Are you and your partner getting ready to expand your family with another baby? Whether you’re expecting your second or sixth child (kudos to you), the new arrival is going to change your life. They always do, right?

In between talking about baby names and figuring out what color to paint the nursery, though, take some time to discuss the financial aspects of a new baby. Since you already have one kid, you’re infinitely more prepared for this baby than you were the first time around. But it’s still going to be a challenging adventure in countless ways. 

While we can’t help with midnight feedings or nap times, we can give you some tips for the financial side of expanding your family. Here are some of the most important financial considerations to think about and discuss together before you head to the hospital.

Prepare for baby-related expenses

As you know, between diapers, food, clothing, and school, having a baby is expensive. But literally having the baby is also expensive

Even with good health insurance coverage, your out-of-pocket cost will probably be at least $1,000. If you end up with complications during labor and delivery, the medical bills can escalate quickly. Before you start timing contractions, make sure you understand the ins and outs of your health insurance and how to add your baby to your plan.

There are some other expenses you and your partner need to plan for: childcare for your other children, your plans for maternity/paternity/family leave, and changes to your life insurance coverage. And don’t forget to budget for diapers, baby clothes, and a good supply of frozen dinners.

Build flexibility into your work schedule

With a growing family and multiple young children, flexibility is essential in every part of life, including work. You may want to consider some alternatives to returning to full-time work. What if you end up needing to be home longer due to medical complications? Can your savings cover some unpaid leave from work? 

Another option to discuss is working from home. Even a part-time WFH schedule can be helpful and save you a lot of money on childcare. Maybe you and your partner can plan your schedules so one of you is home with the children every day. 

The WFH live offers a lot of perks, especially for parents of young children. But preparation is important. You’ll need to schedule Zoom calls around nap times and make sure you can get your older kids to school and soccer practice. It’s also essential to divide up housework, so you and your partner both know who is responsible for what.

Make a plan for childcare

Working from home can significantly reduce childcare expenses, but what if that’s simply not possible? If you have parents or other family members who are willing to help out, that may be the most affordable option. If not, you’ll have to budget for childcare. 

Simplify where you can

When you’re managing multiple children on minimal sleep, the more you can simplify your life, the better. By streamlining your finances, you can avoid accidentally missing payments and overspending your budget.

We recommend setting up autopay for everything possible: mortgage/rent payments, utilities, credit card bills, and student loan payments. If you have room in your budget, consider setting up automatic transfers into your emergency fund or college savings account

Talk about it

Even with automated payments and comprehensive budgeting, unexpected expenses will still pop up. Those situations are always challenging, but they can be especially hard on top of all the emotional and physical challenges of parenting young children. But you can reduce the anxiety and stress of financial emergencies by planning ahead.

Make time to talk with each other about money issues. What do you want to do if the furnace dies? Should you dip into your savings or emergency fund? What if one of your children needs extra care? Would it be feasible for you or your partner to take a leave of absence from work?

Of course, you can’t plan for every possible scenario. But purposeful conversations help you approach problems together to develop a solution and avoid a fight.

Remember the big picture

Having a baby is an amazing and exciting experience, but it’s also tiring and stressful. When you and your partner are feeling overwhelmed, the last thing you want to do is try to work through financial planning issues. Those conversations about money are probably going to be a lot more productive if you can have them before you’re knee-deep in diapers.

Proactive communication and planning are the keys to avoiding arguments about finances. While you’re looking forward to the due date, work with your partner to figure out how to change your work schedules and simplify your lives as much as possible. Create a new budget that includes childcare costs and college savings.

If you’re ready to take charge of your finances, we can help with personalized resources from a Certified Financial Planner™. The Everyday Money Workbook and BudgetingBlocks™ are two powerful tools that offer realistic guidance to help you manage your money.