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written by: victoria mcgruder, cpa, cpwa®

There are a number of financial decisions that you will make over the course of your life that you will have to plan and save for – could be for a down payment on your first home, retiring at a specific age or starting a business. And although no one wants to consider the financial implications of having children, the decision to expand your family will be one of the biggest financial decisions you will ever make. Which is why it will be important to financially prepare and plan for that reality.

Children are expensive. I’m not saying that from an outsiders perspective – I have two children – and they are expensive. Their current needs, their future needs, education & development, etc. Much of it comes with a price tag, and those tags add up.

The Cost of Raising a Child

The U.S. Department of Agriculture (USDA) writes, “Middle-income, married-couple parents of a child born in 2015 may expect to spend $233,610 ($284,570 if projected inflation costs are factored in*) for food, shelter, and other necessities to raise a child through age 17. This does not include the cost of a college education.” (1)

But despite this significant financial responsibility and cost associated with raising children, many of us will continue to have children and expand our families. At least from my experience, parenting will go down as the absolute best thing I’ve ever been blessed with, despite the expense of it all.

So if we know its expensive….but we’re going to do it anyway…let’s talk about the best ways to financially prepare for these expensive little humans.

8 Steps to Financially Prepare for Children

  1. Revisit Your Health Insurance & Identify/Budget For The Upcoming Healthcare Costs

    • Get an understanding of and budget for the costs associated with the birth of the baby – hospital charges, ultrasounds, time in the NICU, etc.
    • Identify the procedures that will or will not be covered and estimate your out of pocket expense.
    • Get an understanding of the added and ongoing costs to your premium as a result of adding a family member to your plan.

  2. Consider Life Insurance

    • A life insurance policy could be established to support the surviving spouse and child in the event that a caregiver were to pass away unexpectedly. The policy could potentially serve as a temporary income replacement or ideally to cover the cost of a home and/or living expenses for a number of years.

  3. Understand Your Maternity/Paternity Leave Policies

    • Every employer and state provides a different leave policy for mothers & fathers after the birth of a child, adoption, etc. Get an understanding of what your options are, which portion is paid for and which portion may not be.
    • Identify how much time you want to take off and start working through the financial impact of that choice.

  4. Open a Savings, Investment or College Education Account For Your Child

    • When your child is born and has a social security number, you can then open up a 529 College Savings Plan with them as beneficiary or a UTMA account in their name. See the following blog post around ways to save for children.
    • The sooner you invest for your child the better as you will give them years and years of opportunity for their assets to grow before they need the funds.

  5. Get an Understanding of the Costs Around Childcare

    • Consider all your childcare cost options early on – will someone be staying home, will there be a nanny or daycare and what is the monthly financial impact of any one of those decisions. For many, the cost of childcare will be one of the biggest monthly expenses a family will incur from birth – Age 5 so it will be imperative to shop around and budget for it.

  6. Create or Update a Will or Trust

    • If you own a home or have assets that you would like to direct to your children in the event that something were to happen to you and/or your spouse, it will be necessary to create a will or perhaps a trust depending on the asset size or family dynamics. A will or a trust will specifically direct your assets where you have instructed they go as opposed to what the court or probate says should occur.

  7. Get Serious About Paying Off Existing Debt

    • Once that baby comes, life will get busy and life will get more expensive and if you can’t prioritize paying down the debt now….it will be VERY difficult for you to prioritize later on in life with more financial responsibilities added to your plate.
    • Identify all your existing debt, create a game plan to payoff over a specified time period and attempt to start more aggressively paying it down before the baby comes.

  8. Embrace Used Baby Items

    • Aside from diapers, soaps or creams – embrace used baby strollers, bassinets, newborn swings, etc. Much of the initial baby gear is so expensive and yet used for such a short period of time. Facebook marketplace, neighbors, friends, etc. are all great places to explore your options and cost savings.

And One More Thing – Learn From My Expensive Mistake

And lastly, I want to share with you all from experience that you do not need ALL the things. Babies are actually quite simple and what works for your brothers baby will probably not work for your own. I know it’s exciting and I know everyone will tell you that you need this and that and the other thing.

But I am here to tell you that you do not need ALL the things.

You don’t need 20 blankets or swaddles or 50 wash cloths or 5 types of different baby wash. I was not aware of this 4 years ago. The fact is that I had no idea what I needed, so I just tried to get it all and figure it out from there. But learn from my expensive choice to get it all and consider just buying the things that you need as you need them. Don’t make a new baby more expensive than they already are or than they need to be.

I hope this is helpful to all the soon to be or new parents out there! It’s such an exciting time for you – don’t let the financial aspect of it all scare you. The earlier you start financially preparing for your child, the better off you will be!


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(1) https://www.usda.gov/media/blog/2017/01/13/cost-raising-child

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I'm a financial advocate, coach, and blogger on a mission to help you build wealth with confidence! 

Having worked closely with countless clients over my 14 year career, I've gained a very deep understanding of money management and effective planning strategies in guiding individuals and families towards financial success. Now, I want to share that wealth of knowledge and insight to empower YOU to take control of their finances, make well-informed decisions, and create a life of abundance without the stress of finances looming over you. I'm so glad you're here! 

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