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Mother Soothing Baby

According to the US Department of Agriculture, the cost to raise a child — excluding college expenses — is over $233,600 for a middle-income family. While many women and couples are delaying starting a family until they've established careers and more sound financial footing, they may face other issues with fertility or a work/life balance.

Whether you've begun to plan even before pregnancy or have nine months to prepare, these steps will help you create a sound financial plan before the new addition arrives.

Create A Budget

Track everything you spend. Use Quicken or Microsoft Money to chart your cash flow. Save receipts, credit card statements, checkbook ledgers, and household expenses for several months to see where your money goes and where you can cut back. You'll also need to calculate your home's worth when you determine your assets' value.

Reduce Credit Card Debt

Transfer high balances to a card with a low or zero-interest rate and pay down balances more quickly. Charge as little as possible while you're paying balances down. Check out these strategies.

Check Your Credit Score

You're entitled to one free credit report annually — but you don't want to check too often, because that can damage your credit score. It's important to check, though, because you can identify and resolve any possible errors. You want to have good, clean credit for potential large future purchases like a bigger home or car.

Talk To HR About Maternity/Paternity Benefits

Company policies vary. The Family and Medical Leave Act (FMLA) entitles new parents working for companies with 50 or more employees to take up to 12 weeks unpaid leave; your employer still pays for medical benefits during this time. Birth mothers should also apply for short-term disability pay.

Estimate What You'll Spend In Your Child's First Two Years

The average amount of money people spend during a little one's first two years is $8,000+ annually. When you calculate other expenses, like diapers and formula, things add up. Depending on you and your partner's incomes, consult with a financial advisor to see whether it's feasible for one of you to stay home with the baby for a year or two.

Boost Your Emergency Savings

The accepted rule of thumb is to stash three months' worth of living expenses away — and if you already have it, great! However, that nest egg should increase to accommodate the additional expenses of a baby. Take maternity/paternity leave — if unpaid — into account, too, when you're building up your savings account.

Set Up A College Fund

If you've got the discretionary income to do so, you can start a college fund even before your child is born. You can use a 529 College Savings Plan, which offers tax advantages, high contribution limits, and diverse investment options.

Prioritize Retirement

If you must choose between saving for your child's college education and saving for your retirement, choose retirement. By the time they're ready for college, they may qualify for scholarships and financial aid. You don't want to become a financial burden to your kids when you're ready to retire.

Cover Healthcare Needs

Take advantage of your company's flexible spending account (FSA). If you're using a very inexpensive plan with a high deductible from the healthcare marketplace, you may want to revisit that plan before your baby arrives, or you'll potentially pay quite a lot more in co-pays, deductibles, and other out-of-pocket expenses.

Get Life Insurance

If your company provides it, take advantage. If not, you can search for a variety of coverage options including term life, which most experts recommend. Life insurance ensures your family’s financial protection should something happen to you or your partner. Consider disability insurance, too, in case one or both parents becomes disabled or injured and cannot work.

Explore Other Savings Options

Save for your and your child’s future withvarious investment vehicles. Explore short-term savings accounts or certificates of deposit (CDs), custodial IRAs, long-term savings accounts, and stock and bond mutual funds.

Baby-proofing your budget is no mean feat, but taking time to prepare your finances now will help reduce stress and worry when the baby arrives so you can focus on more fun, important things!

(Article by Sara Bailey of

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