How to Prepare Financially for a Baby

One of the most significant changes in anyone’s life is when they welcome a new baby into their home and family. While it can be one of the most rewarding things anyone does, it’s also one of the most expensive. That’s why it’s important to prepare financially for your baby before delivery day. 

There are financial moves that can be important to make before your baby comes and ones you should plan to do afterward that are equally important to set your family and your baby up for financial success. This article covers both and outlines things you can do to get ready now. 

couple on couch pregnant

Financial Moves to Make Before Your Baby Arrives

Before your baby is born can be the perfect time to analyze your finances, make sure you’re ready to cover the cost of the delivery and put yourself in a stronger financial position. The last thing anyone needs is starting with a new family with unnecessary debt or without enough money to pay for something your baby will need.

The top four financial moves you can make before your baby is born are: 

Calculate & Prepare for Medical Costs

Understanding what your health insurance will pay is very important to preparing financially to give birth to your baby. Combining this with having the right conversations with your doctor will help you understand what your out-of-pocket expenses might end up being. For example, while it’s not always 100% accurate at predicting your final results, your doctor will know if you are at a higher risk of having a c-section (which can cost more).

It might be essential to have a conversation with your benefits representative to understand what you will be on the hook for during delivery, including your hospital stay. Getting that breakdown will enable you to prepare in advance by putting money away or working an extra job to help pay for delivery financially. 

To put the importance of this into perspective, the average cost of vaginal delivery in the U.S. is $13,024, with a C-section costing an average of $22,646. This is without any health insurance, and what you’ll pay will vary widely based on your health plan, the state you live in, and how much your hospital charges for your delivery type. 

married couple on couch

Create a Post-Baby Budget

Regardless of whether you’re currently a savvy budgeter, there is nothing that will help ease the financial burden of your family growing in number like creating and living by a budget. With inflation growing higher than it’s been in decades, there has never been a better time to start budgeting than right now. Understanding what your medical costs will approximately be, enables you to create your budget after the baby comes. You’ll know if you may take on some debt to deliver and factor that into your post-baby financial plan. 

This will allow you to sit down and determine how much money you’ll need to give your baby the life you want. You might need to get a bigger home if you’re currently living in a one-bedroom place, and you’ll have to factor in more money for food or diapers. This is an excellent time to make the financial decisions you need to make and give up some luxury items you may have wanted, such as the high-end stroller you’ve had your eye on. 

Living on your budget before your baby comes will help you prepare for your new financial life and could help you save some money for unexpected expenses that will come later. There are almost always unexpected expenses you haven’t prepared for with babies, so the faster you can start, the better off you’ll be. 

doctor and baby

Choose a Pediatrician

This may not seem like a significant financial decision, but it can become one quickly. If you haven’t chosen a pediatrician within your health insurance network, the hospital will select a temporary one. When your baby is born, whatever pediatrician is on call will come and see your baby. That doctor may or may not be within your network, and the cost of that pediatrician may or may not be included in your hospital delivery bill. 

The safer route is to choose a pediatrician beforehand and make sure that whoever is on call from that practice when your baby is born is the doctor that oversees your baby’s care. Plus, your baby will typically need to be seen post-delivery within a week at the doctor’s office, so you don’t want to be scrambling to find one that your insurance will cover. 

Create an Emergency Fund

As previously mentioned, there will always be expenses that come with having kids that you aren’t prepared for. Sometimes babies are sick and need extra medicine or an extra trip to the doctor, or maybe you end up breaking something on accident because you’re sleep-deprived. It’s important to prepare yourself and your finances, so you don’t take a huge hit when these things come up. 

Starting an emergency fund now to prepare for the unexpected is vital to the future stability of your finances. You can start with whatever you can afford and then make it part of your budget to contribute some set amount into the fund every month. Hopefully, this will give you a little breathing room and confidence in preparing for things that you can’t see yet. 

If you’re ready to start your emergency fund, you should look for the best savings account for your situation.

mother and baby

Financial Moves to Make After Your Baby Arrives

Now that you’re prepared for when your baby comes, it’s essential to know what financial planning you can do afterward to help you and your baby. These steps are to ensure that your baby is set up to succeed financially, and the results of each are things you need to do now that will impact you and your child down the road. 

The top three things you can do financially after your baby comes are: 

Complete All of Baby’s Paperwork

It’s important to follow through with all of the required paperwork so that your baby is not only recognized by the state and federal government but also to help you prepare your finances. You can’t claim your new baby as a dependent, for example, on your taxes if their paperwork isn’t complete. Some of the tasks you’ll want to complete are: 

Birth certificate: Make sure you choose a name and give the paperwork to your nurse before leaving the hospital, if possible. This will save you the time to figure out the process on your own later. 

Social security number: Just like a birth certificate, you can avoid figuring it out on your own by filling out the paperwork in the hospital. 

Add your child to health insurance: This is important to do within the first 30 days so that any care that is specific to your baby is covered under your plan.

Adjust beneficiaries: If you have a life insurance plan, you’ll want to think about adding your new baby as a beneficiary. This will speed up the process of your child getting any funds if the unthinkable happens. 

Adjust your will: If you have a will, you may want to adjust it to include your new baby for the same reasons you would want to adjust your life insurance. 

Start a College Fund

Now that you have a baby, it’s never too early to start planning for their future. Setting up a college fund upon birth is the best way for your child to benefit later. College is only getting more expensive by the year, and many people have to skip it because they can’t afford it. 

Giving your child the option later in life would be a great financial move, plus they wouldn’t have to take on the burden of excessive debt just to learn. The earlier you start planning for college, the more money your child will potentially have to get their education and chase the career of their dreams in the future. 

Live By Your Budget Everyday

Having a budget isn’t enough to put yourself and your new family in a good financial position. You have to live by that budget daily and month by month. This is the best way to set your family up for financial success and maintain that financial stability and flexibility to live the life you’ve always dreamed of with your baby. 

Those unable to stay on a budget often find themselves unable to give their baby vacations, experiences, or opportunities they thought they would give when they decided to have a baby. Choosing every day to stay on a budget, and be financially fit, is choosing to live the financial life you chose for yourself and your baby. 

family with baby

Bottom Line

Having a baby can be one of the most rewarding decisions. However, if you don’t financially prepare, you’re likely to just incur debt or be hit with unexpected costs that could derail your financial goals. Making and sticking to your financial plan will enable you to give your new baby the life you dream of and help you be in a better overall financial position.