New Baby Checklist: 10 Ways to Get Your Finances Ready

Katie Taylor Updated on May 14, 2019

If you’re expecting a new baby, you probably know that your finances are about to change … but maybe you’re not sure exactly how much they’re going to change, or in what ways. I can relate.

When my wife was pregnant, we spent a lot of time talking about the potential cost of childcare. What we didn’t talk about were the small purchases that add up over time: diapers and wipes, milk storage bags, and teething wafers. Oh, and every single swaddle or sleep sack that got an Amazon reviewer’s child to sleep through the night. 

childhood-2923988_1920-521608-edited.jpg

There will always be costs you don’t anticipate, but having a financial plan will put your mind at ease and give you more time to focus on counting those fingers and toes.

If you’re wondering when you should start preparing financially for a baby, start now. Follow the 10 steps we’ve outlined below, and you’ll be setting your new family up for success. 

1. Create (or update) your budget

Developing an annual budget for something you’ve never done before can be intimidating. I mean, how much does a baby actually cost per year?

Each family’s expenses will be different, but on average, parents spend $12,680 to care for a baby in their first year, according to a study done by the U.S. Department of Agriculture. Consider big-ticket items—like cribs, strollers, and childcare—as well as the small day-to-day expenses like diapers and formula.

Let friends and family know what you’re in the market for. We saved a bundle by getting things like highchairs and clothes from friends whose children had outgrown them.

2. Plan for parental leave

For most of us, forgoing a paycheck for several months requires advanced planning. Talk to your HR department about your options, and think carefully about what makes the most sense for your family.

Under federal law, many employees (both male and female) are entitled to 12 weeks of unpaid parental leave. And your state or your employer could provide even more generous benefits—such as paid leave or the ability to purchase short-term disability insurance to cover some of your income during a leave of absence.

3. Start locating a childcare provider

With annual childcare costs averaging around $8,600 nationally (and over $20,000 in some states) according to the nonprofit Childcare Aware of America, paying for childcare is often the most expensive part of parenting.

And in some communities, the waitlists to get into a daycare center are as long as the pregnancy. It pays to get in early so you’re not left scrambling.

Even if you don’t think you’ll use daycare, it doesn’t hurt to put your name on a waitlist. My wife and I didn’t put our names on any lists because I was planning to work from home while caring for our son. By the time we realized we needed help, we were too late. He was seven months old before we got him into daycare. 

4. Pay down credit card debt

It’s time to get rid of all that interest you’re paying on your credit card balance. If you’re carrying a balance in the thousands, you’re probably paying hundreds in interest annually.

That’s real money you could use for things you’ll need, like a crib or a car seat. And reducing your debt load will make you a better candidate for future loans on any big purchases.

5. Re-evaluate your student loan debt

Adding new expenses to your budget can make things feel pretty tight, but you may be able to create a little breathing room by lowering your monthly student loan payment.

Refinancing your student loans could save you an average $259 a month. With lower interest rates and new payment terms, you’ll have the extra cash flow you need to rest easy…at least when the baby’s asleep.

Imagine Life Without a Student Loan Payment... Start Saving Now!

6. Anticipate your medical expenses

Giving birth is one of the most expensive healthcare events many young families will experience. Ask your medical providers to help you anticipate costs, and take the time to understand your health insurance plan and what it covers.

Because my wife and I wanted to avoid unexpected medical costs, we chose a health insurance plan with a relatively high deductible and lower premiums. We knew we’d meet the deductible early in the year—when she gave birth in January—and then we wouldn’t have medical expenses outside of our premiums for the rest of the year. Of course, this may not work as well for babies born later in the year.

7. Set aside emergency funds

Things happen. No matter how much you plan, something will catch you off guard—a costly home repair, an unanticipated medical bill, a layoff.  You can’t always know what’s coming, but you can prepare yourself for the unexpected.

Most financial experts recommend having at least three to six months’ worth of living expenses set aside. If that number has you balking, take a deep breath and start small. Schedule a regular monthly transfer from your checking account into a designated emergency savings account.

8. Keep (or start) funding your retirement

With all this focus on taking care of baby’s needs, you might’ve forgotten about your own retirement. But that’s a mistake. Contributing to a retirement account is more important than ever.

And you don’t have to stop contributing even if you take a longer leave of absence from the office.

While 401(k) plans and IRAs require that your contributions be made from earned income, non-working parents who are out of the workforce for more than a year can contribute up to $5,500 a year to a spousal IRA with income earned by their spouse. They can then deduct that amount from the household taxable income.  

9. Make a will and buy life insurance

No one likes to think about the what-ifs, but now that you’ll be responsible for a tiny human being, it’s time to put some contingency plans in place. Creating a will and buying life insurance are both good places to start.

If choosing your child’s guardian sounds impossible, just imagine the issue being decided by the court system without any input from you. That should motivate you to make an appointment with an attorney and put your wishes down on paper.

10. Set up a college savings account

College seems like an awfully long way off when you’re looking into your tiny baby’s face. But with the cost of education rising, you can’t start saving too early. 529 college savings accounts allow you to make pre-tax contributions between $235,000 and $520,000, depending on the state, per child.

Don’t forget to let friends and family know that you’ve opened an account. Some people would much prefer to help secure your little one’s future education than wrap another receiving blanket.

With a little planning, your bank account will be just as ready as you are to welcome a precious new family member.

About the Author
Katie Taylor

Katie Taylor is a content writer and editor with expertise in law and policy, finance, and entrepreneurship. She writes for startups and small businesses about everything from bookkeeping to telecom. Her work has been featured in The Washington Post and SheKnows.com. She is continuing to pay off law school loans and lives in Richmond, Vermont with her wife, son, and an unruly dog. Read more by Katie Taylor

Refinance and Save Today With These Lenders

#1 - Comet Recommended View More Details

Works with 275+ not-for-profit community lenders for higher approval chances

  • APR: 2.53% - 9.06%
  • Minimum credit score: 660
  • Refinance up to $300K
View More Details
Visit LendKey View Loan Disclosure

LendKey operates student loan programs for over 275 not-for-profit and community lenders across the country. By partnering with these lenders, LendKey is able to give consumers direct access to the best rates available from the most borrower friendly institutions. As the servicer of all loans obtained through its platform, you can rest easy knowing your personal information will be safe and that the best customer service team will be ready to answer your questions from application until your final payment.

LendKey Student Loan Refinance review

  • Lightning fast rate check - 2-minute rate check with no impact on your credit score
  • More lenders, more options - see the best offers from over 275 not-for-profit and community lenders for higher approval chances
  • Life of loan relationship - With LendKey, your personal information will never be sent or passed on to third parties. Their customer service team is with you from the moment you land on their website until you've completely repaid your loan.
  • Unmatched benefits- Community lenders put people over profits and offer unique benefits like cosigner release after 12 on-time payments, interest only repayment options to keep monthly payments low, the largest unemployment protection period in the market, and more.

Get a personalized quote from LendKey now.

#2 View More Details

Offers unemployment protection and career/coaching/networking

  • APR: 2.490% - 8.074%
  • Minimum credit score: 650
  • Refinance up to 100% of student debt
View More Details
Visit SoFi View Loan Disclosure

SoFi, which stands for “Social Finance,” was created by a group of Stanford business students who found themselves with a mountain of debt after graduation. They set out to change the student loan industry and help borrowers like themselves to get lower interest rates. SoFi has some of the lowest interest rates and, unlike the other lenders we reviewed, it has no maximum amount you can finance. However, Nevada residents can’t currently refinance with SoFi. Minimum loan balances are higher in Arizona, Massachusetts and Pennsylvania due to state laws. Additional state restrictions may apply.

SoFi Student Loan Refinancing Review

  • Low interest rates - For well-qualified borrowers, SoFi offers some of the lowest rates we have found.
  • Strong customer service - It has more than 350 customer service reps available to help applicants through process.
  • Career coaching and networking - Perks include career services representatives who can help you find a job or negotiate a higher salary. SoFi also hosts networking events, happy hours and educational lectures on topics like buying a home in major cities around the country.
  • Unemployment protection - Borrowers who lose their jobs through no fault of their own may apply for Unemployment Protection. If approved, SoFi will suspend their monthly SoFi loan payments and provide job placement assistance during the forbearance period. These benefits are offered in three month increments, and are capped at 12 months, in aggregate, over the life of the loan. Note that interest will still accrue while loans are in forbearance.

Find out what interest rate SoFi can offer you here.

#3 View More Details

For every loan they fund, they contribute to the education of a child in need

  • APR: 2.48% - 6.25%
  • Minimum credit score: 660
  • Refinance up to $500K
View More Details
Visit CommonBond View Loan Disclosure

CommonBond was founded in 2011 by three MBA graduates from the University of Pennsylvania’s Wharton School who wanted to help their peers escape from high-interest student loan debt. Its original focus was on grad students, but it has since expanded to cover undergrads as well.

Of all the companies we reviewed, CommonBond has some of the best customer service. The company prides itself on being easy to reach by email, phone, or live chat. It offers networking events, expert panels, insider newsletters, and even has a program help borrowers who lose their jobs to find new ones. CommonBond also makes you feel good about choosing to refinance with them by donating money to an education nonprofit for each loan they write.

CommonBond Student Loan Refinance review

  • Unemployment protections - If you lose your job or decide to go back to school, you can delay your payments for up to 24 months.
  • Social promise - For every loan they fund, they also contribute to the education of a child in need.
  • Hybrid loan option - Offerings include a 10-year hybrid loan with fixed interest for the first five years, and variable interest for the final five.
  • Referral bonus - For every friend you refer who refinances their loans with CommonBond, you’ll earn a $200 cash bonus.
  • Qualification - Borrowers must have graduated at least 2 years prior if they want to apply without a co-signer. And borrowers in 6 states – Idaho, Louisiana, Mississippi, Nevada, South Dakota, and Vermont – cannot currently refinance through CommonBond.

Get a personalized review of your refinancing options with CommonBond today.

#4 View More Details

Earnest empowers people with the financial captial they need to live better lives.

  • APR: 2.49% - 7.89%
  • Minimum credit score: 650
  • Refinance up to $500K
View More Details
Visit Earnest View Loan Disclosure

Using technology, data, and design to build affordable products, Earnest's lending products are built for a new generation seeking to reach life's milestones. The company understands every applicant's unique financial story to offer the lowest possible rates and radically flexible loan options for living life.

  • Commitment-free 2 minute rate check
  • Client Happiness can be reached via in app messaging, email, and phone 
  • No fees for origination, prepayment, or loan disbursement
  • Flexible terms let you pick your exact monthly payment or switch between fixed and variable rates
  • Skip a payment and make it up later
  • Online dashboard is designed to make it easy to apply for and manage your loan

Click here to apply with Earnest and to see how much you can save.

#5 View More Details

Operates in all 50 states; 2nd largest student loan refinancing lender

  • APR: 2.50% - 7.02%
  • Minimum credit score: 660
  • No refinancing amount maximum
View More Details
Visit Laurel Road View Loan Disclosure

Laurel Road is a national online lender with customers in all 50 states, the District of Columbia, and Puerto Rico. Many of our non-bank competitors are not able to lend in all 50 states.Laurel Road has grown to be the second largest player in the student loan refinancing space in large part because of our reputation as the go-to low rate provider.

Laurel Road Student Loan Refinance Review

  • National reach - Online lender that is available in all 50 US states, the District of Columbia and Puerto Rico.
  • No fees & the lowest rates in the space - Laurel Road is the most transparent about the rates they provide customers, and offer the lowest rates where it counts. Our customers will save more than $20,000 over the life of their loans on average. 
  • Customer service reputation - Laurel Road's customer service representatives are no rookies. With 19 years of experience on average, Laurel Road’s Customer Service team delivers an experience that is best in the industry. They work to build meaningful, life-long relationships with our valued customers to improve their overall financial wellness.
  • The stability & security of a bank - They are a division of Darien Rowayton Bank, a stable and secure FDIC-insured bank, regulated by the FDIC and the Connecticut Department of Banking.

Get your personalized, pre-approved rates in less than 5 minutes.

#6 View More Details

Special offers for medical resident and fellow refinance products

  • APR: 3.10% - 7.84%
  • Minimum credit score: 670 w/cosigner
  • Refinance up to $350K
View More Details
Visit Splash View Loan Disclosure

Splash Financial is a leader in student loan refinancing with new rates as low as 3.25% fixed APR which can save you tens of thousands of dollars over the life of your loans. No application or origination fees and no prepayment penalties. Splash Financial is in all 50 states and is intensely focused on customer service. Splash Financial is also one of the few companies that offers a great medical resident and fellow refinance product. You can check your rate with Splash in just minutes.

  • Low interest rates – especially for graduate students
  • No application or origination fees. No prepayment penalties.
  • Co-signer release program - you can apply for a cosigner release form your loan after 12 months of on-time payments
  • Specialty product for doctors in training with low monthly payment

Click here to see more of Splash's offerings and to see how you can save money.

Comments

I reduced my student loan payment by $152 per month, by refinancing thru Nitro:

Save Money Now