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  • Written By
    Christian Simmons

    Christian Simmons

    Financial Writer

    Christian Simmons is a financial writer who has worked professionally as a journalist since 2016. As an active member of the Association for Financial Counseling & Planning (AFCPE), Christian prides himself on his ability to break down complex financial topics in ways that readers can easily understand.

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    Lamia Chowdhury
    Lamia Chowdhury

    Lamia Chowdhury

    Financial Editor

    Lamia Chowdhury is a financial editor at Lamia carries an extensive skillset in the content marketing field, and her work as a copywriter spans industries as diverse as finance, health care, travel and restaurants.

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  • Financially Reviewed By
    Rubina K. Hossain, CFP®
    Rubina K. Hossain

    Rubina K. Hossain, CFP®

    Certified Financial Planner™ Professional

    Certified Financial Planner Rubina K. Hossain is chair of the CFP Board's Council of Examinations and past president of the Financial Planning Association. She specializes in preparing and presenting sound holistic financial plans to ensure her clients achieve their goals.

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  • Updated: March 27, 2023
  • 15 min read time
  • This page features 5 Cited Research Articles
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APA Simmons, C. (2023, March 27). Financially Preparing for a New Baby. Retrieved April 1, 2023, from

MLA Simmons, Christian. "Financially Preparing for a New Baby.", 27 Mar 2023,

Chicago Simmons, Christian. "Financially Preparing for a New Baby." Last modified March 27, 2023.

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Key Takeaways
  • Having a baby is a major expense and there are not shortcuts. Financially planning for having a baby far in advance is the easiest way to make a difference.
  • Breaking down your planning stages into trimesters can make the process more manageable. Short-term goals like building a budget and cutting down debt make sense to tackle first.
  • Financially planning to care for a child doesn’t stop with the birth of the baby. Be ready to continue to alter your budget and have conversations about the future.

How Much Does It Cost To Have a Baby?

Simply put, having a baby can be a remarkably large expense for a family.

According to the Peterson Center on Healthcare, just the average health-related cost of having a baby (pregnancy, child birth and postpartum care) can be nearly $19,000.

And it’s important to remember that this does not include the many auxiliary costs outside of medical expenses. Having a baby requires equipment purchases such as cribs and strollers, home modifications and improvements, and many other day-to-day expenses.

According to the Baby Center, formula alone can cost anywhere from $400 to $800 per month. Diapers can easily eclipse $1,000 over the course of a year as well.

There are also other costs to consider as well such as doctor’s visits, daycare or babysitter needs and even “fun” expenses like toys that can quickly add up.

The significant price tag that comes with having a baby can be manageable, but it helps if families are prepared for the bump in expenses. This can mean beginning your financial planning even before pregnancy to help ensure you maintain financial wellness.

The Health Costs of Having a Child

Understanding Your Health Insurance Coverage

Understanding your health insurance coverage can play a huge role in successfully financially preparing to have a baby.

“Health insurance is probably my priority No. 1,” Ryan Kaysen, a certified financial planner with Integritas Financial, told RetireGuide.

For many people, health insurance is a must, and it can significantly cut down on the cost of having a child.

The Peterson Center on Healthcare found, for example, that a c-section costs more than $25,000 on average. But those with health insurance only have to pay about $3,200 out-of-pocket.

Did You Know
Women who give birth incur nearly $19,000 in additional health costs compared to those who don’t.

Pregnancy is still a major expense with health insurance, but it can keep those expenses from growing to the point of being truly insurmountable.

Pre-Pregnancy Planning

Pre-pregnancy planning if often a must for those who are looking to successfully financially prepare for having a baby.

Many cost-saving strategies require months-long implementations to make a real difference.

Waiting until you are near the end of your pregnancy to begin planning may make it difficult to achieve the financial goals that you have set.

Analyze Your Finances

The first step in financially preparing to have a child is as simple as analyzing your personal finances and gaining a good understanding of where your finances are at.

For many people, even getting a sense of their own financial situation is a big first step.

A 2020 Intuit study found that 65% of Americans don’t know how much they spent in the last month.

Digging into your finances to establish a picture of where and how you spend money can put you on the right track to begin altering those expenses to make room for a baby.

Establish a Pre-Baby Budget

Saving money is critical to preparing to have a baby, and establishing a pre-baby budget is one of the easiest ways to achieve that goal.

“Budget pretty much dictates everything in a financial plan,” Kaysen said. “Revising your budget, anticipating costs for having a baby and how it’s going to look going forward after they start growing.”

While it may be easier financially to wait closer to the delivery date to begin saving, establishing and sticking to a pre-baby budget can make a big difference throughout the pregnancy in building up a nest egg and getting yourself used to living within your means when the many expenses that come with raising a child are tacked on.

Unexpected Costs To Factor In

When analyzing your finances and establishing a budget to stick to during the pregnancy, it is important to remember that all costs associated with a baby are not easy to anticipate.

Going through pregnancy and raising a child is a learn-as-you-go experience, and there will be road bumps that require money.

It can help to leave some wiggle room in your budget to deal with potential issues like complications, unexpected doctor’s visits or uncovered bills.

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Planning During the First Trimester of Pregnancy

Dividing the financial prep of having a baby into trimesters can help you to more easily keep track of your progress and make the many necessary financial decisions a little more manageable to tackle.

In the first trimester of pregnancy, it may make sense to focus on areas like determining your parental leave plan for once the baby is born and beginning to shave down your debt where you can.

Determine Your Parental Leave Plan

There are many decisions that come with determining a parental leave plan. One of the simplest questions to ask is who will be going on leave.

In a couple, does it make sense for both parents to go on leave? Or will one parent take on the majority of the responsibility of staying with the child early on?

What makes sense will vary from situation to situation.

The next factor to consider is what type of parental leave plans and lengths your employer offers. This can help you to get a sense of what options are on the table.

Consider Short-Term Disability

You may also want to consider short-term disability as an option in place of parental leave to spend time with your child after the baby is born.

This can be a potential option to consider if your employer’s parental leave plan does not make sense for you.

In fact, some employers may offer short term disability to new parents as an option in place of traditional parental leave plans.

Cut Down on Debt

When enacting your pre-baby budget, one area that it may make sense to focus your efforts on early is reducing your debt.

You don’t want to find yourself in a situation where you are already significantly in debt before you begin incurring the many new and sometimes unexpected expenses that come with having and raising a child.

Cutting back where you can and using those savings early on to pay off debt can help to make a big difference.

Planning During the Second Trimester of Pregnancy

Once you have reached the second trimester of pregnancy, things may start to feel a little more imminent. And your financial planning should represent that.

It may make sense to use this time to continue to track spending and build up an emergency fund and also start setting up what your post-pregnancy financial situation will look like.

Track Your Spending

As the second trimester begins, your budget may need to shift from cutting where you can and paying off debt here and there to truly tracking all of your spending.

This can be useful for two reasons. First off, saving money and reducing your expenses where you can becomes more and more important as the birth of the baby gets closer.

And second, the second trimester is late enough into the pregnancy where you may start seeing some unplanned expenses that you will need to account for.

Things like unexpected doctor’s visits or misunderstandings on what your insurance covers may become more prevalent later in the pregnancy.

Establish a Post-Baby Budget

Entering the second trimester also means that it is time to start thinking about and designing what your post-baby budget will look like.

After saving and living within your pre-baby budget for a few months, this is a good opportunity to establish what has and has not worked and use that info to establish the makeup of your post-baby budget.

Things to Include in a Post-Baby Budget
  • Room for everyday costs (diapers, formula)
  • Equipment costs (cribs, strollers, toys)
  • Emergency savings

Remember to include a lot of room for the everyday expenses that come with raising a baby, as well as additional space for any emergency or unexpected expenses.

Update Your Emergency Fund

Another critical step to take during the second trimester is to both update and build up your emergency fund.

“Increasing the amount of emergency savings that you have because, especially in today’s age and post-pandemic world, there’s a lot of health issues that are going on,” Kaysen said. “Having a little bit of a better buffer in your emergency savings to take care of emergencies is going to be extremely important.”

It’s important to remember that, even if you already have emergency savings, that it is no longer a two-person fund. You may need to set aside a lot of additional money to cover expenses during a time of emergency that come with having a child.

According to TIAA, your emergency fund should be big enough to cover six months of expenses.

The Costs of Having a Baby

Evaluate Potential Childcare Costs

A big part of planning during this phase of pregnancy and establishing your post-baby budget will be evaluating the childcare costs that emerge after pregnancy.

This includes everything from diapers and formula to the cost of toys, food, clothes, daycare or nanny expenses, and everything else in between.

Planning for these expenses ahead of time and doing some research on what they will cost you can help to lessen the financial shock of taking on those expenses once the baby has been born.

Planning During the Third Trimester of Pregnancy

Once the third trimester begins and the baby is due in the near future, it’s time to start thinking about bigger picture topics.

By now, you should have already saved up a good sum of money, established and stuck to a pre-baby budget and be in strong position to transition into your post-baby budget.

This frees up the third trimester to be used on areas like estate planning and setting up savings accounts.

Buy Life Insurance

Many people naturally don’t like to think about the idea of dying or if something terrible happens. But that kind of planning becomes more important than ever when you are about to become a parent.

Looking into buying life insurance can help to ensure that, even if something happens to you, your child can still be taken care of financially.

“Life insurance is important because you just took on a whole bunch of different life goals, thus increasing the financial burden on the family,” Kaysen said. “Without life insurance, in the event of an untimely death, you’re putting your family in a much worse position.”

Life insurance comes in many shapes and sizes, so new or soon-to-be parents and find the model that makes the most sense for them.

You may, for example, opt to consider a term life insurance policy that lasts a set amount of time so you are only covered in the early years of the child’s life.

Depending on your age and health, life insurance also does not have to be a major expense.

Write a Will and Plan Your Estate

Another conversation that may be difficult to have but becomes important as the delivery date nears is updating (or creating) your will and settling your estate planning.

It’s important to ensure that you update your will to include your child, possibly naming them as your beneficiary, and create an estate plan that makes sense in case something ever does happen to you. It may make sense to think long-term here and craft a will that does not just make sense with a newborn but will work even 10 or 15 years down the road.

It is also critical to ensure that you have set up a plan in your will on what should happen to your child if you do die during their childhood.

“Something that constantly goes overlooked is the will and assigning guardianship for the child in the will,” Kaysen said. “If those estate planning documents are left undone, then you’re looking at letting the state decide who’s going to become the guardian.”

Set Up Savings Accounts

Another area to begin planning in the third and final trimester of pregnancy is to begin setting up savings accounts in whatever way makes sense for your family.

Some parents like to save money immediately for their children so that the fund has time to grow throughout their childhood.

This could eventually be used for something like college tuition or just to send them out into the world with a decent nest egg once they’ve grown up.

“The first thing that my clients come to me about is education planning,” Kaysen said.

Savings Accounts a Child Could Benefit From

Research Potential Tax Breaks

One important area to come in mind when financially preparing to have a baby is the potential tax breaks available to you when you do have a child.

Some may be modest, but they can make a potentially sizeable difference in your finances.

The Child Tax Credit, for example, can offer a maximum tax credit of $2,000 for a child who is five years old or younger.

Researching potential tax breaks or speaking with a planner or advisor about your options can help you to establish a little more room in your budget.

Financial Steps to Take After the Baby Is Born

Once you have navigated through the pregnancy phase, successfully sticking to your budget, cutting down debt, building up emergency funds and staying on top of financial and estate planning, the process still doesn’t stop.

There are several financial areas to keep an eye on and prep for immediately after your child is born as well.

Keep Your Child’s Documents Safe

It can be very important to keep your child’s documents safe after they are born. It can be easy to be careless with important documents, especially in the hectic days immediately following your baby being born.

But it’s critical to keep track of things like your child’s birth certificate and social security number. One idea to consider is finding a secure area of your home and storing all of your child’s documents and information in one safe place.

Update Your Health Insurance

Once your baby has been born, it’s also important to double check and potentially update and change your health insurance.

This could be as simple as adding your child to your health insurance plan.

But you may also find that different health plan or insurance options may appeal to you once you are a parent. Keep in mind that just because your current health coverage was the best option for you before you had a baby does not mean it is now.

Returning to Work

Once you have had your baby, you probably already know when you will be returning to work. But the how is just as important as the when.

Parental leave can go by faster than you think. It can be helpful to come up with a transition plan for returning to work so it does not become a major shock on your life.

This can include easing into not being around your new child all the time and also establishing a plan for what happens one you do go back to work.

Do you need a nanny or day care, for example?

Stick to Your New Budget

Another critical component in your post-pregnancy plan is sticking to the budget you have set. But, once you are actually in the moment, you may find that it needs adjustments.

You may have planned too much for one area or not enough for another, or even found that your budget simply isn’t doable in practice.

Don’t be afraid to make the alterations you need to make your budget work once you have that information.

Important Financial Conversations To Have During Pregnancy

Financially preparing for having a new baby often includes many short-term conversations. Things like a pregnancy budget, cutting debt and building up an emergency fund take center stage.

But there are several long-term conversations about your finances that are important to have as well as you prepare to become a parent.

Prioritizing Your Financial Goals

Just because you are having a baby doesn’t mean that you no longer have long-term financial goals. But what those goals look like, or need to look like, may change.

It can be helpful to think long-term about your financial outlook and establish what goals you want to eventually hit, and how important they are, once you are a parent.

This can be as simple as adjusting where you want your savings account to be in five years or as serious as discussing career mapping. It depends on what makes sense for you.

Preparing Your Family’s Financial Future

Preparing your family’s financial future and establishing what your family will look like over the next 18 years is a big part of having a baby.

This can include conversations such as whether you plan to have a second child and how that will factor into your budget.

You also may want to have discussions in advance about what each parent is responsible for. Does it make sense for example, for one parent to quit their job and become a full-time parent?

Having bigger-picture conversations in advance can help to ensure that both parents are on the same page financially once the baby is born.

Expert Contributors

  • Ryan Kaysen
    Ryan Kaysen
    Certified Financial Planner with Integritas Financial

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Last Modified: March 27, 2023

5 Cited Research Articles writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

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  2. Peterson-KFF. (2022, July 13). Health Costs Associated with Pregnancy, Childbirth and Postpartum Care. Retrieved from
  3. Longman. H. (2022, June 21). How Much Does it Cost to Have a Baby? Retrieved from
  4. Intuit. (2020, December 11). Survey: 65% of Americans Have No Idea How Much They Spent Last Month. Retrieved from
  5. TIAA. (n.d.). Building an Emergency Fund: How Much Should I Save. Retrieved from