Choosing to start a family may not feel like a financial decision. You shouldn’t make that choice solely based on your money situation, but you shouldn’t ignore practical realities either.
The USDA estimates that raising a child to age 18 will cost the average family $233,000. That doesn’t include pregnancy or college costs. It’s a significant commitment for most families.
The good news: you can plan ahead so financial concerns don’t hold you back from the life you want.
Start with What’s in Your Control
Focus on what you can control now to protect yourself later. Reconfigure your budget to afford items and services you’ll need. Check your medical insurance provider to understand what you’ll pay during pregnancy and birth.
Calculate costs for adding dependents to your plan or explore other coverage options. If you need to save for these costs, create a savings plan now. Break it into a monthly goal you can manage.
Use the Right Savings Vehicles
If you have access to a Health Savings Account (HSA), consider it. You need a high-deductible health plan to qualify.
HSA contributions are tax-deductible, earnings are tax-free, and withdrawals are tax-free for qualifying medical expenses. Unlike Flexible Spending Accounts, HSA funds roll over year to year—no use-it-or-lose-it pressure. If kids are 5+ years away, you can even invest HSA funds to grow them.
Keep Costs in Check
Your baby will need diapers, wipes, bottles, and countless items. But babies don’t need everything department stores sell or luxury versions.
Before arrival, list what you truly need. You’ll be more objective before the emotional rush begins. Since babies grow quickly, most items won’t last long. Friends and family often shower new parents with clothes, supplies, and hand-me-downs—which can save hundreds of dollars.
Secondhand items and used furniture are fine. You’ll pass them along to the next new parent later.
Consider the Long-Term
Having a child requires long-term planning. College costs are rising, so start saving early (529 plans work well after birth). Once you have dependents, ensure they’re covered with appropriate life insurance.
You’ll also want to plan your estate and update your will. This includes designating where assets go, guardianship of your children, and creating a trust. This isn’t just for the wealthy—everyone needs an estate plan. You don’t want a court making these decisions.
Use Your Network
Ask other parents about unexpected costs and what to expect. These people offer real insights. Use them for referrals on childcare, baby products, and deals you might not find otherwise.
Don’t lose sight of your own financial goals. Keep paying yourself first and contributing to retirement and savings. If planning feels overwhelming, a financial plan helps you see the big picture and allocate money toward all your goals. Building a cash emergency fund before the baby arrives ensures you’re prepared for unexpected costs, and working toward clear financial goals keeps your plan on track.
Start a conversation with us to discuss your family’s financial planning needs and goals. We can help you create a comprehensive plan that grows with your family.
