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For expecting parents, the months leading up to your child's birth are exciting but also require careful financial planning. Here are the main money moves to consider.

Expecting a child is one of the most exciting milestones in life. However, with the USDA estimating that it costs more than $200,000 to raise a child from birth to age 18, the potential expenses involved can feel daunting.

When you expect to spend more than $12,000 a year on the latest addition to your family, it becomes clear that you need to make some adjustments in your financial situation. As you prepare for all the necessities of becoming a parent, here are some of the money moves you should make.

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1. Figure Out the Leave Situation

One of the first things to do is take a look at your potential leave. If you work for a company, find out if there is paid parental leave. Federal regulation requires that you be allowed twelve workweeks of leave when you have a baby — no matter which parent you are. However, there are no laws requiring that you be paid during that leave.

Check with your company to see if your leave is paid. If you won’t receive paid leave, you’ll need to see if you can take some of your paid vacation or sick days, as well as estimate how many weeks you can actually take off. When I had my son, there was no paid leave available and my little family could only afford for me to take four weeks of maternity leave.

If you own your own business or freelance, you’ll also need to figure out the impact of not working on your finances and prepare.

2. Set Up a Savings Account for Birth-Related Expenses

Now is a good time to set up a savings plan for all things related to the birth of your child. Are you going to need to cover expenses while on parental leave? Start saving now. Need to move into a bigger place to accommodate the baby in a few months? Get that savings account going. Check your insurance policy. How much of the birth will be coming out of your pocket? Start saving for those medical costs now.

Open a high yield savings account and start putting money into it. If you have a partner, one way to save for the shared goal of saving up for the birth is to use an app like Twine. It will help you navigate the needs related to this shared goal and help you prepare.

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Related: Best Investment Plan for a Child’s Future

3. Be Smart About Your Baby Registry

As you peruse the stores and begin to make a baby registry, you’ll find that there are a number of cute items available. Take a step back and think about what you really need. One of the things I learned early on was that you can never have too many diapers or onesies.

Additionally, don’t shy away from adding higher-priced items, like car seats and cribs, to your gift registry. In some cases, your friends and family might chip in to get you something more expensive. Also, even if you don’t get everything on your list, some stores will give you a discount for unfulfilled items on your registry. That can be one way to get a break.

4. Evaluate Your Baby’s Actual Needs

There are a lot of neat gadgets and items labeled as “must-needs.” However, many of these items are just gimmicky and might not make your baby’s life or your life better. Carefully evaluate what you buy, just as you would anything else. You want to save your money for the things that you truly need, rather than find yourself weighed down with a bunch of things you don’t need.

5. Determine Your Child’s Healthcare

You’ll have to get your baby on someone’s health insurance, so now is a good time to review your policies and figure out where to add the child. If you and your partner are on the same health plan, this is fairly straightforward. However, if you have different plans, you’ll need to compare your options and add your baby where it makes the most sense.

Also, realize that your child has their own healthcare, separate from yours, with their own doctor visits, copays, deductibles and more. As you consider how much to save up for, and as you adjust your budget, make sure to factor this in. Your child will need to make several visits to the doctor during the first year.

6. Revamp Your Budget

Your household budget will probably need an update as you prepare for the baby’s birth. The best time to prepare is before the baby is born. Take a look at your income and your expenses. Then, imagine what they would look like with the additional expenses that come with having a child. Estimate that you’ll probably spend between $12,000 and $13,000 in the first year. While you might be able to cut those costs down, it’s better to overestimate than underestimate.

Where will you find an extra $1,000 per month? Do you need to cut back on some expenses? Are there ways to earn extra money? Work toward getting your monthly budget in line with how it’s likely to look before the baby is born. Start now, and put extra money in savings to help more later.

If you need help to manage your money I recommend PocketSmith. PocketSmith is a cloud-based budgeting app, making accessibility easy. Connect your bank accounts, investment accounts, loans and credit cards to get a big picture look at your finances including your net worth.

7. Get Life Insurance

If you don’t have life insurance, now is the time to get it. If you and/or your partner pass on, is there enough money available to care for your child until they are old enough to take care of themselves?

Life insurance is about providing financial security to your dependents. It can help pay off debts, provide some income to a remaining caregiver so they can do a good job, and even help pay for college. It’s a good way to make sure that your child is provided for no matter what happens to you, and it can also purchase you peace of mind.

8. Update Your Beneficiaries

Now is the time to review your policies and accounts and update your beneficiaries. You can include your child as a beneficiary, along with your partner or others included. If you have a will, update it to reflect the addition of your child.

On top of that, think about who should be a guardian for your child if you and your partner should pass unexpectedly. You will need to name a guardian quickly, just in case. Your guardian should know of your decision, and be willing and able to take on the task of guiding your child through life if necessary.

9. Consider Saving for an Education

Don’t forget to start saving for your child’s education. The sooner you start, the longer you have for compounding returns. New rules allow for some portion of funds in 529 plans to be used for primary and secondary expenses in addition to college costs. Plus, it’s also possible to use 529 plan money at some career and technical institutes, so if your child doesn’t go to a “traditional” college, they might still benefit.

If your other financial goals are being taken care of, it can make sense to begin saving a bit for college, just to give your child a good start and reduce their need for student loans.

Bottom Line

Having a baby is a big physical, emotional and financial responsibility. While nothing can quite prepare you physically and emotionally for being completely responsible for another human, you can do a lot to at least prepare yourself financially.

Author Bio

Total Articles: 66
Miranda Marquit is a nationally-recognized financial writer and money expert. She has contributed to NPR, Marketwatch, Yahoo! Finance, U.S. News & World Report, FOX Business, The Hill and numerous other publications. Miranda is an avid podcaster and writes about money and freelancing at her website, MirandaMarquit.com. She lives in Idaho and loves reading, board games, travel, the outdoors and spending time with her son.

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