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How Does Having a Baby Affect You Financially?

Bringing a baby into the world can be exhilarating. But the anticipation of change can often be overwhelming for new parents. Suddenly, nine months feels like the blink of an eye. Your life changes dramatically. And the details of your finances and everyday nuances will suddenly become drastically different.

Here’s how to prepare financially for this exciting time in your life.

How Much Time Off Can I Afford to Take After Baby?

Begin the planning process by clarifying your employer’s maternity and/or paternity policies. You want to understand if they provide paid time off for you and/or your spouse. And you’ll want to confirm how much time you’ll be allowed to take – from unpaid leave to sick days and vacation days. Also consider any maternity, paternity, or family leave programs that may be offered by your state.

If you’re in a partnership, outline a plan for who will take time off when. Will that time will be taken together or separately? If your employer does not offer paid or unpaid maternity leave, speak with your human resources representative to ensure you understand the options available to you.

How Will My Spending Change After Having a Baby?

Consider Substantial Purchases:

A growing family often means the need for a larger home, vehicle or other big purchases. Planning for these expenses and implementing a savings strategy can help ease associated financial concerns. Feeling more confident in your budget will allow you more time to explore solutions that ultimately fit your family’s needs. Remember to account for the larger items on your registry, including car seats, strollers, baby monitors and cribs. You’ll want to have these items in place before the baby comes.

Emergency Fund:

Now is the time to make sure your family is prepared for the unexpected. Many would agree that three to six months of essential living expenses should be saved in an emergency fund. However, many families are more comfortable with having six to twelve months prepared. Take into account your current spending habits and set aside a comfortable amount that will ultimately accommodate your newly growing family. Learn more about how to build an emergency fund that best reflects your unique circumstances.

how much should I budget for a new baby


Having a budget is always a great idea in order to meet certain financial and lifestyle goals. Preparing for the outflow of cash you will undoubtedly experience now and in the future will help you from being caught off guard or surprised.

According to the U.S. Department of Agriculture’s most recent data, the average cost to raise a child until the age of 17 was $233,610 in 2015. This includes the cost of housing, food and childcare. It doesn’t include the cost of a college education. Incorporating as much detail as possible into your budget including recurring items such as diapers, wipes, clothing, lotion, soaps and activities will help you prepare for the big-ticket items later on.

You’ll also need to factor childcare into your budget. According to, the average weekly cost of daycare for toddlers is approximately $211, but prices can often range. Nannies can be even more costly at roughly $596 per week. Keep in mind that if even one parent plans on staying home after your child is born, the potential impact of lost wages and benefits exists.

How Should My Insurance Coverage Change When Having a Baby?

Health Insurance:

Within 30 days of your child’s birth, review both parent’s health insurance. Make sure your baby is added to your preferred policy. Take into account and clarify your coverage for deductibles, co-pays, vaccination schedules and appointments, as your baby will require frequent visits to the pediatrician, especially during their first year.

It’s very important that you’re comfortable with your child’s care and with a referral from your doctor, friends or family, you’re more likely to feel at ease. Selecting a pediatrician in your provider’s network is recommended, in order to receive the best coverage.

Life Insurance:

As a new parent, you’ll want to review your life insurance policy. Make sure your beneficiaries are up-to-date and that you have sufficient coverage. You may also want to assess other goals related to education spending, eliminating debt and salary changes.

If one parent plans on leaving the workforce, you also might want to think about increasing your coverage. This way you have protection against any loss of lifestyle in the event of early death.

How Should My Estate Plan Change When Having a Baby?

There’s no better time to organize your estate documents. Drafting and executing your legal documents should include directives for guardianship, a living will, and financial and medical power of attorney.

You may currently have trust documents in place. If that’s the case, review them to ensure your beneficiaries are up-to-date. Once reviewed and executed, these documents should be safely stored along with your baby’s Social Security card, birth certificate and health records. Lastly, remember to send copies of your estate documents to your executors to have on record.

How Do I Save for My Baby’s Future?

When it comes to saving for your child’s future, there are a number of details to consider. Education can often be one of the more looming costs and according to the College Board, a moderate budget for an in-state public college in 2019-2020 averaged $26,590, whereas a moderate budget at a private college averaged $53,980. These include tuition, housing, meals, books as well as associated fees. Thankfully, you can now use a 529 savings plans for K-12 education, as well as college costs.

For parents in search of a tax-advantaged savings account that isn’t limited to costs of education, a custodial account can be set up under the Uniform Transfers to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA). These types of accounts protect the minor from tax consequences often associated with assets up to a specified value, until the child reaches legal age. Identifying goals for your child moving forward will be helpful as you develop a monthly savings goal to support your intentions.

how much should I save for a new baby

Bringing a child into the world can present a number of new challenges. But they can each be faced one by one in order to help ease any burden once your baby does arrive. From the first nine months to the rest of their lifetime, there are endless financial decisions to be made in order for your family to find success and happiness.

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