Baby Proof Your Finances: the Checklist Every New Parent Needs

Real talk: parenthood is expensive. According to the USDA projections, the national average cost of raising a child for 17 years is a whopping $233,610. We'll wait for you to take a few deep breaths here... 

Ok, now that you've exhaled, let's think strategically. Before you start frantically deciding which valuables you can sell, let us help. After all, if you can babyproof your home, why can't you do the same for your wallet? 

Taking the time now to make sure your affairs are in order, double-checking your healthcare plan, and getting life insurance can make a world of difference once your little one arrives. If you're preparing for a new addition to your family, check out our checklist of the financial moves that will set you and your family up for success. 

Draft an Estate Plan

Your financial situation is a snapshot of your life, and that picture is about to change! Start by getting your major affairs in order. It's time to adjust - or create - a will and name your beneficiaries and a guardian to ensure that your children are taken care of, and inherit your assets, in the event of your death. 

While you're at it, establish your power of attorney and finalize your medical directives. Once that paperwork is in place, you can consider your bases covered. 

Get Smart About Your Healthcare Options

You can't put a price on your and your baby's health (but if you could, it would be extremely expensive). If you and your partner are both working parents, take some time to compare your health insurance plans. 

Switching to a plan with better maternity coverage can give you some major savings when it comes to hospital- and birth-related medical costs. And don't forget to add your child to your healthcare plan to make sure they're covered. 

This is also a good time to see if you're eligible to invest in a Health Savings Account (HSA), which will help you save pre-tax dollars to use on medical and health-related expenses down the line. HSA funds also roll over and even earn interest, so you can help your new addition thrive down the line. 

Make Maternity Leave Count

Agonizing over dollars and cents isn't exactly how you want to spend your first few weeks as a new parent. While not every employer in the United States is required to offer maternity leave to new mothers, most public schools, government employers at all levels (local, state, and federal), and private companies with at least 50 employees are required to allow 12 weeks of unpaid leave for new mothers. 

If you have paid vacation or sick days, you may be able to work those into your time off to add some supplemental income. Setting aside money early in your pregnancy can help ease the financial strain of unpaid leave. 

Consider Short Term Disability Insurance

Expecting or new moms can also use short-term disability insurance to help supplement any lost income. Consider your current income, expenses, and savings when choosing a policy for a seamless transition. 

Short-term disability policies may be offered through your employer or from a private provider and can give you extra weeks (or even months) of breathing room before you need to return to the work.

Get Those Tax Breaks

As a new parent, you'll want to remember to update your taxes to claim a dependent. You should talk to your tax advisor before tax season even rolls around about adjusting your allowances to reflect your new family situation and find any related tax breaks. 

A greater number of allowances generally means more money in your paycheck which will come in handy when you're adjusting to a new spending routine. And that brings us to our next point.

Overhaul Your Budget

Have you finally mastered the art of budgeting? Well, it's time to level up. According to the Child and Family Research Partnership, the yearly cost of raising a child in Texas in a two-parent household is $23,852. 

When planning your child-friendly budget, you'll want to consider one-time expenses (like cribs and strollers) versus ongoing expenses (diapers, formula, and eventually, childcare). Before your baby arrives, experiment with ways to cut costs such as eliminating unnecessary subscriptions, cooking more at home, consolidating debt. 

All of these steps will help you have some wiggle room to save. Getting creative early on can help you save in the long run. 

Oh, and remember that rainy day you've been saving for? This is a great time to kick up your contributions to your emergency fund so you'll be prepared for inevitable yet unexpected expenses down the line. 

Get Life Insurance 

Buying a life insurance policy is one of the most important things you can do as a new parent. If you have life insurance through work, this is a good time to check in on that policy. Chances are, it's not adequate to cover your family's needs if the worst were to happen. 

Spend some time researching your options to find a policy that fits your family's current needs and future goals. Knowing your child's future is protected gives you the peace of mind to be the best parent you can for them. 

Start Saving for College ASAP

Sending your new baby to college may seem far off, but the earlier you start planning, the easier it will be. One of the best ways to start prioritizing your child's education is by opening a 529 plan. These accounts are "tax-advantaged" investments in that you won't have to pay federal income tax on the qualified expenses you use the funds for. 

529 plans are also popular for their flexibility. You can use the funds to pay for tuition, books, and other educational expenses, and even help with student loans down the line. They also won't impact your child's chance of getting financial aid, helping your money go even further. 

Decide Now to Make Smart Financial Choices

Take these tips and apply them to your situation so the stress of finances won't be too overwhelming when you're sleep-deprived with a newborn. Making smart choices now to give your child the best start in life means you can spend more time living in the moment and enjoying your new bundle of joy.