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10 Money Tips for Baby Preparation

This article was written by in Family and Life. 4 comments.

Looking forward to that new baby smell? It’ll cost you… for years. USA Today has ten tips for “baby-proofing” your finances — the way you might baby-proof a kitchen — so you’ll be in a better position to part with $1 million over the next 18 years.

1. Review health coverage. Some new parents I’ve known have been constantly in and out of the doctor’s office. I hope those visits were all covered.

2. Get rid of credit card debt. You don’t want to still be making your minimum credit card payments when you’re also making diaper payments.

3. Build up an emergency. I don’t know one new parent who has not faced some sort of emergency in the first few years, but the severity of that emergency has varied. Emergency funds are good sense for anyone, with or without child.

4. Revise your budget. USA Today suggests using the calculator at

5. Update your will and life insurance. This is a good tip for any major life change. You want want to add your newborn into your will and make sure you have enough insurance coverage to take care of the new arrival.

6. Show fiscal restraint. One father I know wanted to buy his new son every fancy gadget, whether for learning or for fun. Don’t go overboard.

7. Weigh the cost of staying at home vs. working. This is a fiery topic deserving of its own article, at minimum. Yes, sometimes there is a financial advantage to one parent staying at home, thus eliminating the need and the cost of day care. It’s a decision in which more than just finances come into play.

8. Open a tax-advantaged workplace spending account. Your employer might offer a healthcare spending account, which will allow you to deduct certain medical expenses for your family directly from your income. That’s also known as paying expenses with “pre-tax money.”

9. Exploit tax breaks. “See whether you qualify for child and dependent care tax credits or an earned-income tax credit. You should also adjust your tax withholding to reflect a dependent child; this will give you a larger paycheck, which will help cover your new baby expenses.”

10. Save for college. When you’re looking down the road, it’s likely that college is going to be an enormous expense, particularly if tuition rates increase at the clip we’ve been used to. Typical financial advice says that parents should not risk their own secure retirement for the college education of their kids. I think there must be a happy medium.

You and Me and Baby Makes $197,700 [USA Today]

Updated September 30, 2007 and originally published July 20, 2007.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 4 comments… read them below or add one }

avatar 1 Anonymous

I think many of those things are good ideas whether you have a child or not.

As for my experience, raising my two children has been FAR more expensive than I could have ever dreamed. Even the staples like diapers and formula can add up to a hefty sum over a month. Luckily my wife is an avid garage sale shopper, so the clothing and toy purchases have been far less than they otherwise could have been.

My recommendation would be to sit down and make a detailed plan of your finances before deciding to have a child. Some friends of mine had to quit contributing to their 401k and other savings vehicles to alleviate the financial burden.

That being said, I’m not sure I would wait until you are in your perfect financial situation. Kids are wonderful and are worth the added expense.

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avatar 2 Anonymous

I think if you can prepare financially for kids – that’sgreat – but there really is no “perfect” time to have kids. Because, if you wait too long to have kids, then you can’t keep up with them!

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avatar 3 Anonymous

About a month ago my wife of only 8 months told me she thought she was pregnant, and the next day we found out she was officially. That evening I went from a guestimate budget to a written down form. I’m always paranoid about money just because we both had our fair share of debt coming into the marriage. She has student loans and I had credit cards. We found that we should be fine if we start saving more then we even had been. A couple weeks later we found out there was another baby! I wasn’t normal for a week!

Luckily she’s going to be getting a raise at the beginning of the school year and I should be getting one myself before the babies show up. If I get another bonus like I did last year that’ll be very helpful. One student loan payment that had been coming directly out of her check will be payed off soon, so that’ll add to our monetary flexibility.

We’re also very lucky that my health coverage is 100% for me and all family members with no money taken out of my check. I’m not all that religious, but someone has been looking out for me lately.

Day care is the one thing that scares me. I’m not sure how we’re gonna go about it yet. I think we’re gonna look for a college student to watch the kids at our house instead of sending them off some where.

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avatar 4 Anonymous

Hello. I do not want to fill the comments with a long list of details that are available elsewhere but most of the high-cost-children stories are what is spent, while what needs to be spent is closer to net zero.

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