Top 10 Financial Planning Tips for Having a Baby


Having a baby requires a massive amount of preparation.  You must determine whether to paint pink or blue, rearrange work schedules, and buy strollers, cribs, car seats and every other baby necessity.  You must even decide on a name that the baby will carry for life.  As you are preparing, take some time to also prepare your finances.

1: Create a Written Financial Plan. Acquire a financial plan, perhaps an eFinPLAN financial plan. People don’t plan to fail—they fail to plan.  Having a baby is not only the perfect opportunity to create a plan for you.  It is also a necessity to help you survive one of the busiest and most enjoyable times of your life.

2: Create a Debt Reduction and a Monthly Cash Flow Budget Plan. Make a plan to reduce debt, and commit to incurring no new debt.   This way you can earmark savings for the things you will want and need, instead of buying them on credit.

If you don’t have a budget, it is a necessity that you create one now.  You will want to estimate the new expenses for day care, baby sitting, food, diapers, neonatal medical care, etc.  Be sure to calculate changes to your income if one of you may quit a job or cut back to part-time.  You may run ‘what-if’ scenarios in your financial plan to determine the impact of each decision.

3: Update Wills and Beneficiary Arrangements. When you have children, it is essential that you put your plans into writing in case either parent dies.   In addition, change life insurance and retirement plan beneficiary arrangements to reflect your new estate plans after discussion with your financial and legal advisers.

4: Update Life and Long-Term Disability Insurance. When you have children, your need for life and long-term disability insurance will increase.  Your financial plan will help you determine whether there are any deficiencies in your insurance needs.  Use your financial plan as a discussion tool as you meet with your trusted insurance provider.

5: Know Your Health Insurance Benefits. Study your health insurance policies to know exactly what your possible out-of-pocket costs are going to be for prenatal and postnatal care, and for birth.  Carefully study your policy so that you use the right in-network doctors and hospitals.  Also, some people actually time pregnancies so that their deductibles are met within a coverage year.  For example, if you had paid medical deductibles and co-insurances in one coverage year for tonsil removal, it may be to your financial advantage to have pregnancy in the same coverage year. Obviously, this is not always possible.

6:  Know Your Maternity-Leave Benefits. Study your employment manual to know your company’s policies for maternal and paternal time off.  Some companies have to comply with certain legal requirements.  In addition, you may be able to use some sick and vacation time.  You may want to try to time the pregnancy is such a way to maximize time-off and medical benefits.  For example, if you have the baby at the end of the year, you might be able to use some time-off benefits from both calendar years.

7:  Day Care and Baby Sitting.  If you are going to use a day-care center or a private baby-sitter, be sure to investigate the cost early on in the pregnancy, and include those numbers in your budget projections.

8:  Budget for Essential Baby Buys. Create an inventory list of necessities, such as changing tables, diaper pails, bottles, breast pumps, monitors, and child car seats, to mention a few.  It is amazing that anyone ever raised children without all of the latest conveniences that are now deemed necessities.  Hopefully, you will have a nice baby shower to provide the essentials.  If not, and if you are on a tight budget, you might need to receive safe hand-me-downs or to shop for bargains or at thrift stores.  Never buy a used car seat, as it may have been damaged or it may be too old to meet current safety standards. Also, check safety standards for used cribs.

9:  You Don’t Have to Buy Everything. You will feel the pressure to be perfect parents, to buy everything to help you be the best parents and to raise the best kids in the safest environment, capturing every moment.  Make wise decisions about what you really need.  The process of determining needs versus wants for your child will continue for about the next 18 years.  It seems as if the inventors just keep inventing the latest camera, learning tool or safety device.  Remember, these are not all necessities, and you will still be a good parent even if you don’t have the latest of everything.  Some of the happiest adults I know grew up in modest income families, while some of the least productive adults are those that grew up with every privilege.

10: Use Advisers. Life is complex, and the only way to sort through the confusing maze is to utilize experts.  Find and use trusted professional advisers: legal, tax, insurance, investment, and financial.  Regarding time-off and medical benefits, be sure to read your benefits books and consult with your insurance adviser, employee benefits or human resources personnel for guidance.

Summary: Having a baby is one the most joyful times of your life, and it is a wonderful opportunity to plan together what you want for your child, your family, and your future.