Financial Considerations for New Parents

You’re going to be parents – congratulations!

After the initial excitement, reality of how much life will change settles in. To get ready, you’ll have to examine several aspects of your life. We have advice on how to prepare your finances to allow excitement to grow, and avoid anxiety.


Know that your discretionary spending will change. Shifts begin with pre-baby expenses such as car seats, strollers and cribs. Then, post-baby expenses for formula, breastfeeding equipment, diapers and the like, follow.

While cribs and strollers are necessary, you can save money by passing on the deluxe models. This is the true for food too; local and organic might be nice but are much more expensive.

Many first time parents receive their big ticket baby gear as gifts from family and baby showers. If you aren’t so lucky, no problem! Check out used items or ask friends with young kids. You might be doing them a favor by helping them de-clutter!


Review your insurance policy for pregnancy, birth plan, and post birth needs. Coverage fluctuates for specialist appointments, breast pumps, and birthing methods. One spouse or partner’s health insurance may be better suited to cover the baby.


Life insurance policies should provide enough coverage to pay off all debt. This includes student loans, credit cards, cars, and mortgages. Each parent’s policy should also provide some replacement income for the transition period.


It’s important to assign guardianship if something happens to both parents. Get a will, Durable Power of Attorney, and medical directive in place before baby arrives. Then, adjust your beneficiaries on life insurance and retirement accounts to match.


Daycare is the biggest expense for most new parents. Research all available options. Options include a nannies, in-home daycare, corporate daycare, or care by a relative. Learn if you have a Flexible Spending Account (FSA) available through your employer. Daycare costs are often included under the umbrella of acceptable fund usages.


Unexpected emergencies and preparing for the future, both tap into savings. This refers not only to how much you should be saving, but also to the different types of savings needed. Look into an emergency savings, education savings (529 account), and investment savings.


Taxes have the potential to be easier to bear this year as you will be able to claim a dependent!


If both spouses are working and aren’t covered by a paid leave policy, a financial burden can arise. Check into disability coverage for mama. Her income could be, at least partially, covered. Paternity leave still often requires the use of sick or vacation days. Don’t assume anything though; talk to HR to check into all available options.

Congratulations on this adventure! Remember, small tweaks now can significantly impact your future finances for the better.