Bringing a baby into the world is one of the most exciting and life-changing seasons of your life. At the same time, it comes with some financial stress and leave you wondering how do you prepare financially for a baby? From medical bills to monthly baby expenses, preparing your family for a new baby means planning in more ways than one. Whether you’re pregnant or hoping to conceive soon, you must consider how having a baby will affect your finances. So, here are 10 smart and practical ways to financially prepare for a baby!
1. Review Your Current Budget
If you don’t have a budget already, now is a great time to start one. Notate your current income and spending habits by reviewing the past couple months of bank statements. Where’s your money currently going and does it support or hinder your goals? What can you shift or cut back on, if needed? Is there room in the budget to build up a baby fund and financially support a baby? Knowing where you stand now is the first step in planning for a baby financially and building a budget that works once the baby arrives.
2. Build or Boost Your Emergency Fund
Now is the time to prioritize saving, if you aren’t already. A solid emergency fund—ideally covering 3 to 6 months of expenses—can help you handle any surprises without panic. You don’t want to be caught in a financial emergency after baby is here (such as an expensive car repair or needing a security deposit to move unexpectedly.) Small, consistent contributions can make a big difference over time, even $25 per paycheck is better than nothing! Ideally, you should keep this emergency fund in a high yield savings account. We’ve used Ally bank for a few years and love it. Their “bucket” feature to set up multiple savings buckets inside one savings account is amazing! Feel free to use my referral link to join them.
3. Understand Your Health Insurance Coverage
In addition to having a funded savings account, one of the best ways to financially prepare for a baby is to understand your insurance benefits. Review your healthcare coverage for:
- Prenatal care
- Labor and delivery
- Postnatal visits
- Baby’s first checkups
Knowing what your policy covers will help you plan for deductibles, copays, and out-of-pocket costs well in advance. Make sure to add baby to your health plan within 30 days after they’re born too!
4. Plan Ahead for Parental Leave
Does your employer offer maternity or paternity leave? Will you or your partner take unpaid time off? What benefits does your state offer, if any? Start calculating the income you may lose ahead of time and create a savings cushion to cover that time. Some employers offer paid family leave or the ability to use your sick time and PTO during leave. You may also have financial state benefits for having a baby, like in California. California offers State Disability Insurance (SDI) for the mother giving birth and Paid Family Leave (PFL) for both the mother and significant other. It was confusing to figure out at first and took a couple weeks to set up, so don’t wait until the last minute to research! I’ll be making a post about California benefits at some point, too.
5. Make a List of Baby Essentials
There are SO many baby products on the market. It’s tempting to go overboard with baby gear, but the truth is—you don’t need it all. Focus on must-have baby essentials first like:
- Car seat
- Stroller
- Diapers and wipes
- Basic clothing and muslin cloths
- Feeding/pumping supplies
- Baby first-aide items (think thermometer, nail clippers, gas drops, etc.)
- Postpartum supplies for healing (check out my postpartum bathroom cart essentials post for a little of supplies)
One you have these covered, then go into a first round of “nice-to-haves” like:
- Crib (we haven’t used our crib yet since we co-sleep. If you will be putting baby in a crib early on then this would be a must-have for you!)
- A couple infant toys and books
- Bathing tub
- Carrier
- Breastfeeding pillow
- Bouncer
Then proceed into a second round of “nice-to-haves” such as:
- More baby toys and books
- Tummy-time mat
- Dock-a-tot
You don’t have to cover all these baby expenses out-of-pocket either. Add these items to your baby registry and mark items as “must-haves”. Accept secondhand items from friends and family, or shop local thrift stores or community boards like on FaveBook Marketplace. And use gift cards wisely to cut down on out-of-pocket costs. All of these are great ways to cut down on the up-front costs of preparing for a baby financially.
6. Look Into Life Insurance and Estate Planning
To truly financially prepare for a baby, think about the “what ifs.” Consider getting term life insurance for you and your partner. A good rule of thumb is 8-10x your annual income (or for us stay-at-home moms what would cover the expenses we perform like childcare, meal planning, cleaning, etc). Also take into consideration any debt, financial obligations and your budgeted monthly costs when determining how much insurance to purchase. Losing your significant other would already be a stressfull, trying life event. Avoid adding to the burden by protecting yourself financially with Life Insurance.
And if you haven’t already, create or update a will to name a guardian for your child and outline how assets should be handled, just in case!
7. Estimate New Monthly Expenses
Outside of the up-front costs of having your first baby, there are recurring costs like clothing, diapers and wipes. To help prepare financially for your baby, start estimating a monthly budget that includes:
- Diapers and wipes
- Formula or breastfeeding needs
- Baby gear and clothing
- Pediatric visits
- Childcare (if needed)
Knowing what to expect and seeing how it affects your weekly and/or monthly budget helps you adjust your finances before the baby arrives.
8. Shop Smart and Accept Help
Say yes to hand-me-downs, borrow big items from family or friends, and buy only what you truly need. I’ve already packed away about 20 outfits that Oliver never wore and no longer fits into, and he’s only 3.5 months old! Look for deals (love holiday deals like Black Friday, Cyber Monday, Memorial Day, Labor Day, etc.), use coupons, and take advantage of cash-back apps. Financially preparing for a baby doesn’t have to mean spending big—it can mean spending smart!
9. Plan for Childcare Early
Childcare is one of the biggest expenses for new parents. I’ve had some friends say they’ve been quoted upwards of $900/week for one child. That’s like it’s own mortgage! And because of this, they’ve decided to keep one parent home to not pay for childcare. If you are going with childcare, look into options early (the good places usually fill up fast!), especially if you’ll return to work. Ask about daycare waitlists, family care, or hybrid solutions to get a sense of what your monthly cost will be.
10. Communicate with Your Partner Often
This is the MOST important step, in my opinion! Finances can be an emotional topic—especially with a baby on the way. Everyone approaches and handles money differently. Make space for regular check-ins with your partner so you can talk openly about goals, concerns, and budget adjustments. You can check in once a quarter, once a month, or even every paycheck if that’s what works for you. Staying united will reduce stress and bring more peace to your home.
Final Thoughts: You Can Financially Prepare for a Baby—One Step at a Time
With all of this said, you don’t need to have everything perfectly planned before your baby arrives (we certainly didn’t!). There are families before us who successfully raised children on less and without planning. At the same time, taking steps now to financially prepare for a baby will help you feel more confident, more grounded, and more able to enjoy those precious early days without as much stress. Even getting half-way to your savings goals will put you much farther ahead than not saving at all.
You’re not just financially preparing for a baby—you’re building a strong foundation for your growing family. You’ve got this!