Skip to main content
CFP Board LMAP Logo
Search Let's Make a Plan
Find a CFP® Professional
Please select a location from the dropdown.

By executing a search, I agree to Terms and Conditions for the Find a CERTIFIED FINANCIAL PLANNER™ Professional Search

Provided By CFP Board

Four Financial Considerations When Preparing for a Baby

The arrival of a new baby is an exciting time. The rewards of raising a child are enormous, but so are the expenses. According to the U.S. Department of Agriculture, you may spend up to a half-million dollars over the first 18 years for a baby born in 2022. This wonderful life event requires that you make financial considerations now to be prepared for the future.

Planning in advance before your bundle of joy is born is the best way to ensure a smooth transition and gain financial confidence. Here are four considerations to help you create a solid financial plan as you grow your family.

First-Year and Post-Baby Budgets

Look closely at your budget before you or your partner become pregnant or during the early months of pregnancy. Your budget may need to expand to include new financial goals, such as saving for college or buying a home, but you still need to stay on track with retirement savings.

Make sure you add estimated medical expenses to your spending plan, including copays and out-of-pocket costs for prenatal care, testing, labor and delivery, and newborn wellness care. Your spending plan should also cover one-time and ongoing needs such as the following:

  • Stroller
  • Car seats
  • Motion baby swing
  • Bassinet
  • Breast pump
  • Infant formula
  • Diapers and wipes

Child care may be the most significant expense to consider when you are planning to welcome a new child to your family. You may need to adjust your budget to account for child care expenses, as well as a decrease in income if you or your partner choose to become a stay-at-home parent.

According to a 2022 child care survey from, the average weekly cost of child care is $226 for day care and $694 for a nanny. That adds up to more than $11,500 per year for day care and over $36,000 per year for a nanny. Either option could take up a sizable portion of your family’s income.

Life and Disability Insurance Needs

How will you provide for your child or children financially if something happens to you? Life insurance is an effective way to protect your family.

With life insurance, you can pre-select an amount of money that will replace your income and alleviate emergency expenses. Even if one parent stays home, remember that both parents need life insurance to help the family maintain their standard of living.

Consider purchasing disability insurance, too. If you become disabled and unable to work, disability insurance can pay a percentage of your income so you can continue meeting family financial obligations until you are back on your feet.

Key Estate Planning Documents

Putting an estate plan in place is one of the most essential steps you can take to care for your family. Your actions and preparation now will directly affect the legacy you leave.

Before or shortly after your baby is born, it is important to establish a will or trust. Select an executor or trustee and clearly outline how your assets are to be distributed between the surviving parent and your child. Make sure you name a responsible guardian to care for your child if you were to pass away. Name a separate guardian to handle financial matters.

You should also have a living will or healthcare proxy for medical decisions and give someone power of attorney to make financial decisions in the event you become incapacitated.

Saving for College

There are many options to save for college and other education expenses, but a common way is the 529 plan. Set up a 529 plan now and start depositing money into this account to take advantage of growth without taxes. You can later withdraw 529 plan investment proceeds tax-free to pay for qualified college and other education costs.

Plan ahead for additional secondary school education costs if you choose the private school route for your child. Consider using up to $10,000 of 529 plan savings every year for private education between kindergarten and high school.

A CFP® professional can help you plan ahead as you look forward to growing your family. Visit to find a CFP® professional in your area.

Get started on securing your financial future today
Find a CFP® professional
Family Finances Settling Down