Your monthly household budget will have to be re-evaluated once the baby arrives.

Complete To-Do List

I added To-Do Lists at the end of each of the above sections. Let’s go over those here in one easy-to-find place: