Family finances

7 Great Ways to Financially Prepare for Your Baby’s Arrival

Welcoming home a new little bundle of joy represents a critical life milestone and a time for celebration. It’s also time to get out the Excel spreadsheet or other accounting tools to create a budget that plans for the costs of raising a child to adulthood.

Understandably, most parents-to-be prefer to focus on decorating the nursery or feeling the tiny kicks on moms’ belly. However, making the right financial moves in the months leading up to birth determines in large part how well-prepared a child is for later life. Taking the following money moves while the baby is still in utero sets the child up for future success.

Disclaimer: This post is sponsored by PSECU, a Pennsylvania-based credit union.

7 Great Ways To Prepare Financially For Your Baby's Arrival

1. Check Coverage

Giving birth in a hospital costs a pretty penny, even for those who have health insurance coverage through their employers. Those lacking coverage often find themselves with an impossibly high bill simply for asking for aid during childbirth.

If covered, people should call their health insurance company to find out what they will pay and what they will not. Likewise, it’s important to investigate the maternity leave policy at work. Those who work in companies lacking a paid leave policy need to budget for the time they will be out of the office.

2. Estimate Costs

Many parents-to-be erroneously believe they can live as cheaply as a family of three as they could when still a partnership. However, raising a child to age 18 costs serious money, even without springing for a car or college costs. As the price of raising a child to 18 costs more than $260,000 in many cases, it’s essential to have sufficient liquid savings to cover the costs of insurance co-pays, future braces and other expenses.

3. Get Registered

Baby registries offer future parents on a budget an opportunity to stock up on needed supplies without breaking out their own pocketbooks. By setting up a gift registry early, invitees have ample time to save for that perfect gift. For most expectant parents, affording the necessities make up the majority of their financial stress, so they should list practical presents like wipes and diapers in various sizes along with larger requests for cribs or rocking chairs.

4. Start a Baby Savings Account

Recent research indicates that children start forming attitudes about money at an early age. Set them off on the right foot in terms of finances by opening a savings account in their name.

Unless they’re cast as the next Gerber baby, infants obviously won’t possess money to fund the account. When the time comes, though, they will appreciate learning about spending and saving with their own money. In younger years, a simple piggy bank will suffice in teaching the importance of financial management.

Savings for Parenthood

5. Open a 529 Plan

The price of higher education is unlikely to drop any time soon, and given how exorbitant college costs can be today, imagine what tuition may cost 18 years from now. A 529 savings plans offers several advantages. Even though the contributions made are not tax deductible, the withdrawals — including interest — are not taxed. That makes 529 plans one way to offset the rising costs of obtaining a university degree.

6. Buy Life Insurance

Few people relish the thought of their own mortality, but having a child means making sound financial plans in the event the unthinkable occurs. Life insurance makes it possible for loved ones to grieve without fearing for their economic futures.

Two types of life insurance exist: whole and term. With a whole life policy, cash accrues and can be borrowed against. These usually require a thorough health exam and are best purchased young. Term policies cost far less, but offer coverage only for a specified period of years. In addition, they don’t build cash value.

7. Make a Will

Many parents assume their estate will pass to their children automatically in the case of their death, but sadly, this doesn’t always occur. When a person passes away intestate — without a will — the state institutes a probate procedure. This results in longer wait times for children to receive their inheritance.

Make final wishes known through a legal will signed by witnesses. Those with means to do so can contact a competent trusts, wills and estates attorney. People can also apply for help through local legal aid societies.

Advanced Preparation for Financial Success

Parents want to make sure their babies are healthy, and they also want to set them up for financial success later in life. Taking certain money moves even before the baby is born allows families to focus on their little one, not their dwindling bank accounts. Babies grow so fast — enjoy every hour of their infancy by preparing economically beforehand.


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  1. Best article.

  2. I don’t think you ever be completely financially prepared as babies and parenting is unpredictable but we did plan and buy and save as much as we to help especially with the maternity leave period but these tips are definitely worth taking notes from and applying especially having a will and education and insurance fund

  3. Thank you for this article

  4. Very good pointers. I always wanted to be financially prepared before I had a child but I suppose not everything goes according to plan but it is never too late to start

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