Financial Moves Expecting Parents Should Make

Parents with baby

It's easy to get caught up in the excitement of a newborn or adopted child. You've likely waited for months or possibly years for your new family member. But you may also be worried about the financial responsibility of a growing family. Prepare to put those concerns to rest. 

Read up on the financial moves expecting parents should make so the only thing that keeps you up at night is your new bundle of joy.

Adjust Your Budget

Use an online baby cost calculator to estimate the immediate costs of adding a new member to the family. Consider the purchases you'll make during the first year, e.g., bedding, clothing, diapers, etc. Remember to also figure the long-term changes that are on the horizon, such as the potential loss of income if one parent reduces work hours or stays home with the baby or adopted child.

Emergency Savings

Increase your emergency savings fund. While you may already have three months of living expenses set aside to pay for bills and other necessities if a job loss occurs, boosting your savings based on your revised budget can better prepare you for the future. Living expenses post-baby are likely to be higher than pre-baby. You may still end of with three months' worth of living expenses, but it will now reflect the changes to your household budget.


Do you or your partner plan to return to work full-time? If so, explore your child care options and add estimated costs to your budget. Check to see if your employer offers a Flexible Spending Account (FSA) since it might help save money. FSAs allow you to use pre-tax dollars to pay for eligible daycare services. 

Eliminate Debt

Abolishing debt now will leave more wiggle room in your budget to add to your emergency fund. Increase your earnings with a temporary side job and use the cash to pay off debt. Then, redirect old debt payments to your savings account. You'll have the peace of mind of knowing your hefty savings balance can shield you from unexpected expenses that can throw off your budget. 

FMLA Leave

The Family and Medical Leave Act (FMLA) allows mothers, fathers, and adoptive parents up to 12 weeks of leave to care for a newborn or newly adopted child. The leave is unpaid but protects your job. You and your company must meet specific criteria to be covered under the Act. 

You could use sick, personal, or vacation days to recoup some of the lost wages. Another option would be to access temporary disability insurance benefits through your workplace. 

Speak with your employer's human resources department to discuss options unique to your situation.

Update Critical Documents

As your family grows, so does the list of financial considerations related to your assets. Discuss your plans with a trusted attorney or financial advisor. You might determine that you need to:

  • Increase your life insurance policies. Or, if you and your partner don't already have a policy, now might be the time to purchase one. The coverage can help replace the income of the deceased partner. Funds can be used for such things as paying off your mortgage or covering college expenses.
  • Update your will and assign a guardian to care for your child should you and your partner pass away. A guardian may also be in charge of the assets you leave to your child until they reach a specified age.
  • Change beneficiary designations on financial documents such as 401(k) plans, IRA, and life insurance policies.

College Savings

Start saving early to give your money a chance to snowball without stressing your budget. College savings plans, e.g., 529 Plans and Educational Savings Accounts, allow your money to grow tax-free. Some programs even allow friends and family to contribute directly to the plan. Funds can be used for qualified educational expenses like tuition, fees, and books. 

As your child grows, so will your financial needs. Review these and other areas at least annually to ensure you stay on track to meeting your financial goals.