The decision to start a family is one of the most important a couple will ever make. And while it’s never all about money, it’s certainly wise to consider the financial impact of starting a family so that you can better prepare for this seismic shift. 

 

Every family situation is different. Some couples are blessed with great financial security, while others are struggling to pay the bills on a month to month basis. 

Most of us fall somewhere in between. But regardless of where you land on the spectrum, here are some smart financial tips you can implement as you prepare for a baby.

 

 

Try to plan your pregnancy as much as possible. Getting your birth control online makes it easy to plan ahead and avoid getting pregnant before you’re ready. Once the time comes, you can follow your doctor’s recommendations on how to proceed.

 

 

Having a baby is expensive! Thus, it’s imperative that you have your health insurance squared away prior to becoming pregnant. (Once you become pregnant, you’ll be unable to make policy changes and/or switch providers.)

 

Now’s the time to forecast the costs of your pregnancy and figure out if you need to make any changes to your insurance. Think about everything from prenatal care to labor and delivery.

 

 

What does your income situation look like? Do both of your jobs look fairly secure? Will one of you be stepping away from a career in order to care for the child? These are all questions that must be explored. It’s a good idea to have an ongoing dialogue about these issues so there are fewer income-related surprises after the baby arrives. 

 

 

While you might be pretty free with how you handle money right now, a child adds a layer of seriousness to your finances. You’re about to have another person who depends on you. Living paycheck to paycheck isn’t ideal.

 

Begin building an emergency fund of three to six months of household expenses. You don’t have to create this fund overnight. Start by consistently saving a few hundred dollars here and a few hundred dollars there. Before you know it, you’ll have a sizeable cash cushion to fall back on. 

 

 

Having a baby is expensive. And it’s not just prenatal care, labor, and delivery. There’s a laundry list of other expenses you’ll encounter over the next couple of years. These may include:

 

·      Baby gear

·      Nursery items

·      Formula

·      Food

·      Childcare

·      Insurance

·      Clothing

·      Diapers

·      Unpaid time off

 

The sooner you come to terms with the expenses you’ll face, the easier it is to begin planning ahead.

 

 

When it’s just you and your partner, life insurance is a luxury (not a necessity). If one of you passes, it’s unfortunate but not catastrophic (financially speaking). With a child, things change. You both need life insurance as a way to counteract the financial challenges that a premature death would bring.

 

The best rule of thumb is to buy insurance equal to 10-times your salary. Thus, if you make $100k per year, it’s a good idea to get a $1 million policy. This would allow the money to be invested in such a way that your partner could pull out the earnings without touching the premium balance.

 

 

It’s never too early to begin thinking about college education for your future baby. As tuition costs continue to rise, planning ahead is the only realistic option. And a 529 college savings plan is one of the best ways to do it.

 

You don’t have to throw a bunch of money into a 529 plan right away, but it’s nice to have. This lets you gradually invest money. It’s also a fantastic option for grandparents and relatives who want to give gifts to your children.

 

 

When it comes to starting a family, intentional is the operative word. The smarter you are with your financial resources, the less stressful and disruptive this experience will be. Plan ahead and make intelligent decisions that set you up for long-term success. It won’t always be easy, but you’ll feel safe and secure.