Ways to Prepare Financially for a Baby

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Having a baby can cost a lot, from one-off to ongoing costs. That’s why it’s best to begin financially preparing far in advance.

Being pregnant is a beautiful, life-changing experience. But it can also be stressful and overwhelming, especially if you’re not prepared financially.

This often involves short-term conversations like building a budget, cutting debt and building emergency savings. But it also includes several long-term goals that can change your thoughts about money and life after your child arrives.

Review Your Health Insurance

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If you’re planning on having a baby soon and haven’t yet taken care of all the financial business involved in having an infant (childbirth costs, postnatal care), now is a good time!

Regarding having a baby, health insurance can help cover the medical costs associated with labor and delivery. However, the average price of giving birth – whether vaginal or C-section – is more than $15,000.

Before you get pregnant, you should review your health insurance to ensure it includes childbirth coverage. If you need more clarification, ask your employer or insurer to confirm the extent of your coverage and determine which hospitals are in-network.

Many states have laws that prevent hospitals from charging surprise medical bills to patients who receive care out-of-network. Additionally, the Affordable Care Act made maternity care an essential benefit, meaning you can’t be denied or charged higher premiums because of your pregnancy (assuming you enroll in an ACA plan during open enrollment or a special enrollment period). This is true even for those with pre-existing conditions.

Review Your Budget

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Children introduce additional moving parts to your finances. You’ll want to be able to take your monthly income, subtract expenses for savings, retirement, paying down debt and other priorities, and make sure you’re covering basic needs like food and housing.

The cost of having children includes one-time costs like a crib, sleep monitor and stroller, and baby clothing and supplies (diapers, formula, toys). Creating a budget before the baby arrives is a good idea so you know where every dollar goes. It doesn’t have to be a super detailed spreadsheet, but make sure you’re balancing your spending and saving goals. The more you accomplish now, the less stressful the whirlwind of new parenthood will be. And that means more time to pick out the nursery theme.

Review Your Credit Score

Once you know how much money is coming in and going out, it’s time to make a plan. Start by reviewing your credit score and report. Your credit score will tell you if you’re likely to qualify for a loan or other type of financing and what interest rate you might have to pay if you do go that route.

Having a baby will occupy your mind with things like feedings, diapers and sleep deprivation. This may cause you to miss payments on credit cards or other debt instruments. It is important to eliminate this possibility by setting up automatic bill pay for all your accounts.

You will also need to set up savings goals for the long term, including your child’s college education. It would help if you also thought about getting life insurance. This protects your family financially in the event of an unforeseen incident. This can help minimize the tension and worry that might accompany unexpected situations. Lastly, getting a pre-natal checkup would help prepare your body for your child’s birth.

Review Your Investments

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Before you have a kid, you should take a long, hard look at your budget and how you pay for things. Then you may determine what modifications are required to meet any additional expenditures and see if there are any methods to save money.

You should review your investment portfolio to make sure that it is aligned with your goals.

Diapers, best-quality baby formula, and more food are only the beginning of the increased expenditures on having children. You must also include one-time expenditures such as hospital bills and continuing expenses such as daycare and insurance.

Opening a regular savings account for your child soon after birth is a good idea. This custodial account allows you to control the funds until your child reaches age 18, when you can transfer them into their account.

Review Your Credit Card Debt

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As you move into the second trimester, continue tracking your expenses and cleaning up your finances, but shift your focus to addressing some of the new childrearing costs that are coming. For example, reviewing your beneficiary statements on company-sponsored life insurance and 401(k) plans is important to ensure they reflect the correct individuals (like your spouse or children) in the event of your death or disability.

Consider opening a savings account for your baby, which allows you to deposit money in their name that they can use later for college-related expenses. These accounts are often called 529 accounts. You can start these as early as your first trimester, although opening them soon after your child gets a Social Security number is best.

If you have credit card debt, it’s important to review it before the baby arrives. Credit card interest rates can be high and depending on the amount of your balance and the time frame in which you pay it off, those interest charges can add up quickly. Paying off any high-interest rate cards first will help you save money overall and reduce the amount of time it takes to pay them off by focusing on one at a time.


Having a baby is a joyous time, but it can also be stressful. Having a financially stable home life is important for both the parents and their child. Take some time to review your finances before bringing home your new bundle of joy!

The more you can do to prepare for the arrival of your baby, the easier it will be for everyone involved. Consider these tips and take action today so you can enjoy your baby’s first year with peace of mind!