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1st Child? 4 Tips to Prepare Financially

Jessica Cotzin Updated: September 26, 2023 • 5 min read
Family with baby looking for financing solutions

There’s plenty to prepare for when you have a first child on the way. There’s baby room decor to think about, planning a baby shower and adding adorable baby garments and gear to your registry, and stocking up on baby books to be physically and mentally ready.

You also need to prepare financially for a child. In the US, the average middle-income family will spend approximately $14,800 annually per child and $233,610 to raise a child up to the age of 17.

Planning finances for a new baby isn’t always easy, but if you’re getting ready to panic, don’t! We’ve got some tips that will help you manage your budget online and anticipate the changes a baby will bring.

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#1: Manage Your Income and Expenses

In other words, build a budget! This is key to planning finances for a new baby and will help you manage household finances wisely.

It’s easy to spend money on a whim without keeping track when it’s just you (or you and your partner), but introducing a child into the equation will bring in new expenses that need to be accounted for.

Creating a strong budgeting approach to stretch your income and cover these expenses will not only put your mind at ease, but it’ll keep you saving more money in the long-run and avoid debt from piling up.

The 50-30-20 approach

If you’re new to the world of budgeting, the 50-30-20 budgeting approach is the recommended way for dividing your income to pay expenses.

It looks like this:

  • 50% of your household income goes to necessities like bills, loan payments, diaper, formula, child care, and so on.
  • 30% is reserved for wants, like a vacation or going out to dinner.
  • 20% goes to your savings and paying down toxic loans and debt (like payday loans or high-interest credit card balances)

While managing your budget like this might not work out every month, this budget approach is the goal and should be what you strive for. Even if your necessities require more than 50%, that’s ok! This is just a baseline to give you an idea of how you can break down your budget, track your progress, and keep improving.

You can manage your budget online or even leverage apps to help you stay on track.

If your “wants” monthly spending was previously higher than 30% it can be hard to suddenly adjust to spending less. Start early! Practice living on less before the baby arrives. Even if you don’t think it’s necessary, spending a little less will help you ease into your budgeting approach and anticipate upcoming expenses.

Work on your debt

Planning finances for a new baby can feel impossible when you’re busy paying off your debt but remember, there are options available.

If you feel stuck paying down your high-interest credit card debt, there are tons of reputable lenders out there, like ClearOne or Freedom that offer debt consolidation loans and other debt solutions to help reduce your monthly payments.

Or for those working on reducing their student loan payments, you can always apply online for student loan refinancing. 

Reducing your monthly payments, even by a little bit, will help free up money and manage your debt.

#2: Prepare for Delivery

It can cost thousands to have a baby in the US, even with good health insurance. Pre-delivery planning is a big part of preparing yourself financially for having a baby.

The first step is to understand what your health insurance coverage is and what you’ll be responsible for paying out-of-pocket throughout your pregnancy up to delivery so you can anticipate these expenses and budget accordingly.

This will help you establish a pre-baby budget so you’re prepared for your new family addition.

When digging into your health insurance details, don’t forget to find a physician within your network to avoid extra charges.

If your healthcare plan isn’t great for parents-to-be, explore your options. Some employers have multiple health insurance plans they offer as part of their benefits.

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#3: Plan on Childcare Costs

Paying for childcare is a big cost when having a baby, so start planning early about what you’re going to do once your maternity leave is over.

Research the daycare centers in your area to get an idea of how much you’ll be paying for the year, since it can vary greatly depending on location.

Some factors to consider in your research:

  • Cost of tuition
  • Registration fees (which are common)
  • Are there other yearly fees?
  • Does the daycare offer part-time/flexible hours or can you only enroll full-time?

Understanding the costs of daycare is a major part of planning finances for a new baby and will help you manage your budget. Some parents find that it’s better financially to quit their jobs rather than pay for childcare. Some parents decide to only enroll their child part-time to save money, and others will enlist the help of family members.

Exploring all of your options will better help you find ways to save.

#4: Save Money for When Your Child is Grown

Who wants to think about paying for college tuition in 17 years when you’re child isn’t even born yet?

No one, but leveraging a college savings account or prepaid tuition plan now rather than later comes with some big advantages.

A 529 plan is a state-sponsored college savings account that allows tax-free investment growth. The money you put into it today will compound over time and when you’re ready, you can make withdrawals for qualified education expenses like tuition, room and board, and school books.

The beauty of a 529 plan is that you can contribute as much (or as little) as you want, and the money is transferable in case you relocate to another state.

College tuition is increasing every year, so getting started on saving early can go a long way. If there’s wiggle room in your budget, try to include a monthly contribution amount to a 529 plan. If there’s no room in your budget, it’s still a good idea to have a college savings plan in case you have some extra cash one month or if Grandma and Grandpa want to make gift contributions here and there.

Prepaid Tuition Plans

A prepaid tuition plan is a type of 529 plan and also helps parents save for their child’s future education costs. It lets you pay for future tuition costs at today’s prices, which can save you a significant amount of money since tuition is consistently rising every year.

The only drawback is that this type of college savings plan only works with certain colleges and universities in a specific state, and it’s generally limited to tuition costs only.


Being a parent will undoubtedly change your life in many ways, and while money is a stress factor for new parents, it doesn’t have to be. Once you know a baby is on the way—or if you’re thinking about having one—start planning and managing your household finances wisely.

Planning finances for a new baby and building a budget that anticipates upcoming expenses will help reduce financial stress and allow you to focus on the joys of being a parent.

Manage your budget online, understand pre and post-delivery baby costs, and start planning.

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Written by Jessica Cotzin

Jessica Cotzin is a writer and the Lendstart authority on small businesses and personal loans. She has been writing about personal finance and the loans industry for a number of years, and holds a bachelor’s degree in journalism from Florida Atlantic University.