Are you ready to grow your family? Whether you’re just thinking about the future or looking at a due date that’s just a few months away, it’s critical to prepare as much as possible. We won’t tell you which car seat to buy or how to decorate your nursery, but we do have lots of practical advice on how to financially prepare for a baby.

It all comes down to thinking ahead, defining the new baby-related expenses, and making as many contingency plans as possible.

That means modifying your budget to accommodate additional costs and taking care of insurance and estate planning. It might sound like a lot, but it doesn’t have to be overwhelming. Just follow this guide to get everything set before the due date!

Practical considerations to financially prepare for a baby

Babies are expensive — recent estimates say it costs approximately $17,000 per year to raise a child. That means you need to make sure your finances are prepared in several different areas:

  • Budget
  • Parental leave
  • Childcare
  • Health insurance
  • Income 
  • Life and disability insurance
  • Estate planning

All of this can be looked at and prepared for in your budget.

If you don’t currently have a clear budget, create one! A comprehensive budget allows you to see exactly where your money is going each month.

And when you’re planning your budget, make sure to think about contingencies. You can’t plan for every possibility, but it’s best to make as many preparations as you can. That way, there’s a lower chance that something unexpected will have significant financial consequences.

Your budget should also include smaller expenses, like the cost of diapers, formula, and doctor’s visits depending on your insurance plan. And remember — babies grow fast and their needs will change as they do. Be sure to revisit your budget often to accommodate those changes!

Considering current and upcoming expenses

Babies are more than just diapers, formula, and cute little clothes. You should also be looking ahead to think about all the new expenses that your baby will bring. And if you’re spending more than you make, it’s time to rein that in.

If you have lots of extra money left over each month, think about what you want to do with that. Do you want to start a college savings account for your child or bump up your emergency fund? Make decisions that align with the values that are most important to you.

You also need to think about little things you will be spending money on. 

Could you budget some extra money for grocery delivery or takeout to combat the extra stress and fatigue of those first few months? Even minor expenses add up over time, so the more you can prepare, the better.

Planning out parental leave and childcare

Are you and your partner going to take some time off when the baby arrives? Do you have access to paid parental leave? If so, that’s wonderful! We’d definitely encourage you to take as much parental leave as possible.

If you don’t get paid maternity/paternity leave, it’s time to run some numbers. How much time do you want to take? Will that leave be completely unpaid, or will you earn a portion of your salary? 

For example, do you get short-term disability leave? Many companies offer this as part of their benefits package, and you might be able to use it to take some time off while still earning part of your salary.

After your parental leave ends, what’s your plan for childcare? If you or your partner plan to quit your job and stay home full-time, can you pay all your bills on just one income? If not, rework your budget!

If you and your partner will continue in your current jobs, what’s your plan for childcare? Unless you have family members who are going to help out for free, you’ve got to budget for a nanny or daycare provider at least until your child is old enough for preschool or kindergarten.

Growing your career and income

Your earning potential might not be the first thing you think about when you’re budgeting for a baby. But your 20s, 30s, and 40s are the decades when your “human capital” (your ability to work) is one of your biggest financial assets. That means you need to take career development into consideration when you’re thinking about childcare and budgeting.

For example, if you take a few years off to be home with your baby full-time, your income during those years will change. But how will that impact your job growth potential when you return? Will it set you back on your career track? Or will you be able to jump back in where you left off?

Depending on the answers to those questions, you may want to consider different income options.

Is it worth trying to find a way to switch to part- or full-time remote work so you can be home without losing your income? There’s no right or wrong answer — the point is to consider how having a baby will affect your long-term earning potential and make decisions accordingly.

Preparing for the unexpected

It’s not fun to think about potential emergencies, but it’s crucial. We’re talking health insurance, disability insurance, life insurance, and estate planning. And as your family grows, what you need may change too. 

Let’s start with health insurance coverage — do you have the right type of plan? For example, can you handle the financial hit of a high-deductible plan, or would HMO coverage be better?

Next, think about what happens if something goes wrong. Do you have long-term disability coverage? This type of insurance would ensure that you could still receive some income if something affects your ability to work. 

And if the worst happens, do you have a good life insurance policy? Do you have a comprehensive will that includes guardianship instructions for your child? It not, take care of that as soon as possible.

It’s also a good idea to give a trusted person power of attorney to make financial and medical decisions for you if you become incapacitated.

Plan ahead to get your finances ready for baby

Having a baby is so exciting, but it can also be financially stressful. Fortunately, you can relieve a lot of that stress by planning ahead. With a comprehensive budget, insurance coverage, and a thorough estate plan, you can feel confident that your child will be protected no matter what happens. And if you don’t have any of that in place yet, start with the budget and work from there.

Not excited about using an app or spreadsheet for your budget? BudgetingBlocks™ is the answer! This hands-on system gives you the tools to visualize your finances and decide exactly where you want your money to go. Get all the details about this fun and practical tool at