Here’s How to Financially Prepare for Having a Baby


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Putting together this article of resources and tips on financially preparing for having a baby was one of the most requested blog posts from readers in 2020. I don’t know if it is the pandemic, that millennials are now aging into parenthood, or the fact that money is just a super timely topic at the moment, but several of you wanted this post to come together and I am more than happy to oblige. 

Below, I’ve added in a bit about my own experience on how to financially prepare for having a baby, hyperlinked related articles where I could, and even sourced some great material from other places around the web so you don’t have to do the searching. 

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How to Financially Prepare for Having a Baby

Lock down your health insurance coverage

I listed this one first because navigating health insurance (at least to me was THE MOST SCARY aspect of financially planning for a baby. 

Knowing how much it stressed me out, my husband graciously agreed that since I was doing the physical work of carrying and birthing our baby, his part would be navigating the insurance. And this was a big job — you go to your OB’s office 10+ times in nine months. And you bet you get a bill after all of them. 

Some insurance providers cover additional benefits like a lactation consultant or a night nurse, but again, you often have to read the fine print or interact with your insurer to understand all the details of your benefits. 

Here are a few posts I found that break down insurance basics, and then more specific pregnancy-related insurance questions.

The words “baby” and “expensive” often go hand in hand. But what was really surprising to both my husband and me was how much we had to spend out of pocket on medical costs, even though we have good insurance through his work.

For example, I was surprised by how much you don’t see your baby. Meaning, you don’t get an ultrasound at every visit. And if you want one, you can have it, but you’ll have to pay extra. Also, most insurances only cover a 2-night hospital stay for a routine vaginal birth.

Final tip: Don’t be scared – there’s a lot that is covered, but a lot that isn’t, so if you’re considering adding to your family, become intimately acquainted with your insurance, and start saving ASAP.  Otherwise, be prepared to be shocked every time a bill arrives.

Tip: Max Out Your Health Savings Account (HSA)

We had the added benefit of conceiving in one calendar year and delivering in another, which happens in most pregnancies. (Except for those of you who conceive in January and February, sorry brah!)

So, in order to sock away the most we could, we maxed out our health savings account (HSA) contribution in both 2019 and early 2020 in order to ensure we had enough to cover all of the related costs of the pregnancy. 

Pro Tip: You’ll at minimum need to plan how you’ll pay your insurance deductible.

Often, most parents will need to pay this before insurance will cover the remaining costs of labor and delivery. An HSA can help with this and more. 

And the best part about HSAs is that they roll over, so if you’re planning for kids 1-2 years out, you can amp up contributions in preparation for starting a family. 

HSA monies can also go toward fertility treatments. 

Adding on to the point above, getting pregnant made me very grateful for the fact that we put away money into an HSA and also keep money on hand to self-insure a lot of medical expenses due to our high deductible plan.

Sometimes pregnancy can throw you for a loop. Pregnancy can be accidental in nature; it can happen and you’re definitely not prepared. But if you do like to plan and if you feel like a family is in your future, start padding your savings now. It will make navigating pregnancy (and impending parenthood) that much easier.

Final tip: If you have a health savings account and are lucky enough to have your pregnancy split over two years (e.g. pregnant in 2019, deliver in 2020) be sure to max out your HSA contributions for the year of your delivery too, as this is often the most expensive part of the entire process.

Plan Out Maternity Leave

I wrote a post on how I saved up for my maternity leave as a self-employed freelancer here. Here are a few other articles I found really helpful. I especially zeroed in on resources for those of you working a corporate gig, or running a brick-and-mortar business outside of your home.

Tip: (Financially) Prepare to buy a maternity wardrobe

Maternity clothes are an expense, but how much you spend is up to you. You can fund it yourself or take hand-me-downs from friends and family, that option is available to you!

With regards to my maternity wardrobe, I had a dear friend loan me some of her old outfits, and then I shopped at the Motherhood Maternity outlet for day-to-day wear like tees, jeans, and sweatshirts. I also bought yoga leggings (with tags) off of eBay for a deep discount. All-in, I think my maternity wardrobe, which I have work the crap out of the last nine months cost around $500. I'll also get to use it again if/when we decide to have a second baby.

There are cute maternity clothes and options out there, but I wouldn't spend a lot in this area. For one, it goes by quickly. Second, you don't feel great, so having comfortable clothing is more important than style. Third, you probably won't fit into some of it by the last month or so.

Final tip: Buy a few workhorse pieces (here's a capsule maternity wardrobe article I wrote for The Huffington Post style section), wash them a ton, and call it a day. Skip the rest. Even though the options are far cuter than they used to be, in my opinion, maternity clothes still aren't anything to get excited about.

Affording Baby Clothing, Gear, and Expenses

In my experience, the amount of gear you need for a baby is the least overwhelming part of the financial prep, but yes, there are costs — extensive costs — to all of the things you’ll need for the baby. 

Pro Tip: While babies need a lot of “stuff,” they need different things at different times depending on their development, so you don’t need everything all the big-box stores tell you right away. Here is my list of what to buy and what to skip, and another fantastic minimalist baby list from my friend Erica at The Worth Project.

I also put together a post on how I put together a sweet little nursery on a budget. 

Tip: Prepare for Unexpected Costs

I know this is probably the most obvious statement of all time, but I was surprised. And while there are less-expensive versions of every item offered, the fact that what works for one baby, may not work for yours means you may buy multiples of the same thing in the hope it's what “works” for your little one. So, I was surprised by that.

The good news is the fact that babies grow so quickly means the market for buying things secondhand is quite vast and most items are in excellent shape (compared to the wear and tear you get on most secondhand items.)

There are also many ways to save if you commit to it: such as accepting hand me downs (you’ll get lots of offers, I promise!), taking advantage of baby swaps and consignment sales, and leaning into discounts available for new mothers as registry participants.

Final tip: If someone offers to throw you a shower, I do suggest taking them up on it. People love to celebrate the arrival of your little one, and this can be a great way to get a lot of what you need from generous friends and loved ones who want to celebrate you.

Saving for College

Setting up a college savings account for your baby is a BONUS, not a requirement in the personal finance game of life. And you shouldn’t really contribute to your kid’s college fund if it is to the detriment of your own emergency savings, debt repayment, or retirement contributions. 

With that said, if you’d like more information about setting up a college savings account for your kid, here are the articles I loved:

The TL:DR on How to Financially Prepare for Having a Baby

If I can leave you with one final tip? Try not to freak out about how much babies cost. The beauty of having nine/ten months to prepare is that this is close to a year. Pregnancy is a long business. There is time to spread your costs and baby expenses out and to save up, so as long as you don’t procrastinate, you’ll be fine.

And one final tip from me: Whatever you can do to organize your finances before the birth of the baby is well worth it. Having nine months to prepare for a child’s arrival is a gift as there really is so much time to get everything together. Don’t squander such a gift by waiting until the last minute!

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