Are you wondering how to prepare financially for a baby?

I didn’t go the traditional route to have children. Almost overnight, I went from zero to three children, when I adopted a sibling group out of foster care. We got a call about the kids on a Thursday, met them that Friday, and welcomed them into our family the following Monday. At the time, the youngest was still an infant, and the older two were four and five years old.

While it was incredible to watch our family grow, it didn’t take long to recognize that we were unprepared financially. In fact, that lack of financial preparedness made the family transition even more stressful. 

When it comes to financial planning for your expanding family, the most important things you can do are:

  • increase your emergency savings
  • create and maintain a budget
  • verify you have adequate insurance coverage, and
  • create or update your will.
increase your savings to prepare financially for a baby

Increase Your Emergency Savings

No matter where you are in the family planning process, the most important thing you can do is to start saving. It doesn’t matter if you already have kids in the house or are just dreaming, you can never begin saving too soon. 

Truly, if you only take away one thing from this post, know that building up your emergency savings is critical to your family’s long-term financial success. When it comes to kids, there are always unexpected costs, and you will thank yourself for setting the money aside ahead of time. 

Start by eliminating the things and services you don’t need. You can do so by taking the time to sit down and look hard at your monthly bills. Are there things you are paying for that you really don’t need? What about subscriptions you didn’t even know you still had? Whatever you do, take the time to reduce your expenses as much as you can so that you have a comfortable amount of money set aside when that baby arrives.

Create and Maintain a Budget

Babies are expensive. I know, people say it all the time because it’s true. And whether you think you are prepared, just know that your expenses are going to change quite a bit as your family expands. Additionally, your income may also change depending on your situation.

Related post: How to Create a Family Budget that Works

There are three specific areas I recommend considering as you prepare financially for a baby:

Medical bills.

If you are having a baby the traditional way, you’ll want to consider medical expenses. These might include prenatal, delivery, and postnatal expenses. Do you have insurance? What will your deductible be? How much will you owe out of pocket? If you don’t have insurance and have a low income, research state programs that can help to minimize the expense. Plan ahead. Depending on your insurance situation, you may want to consider having additional funds for unexpected medical issues.

Baby items.

The expense increases when you start to think of all of the things you’ll need for baby in the first year. Consider strollers, car seats, changing tables, bottles, clothing, cribs, diapers, swing, dresser, baby monitor, rocking chair and more. Even if you receive some of the items as gifts ahead of time, it’s a good idea to head to your local store and price them so you know what to expect as the baby grows. If you are going to breastfeed, you may need a breast pump if you plan to ever leave the house without the baby. If you aren’t breastfeeding, consider the price of nipples, bottles, and formula.

Childcare.

As soon as possible, come up with a plan for childcare. If you have free babysitting services from family, consider yourself blessed, but know that childcare can be a huge expense for many. When it comes to being financially prepared, you need to know how much it’s going to cost. Consider whether you will need daycare or a babysitter. Call around to compare costs or ask other moms what the going rate is for childcare in your area. 

Related post: 3 Benefits and Cost Savings of Being a Stay-at-Home Moms

Control your expenses 

Even though you’ll need a lot for your new little one, there are lots of ways to control your expenses.

Buy used.

Babies outgrow clothing and toys long before they wear them out. Consider thrift stores for quality used toys, baby clothes, and even furniture. You may even find stores that specialize in used baby items. Our local Early Childhood PTA hosts a resale event twice a year. I found that event to be the perfect way to get a lot of clothing at very reasonable prices.

Welcome the generosity of others.

When you are ready, tell everyone you know about your happy family news. Whether someone throws you a baby shower or not, you’ll almost definitely be offered plenty of baby- and kid-related items. We received tons of hand-me-down clothes and toys and I’m not sure what I would have done without the generosity of our family and church friends. 

baby gifts help prepare you financially for a baby

Wait for gifts.

People love to go crazy giving gifts when a baby is involved. I mean, who doesn’t like to purchase little clothing items in pink and blue? Since you never know what someone might purchase, it’s a good idea to wait until the dust settles before making purchases of your own. The gifts you receive can offset the financial burden so be patient, and only purchase what you actually need.

Remember that you don’t need everything.

There are thousands of gadgets out there but remember that your baby doesn’t need them all. Go with your mother’s intuition and stick with the items you know you need. 

Plan for Maternity/Paternity leave

Even if you have some time to prepare financially for a baby, it’s important to be aware of the maternity and paternity leave policies of your place of employment. Consider the amount of time you (and your spouse) will have off of work and whether it’s paid or unpaid. Either way, your leave time can have a significant impact on your family finances.

prepare financially for a baby by having adequate insurance

Prepare Financially for a Baby with Adequate Insurance Coverage

Take the time to go over your insurance coverage with the appropriate expert. You may want to do this before baby arrives, but definitely take the time to do so after. If you haven’t purchased life insurance, it’s time to get some. The monthly premiums are relatively low for a large term policy and you’ll be protected in the unfortunate event that something was to happen to you or your spouse. 

Create or Update your Will

It’s never fun to plan for a time when you aren’t around to take care of your family, but in the unlikely case that something does happen, you want to make sure you’ve provided for your little ones. Make sure to have your wishes clearly identified in a will. If you already have a will in place, take the time to update it (and do so each time you have a major life event). 

Related post: How to Build Wealth

Preparing for a new addition to your family can be an exciting time. When you take the time to prepare your finances ahead of time, you’ll be able to enjoy that first year without the added stress.


Hi, I’m Leah Hadley! I’m an entrepreneur and mother of three adopted children. I founded two companies: Great Lakes Divorce Financial Solutions and Great Lakes Investment Management. I am committed to strengthening families through financial wellness and Moms Managing Money is my passion project to support you on your financial journey.