Get Your Finances Ready for Baby

by Brian M. Williams Prepare Finances for BabyWhether you have a baby on board or are thinking about starting a family, adding a cute little bundle of joy can strain your family budget.

How do you get your finances in order? By using this handy checklist!

These items will help you get your finances prepared so you're covered when your baby arrives.

Let the fiscal fun begin!

Get Your Finances Ready for Baby Checklist

In a nutshell, your pre-baby plan consists of spending less, saving more and cutting down debt. Going through these steps can potentially increase your overall net worth. These steps can also ease the transition to one income if one of you plan to stay home with the baby or transition to a reduced income if you'll be paying for childcare.

Family Finance at a Glance

Step One: Build your budget. Break down your expenses into these three buckets:

  1. Every Day Expenses
  • Essential expenses: Mortgage or rent and utilities, transportation and the other items that you must have.
  • Variable expenses: Changing cell phone or internet plans, updating insurance coverage and taking a look at food costs might save you hundreds a month.
  • Optional expenses: Dining out, buying take-out, movies and impulse purchases.
  1. Preparing for Baby Expenses The average family spends about $12,000 during baby’s first year. Babies are expensive, but they don’t have to be as expensive as you think. Buying baby gear on eBay and at yard sales or borrowing items can more than half the cost.


  1. Ongoing Baby Expenses Jot down your estimated expenses including diapers and childcare. Now that you've got a feel for what you'll spend, take a look at your income and expected income.

Is there a gap? Try these next suggestions.

✓ Prioritize: Having a baby can be a life-changing experience. What you find essential to your life now might change once your baby's here. Scan your expenses. Do you anticipate lifestyle changes that might eliminate some costs?

✓ Lower expenses: If the gap still seem large, look at ways you can lower expenses. Changing cell phone or internet plans, updating insurance coverage and taking a look at food costs might save you hundreds a month. Some families-to-be lower costs by moving to a less expensive area or switching for a more economical car.

Increase Savings and Income

Step Two: Jiggling numbers and work hours now, will help with finances later.

✓ Supplementing income: See if you can ask for overtime and set aside the equivalent of one person's pay check every or every other pay period. Can't get overtime? Try adding a part-time job to the mix if you're able to handle the load.

What should you do with all that extra money you're packing away? You could create an emergency fund. Your emergency fund should cover at least three months of household expenses.

✓ Reduce toxic debt: Reset your financial button during pregnancy by eliminating credit card debt. Try to pay as much extra on top of the minimum payment as you can afford. Even if you're not able to pay everything off during these months, you'll have lowered your monthly interesting charges and decreased payments. and student loan bills. If your mortgage or car loan has a high interest rate, consider refinancing those.

Planning Ahead

Step Three: Weigh the cost of staying at home versus working. These questions can help you decide which option is best for your family. Calculate your loss or savings using your take home income, not your gross income. Working or staying at home with your baby has benefits besides potentially saving money.

✓ For you to find out...

• Does your employer offer a flex-plan to help cover childcare costs?

• Does the cost of transportation, childcare and professional clothing exceed your available income?

• Do two incomes push you into a higher tax bracket?

✓ See a financial planner: Should you be thinking of retirement during pregnancy? Talk with your credit union's budget counselor or a financial planner. You might be able to take steps that maximize your savings fund. During maternity leave, your partner might be able to make contributions to your retirement plan or you might be able to contribute extra now.

Medical and Life Insurance:

Step Four: Evaluate your medical coverage.

✓ For you to find out...

• Whose insurance coverage is better -- yours or your partner's?

• Does your insurance cover prenatal visits?

• When can you add baby to your insurance?

• Can you open a workplace flex-plan spending account to pay medical expenses with pre-tax money?

• How you'll create a living will. • How to purchase a family life insurance plan.

To-Do List Just for Baby

Step Five: Get items that are specific for baby-- now. From social security cards to bank accounts, it's time to take action. Some of these items can take time, so you don't want to wait until the last minute.

✓ Open a savings account in your baby's name. Friends and relatives might enjoy donating to baby's piggy bank. It could be the start to a college education, a needed car seat or just an emergency fund.

✓ Create a baby registry: Let others know that you're pregnant. Most people love babies and buying things for them. This is your opportunity to get what you want if you can't afford it.

✓ Go shopping: Now that you have an idea which items will appear like magic and which you'll need to actually purchase, it's time to head out to the stores. Your key phrase will be "fiscal restraint." Ask around and see what you really need and which things are a total waste of funds and space. Then equipped with your lists, head out and enjoy the baby scene.

You've got nine months to prepare for baby's homecoming. Even if your child isn't arriving on your preferred financial schedule, there's still time to get your financial act together.

What tips can you share with other parents?