The Most Important Things to Do Before Baby Comes – Personal Finance Edition

The Most Important Things to Do Before Baby Comes – Personal Finance Edition

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I remember it like it was yesterday: the day my wife told me she was pregnant with our first child. That rush of emotions is something every parent remembers well. It’s like a ball of joy, terror, and wonder gets all tangled up inside your stomach as you stand there wondering about all the ways life is about to change.

If you’re anything like me, you hugged your wife, shed a few tears, and promptly typed “things to do before baby comes” into Google.

There are a lot of great blogs out there that can help you learn about the stuff you’ll need to buy, how to baby-proof your home, or which direction a newborn’s car seat points (it’s the rear).

But what I was looking for was how to prepare financially. This life-change is huge, and I wanted to be ready. In this post, I’ll offer some personal finance tips that I wish I’d known before having our first, and hopefully they’ll help you avoid some of the mistakes I made.


Optimize your budget
Talk to your friends about expenses
Research your parental leave options
Don’t forget about your financial goals

Things to Do Before Baby Comes

1. Optimize your budget

After finding out the good news, the first financial move you should make is optimizing your budget. Hopefully, you have a budget in place already, but if you don’t, now is the time to sit down with your partner and create one together.

Make sure you’re saving as much as possible. The amount depends on your situation, but I recommend 20% of your take-home pay. If you can do more, do more!

Please keep in mind, though, there will be plenty of necessary expenses that pop up throughout the next several months, some of which will prevent you from saving as much as you’d like. One mistake my wife and I made is we sat down and made a budget unlike any other budget we’d ever created. We planned on saving almost 50% of our take-home pay.

In theory, it was a great idea. We’d save so much money leading up to the day baby arrives that we’d eliminate any possible financial stress, so we could just focus on our family.

As you might have guessed, it didn’t work as we excepted. We spent the next several months feeling stressed and guilty about the many purchases that kept sneaking up on us, and we were ashamed that we weren’t meeting our goal.

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Yes–save as much as you can, because babies ain’t cheap. If you’re opting for a hospital birth and have insurance, out-of-pocket costs could range from $500 to more than $3,000. Formula ain’t cheap either. And you’ll blow through thousands of diapers your first year. But remember, the purpose of saving is so that you can afford this baby and everything that comes along with it. Go easy on yourself when you don’t anticipate a few big expenses.

Just try your best to factor these expenses into your new budget. And remember: these expenses are why you’re saving money in the first place.

13 Things to Do Before Baby Comes - Personal Finance Edition

2. Talk to your friends about expenses

Next on our list of things to do before baby comes, let’s take a look at those unexpected expenses.

It’s safe to say you won’t think of everything. Inevitably, there will be some surprises. Especially if this is your first baby. But you should try your best to be informed. Having enough saved in advance will allow you to feel prepared, limit your financial-stress, and prevent you from having to take on credit card debt.

How much should you have saved? I suggest talking with a friend who has already gone through the experience. Find out what surprises they faced. Did they save enough money in advance? Did they have a fully-funded emergency fund, and did they have to dip into it for anything?

Ask someone who knows your situation, your income, and the cost of living in your area. What do they recommend you have socked away before your due date?

To give you a general idea, here were some of our initial baby-related expenses:

This is by no means an exhaustive list, but you can see how easily one might underestimate the expenses that pop up around the time your baby arrives.

For a more in-depth list of needed items, check out this article from The Bump.

3. Research your parental leave options

Now that you’ve got your budget optimized and you’ve started considering your future expenses, it’s time for you and your spouse to look into your parental leave policies.

Unfortunately, a lot of workplaces in the US still don’t offer paid leave for new parents. You’ll need to do some digging or ask HR about the policy at your place of employment.

4. Childcare

If you and your spouse both work, another important thing to do before baby comes is begin considering childcare. Depending on your location, daycare can be more expensive than your mortgage. In fact, there are parents who decide to stay home with their kids, because they would actually pay more in childcare than they would make at their jobs.

Mother’s day out programs are a great option. They are usually cheaper as they only meet a couple of days a week. If you have retired parents nearby, they might be able to take over on the days MDO doesn’t have your little one.

Whether you plan on putting your child in daycare, mother’s day out, or hiring a nanny, make sure you begin factoring these expenses into your ongoing family budget.

Important Things to Do Before Baby Comes

5. Change your beneficiaries

Once your baby is born, you may want to update your beneficiaries on your 401Ks, Roth IRAs, and life insurance policies. This is a step that is often forgotten, but in the case that something happens to you and your spouse, you’ll want to have your beneficiaries updated and a will that states exactly how and when you want your assets distributed.

5. Start a 529 college savings plan

529 college savings plans work very similarly to Roth IRAs. You contribute after-tax dollars to an investment account. You will typically have a variety of fund options to which you can allocate your contributions. This money grows tax-free and can be used for your child’s college tuition, books, fees, and many more education-related expenses.

Keep in mind, this money needs to be used for some form of college or trade school. If you opt to use your distributions on something that does not qualify as a college-related expense, your earnings will be hit with the usual income tax and an additional 10% fee.

Go ahead and start a 529 or similar plan as early as possible, if you have reason to believe one of your kids will attend some type of post-secondary education (these accounts are also transferrable to other family members).

However, you should never fund your child’s college fund before funding your own retirement accounts. Just like the oxygen masks on a plane, you can’t take care of someone else if you’re gasping for air yourself.

6. Don’t forget about your financial goals

Which brings me to the last and most important point on our list of things to do before baby comes. With all the new expenses, having a child can feel overwhelming. You want the best for your kids–the newest, safest crib, the best-rated car seat on the market, and so on. But you’re not sure if you can afford it all.

Some of these purchases might be necessities, but there are thrifty ways to shop for them. Make sure you shop around and use some well-planned strategies so that you’re never forfeiting your own financial goals in the process. Sit down with your spouse and reevaluate your big-picture financial goals. Now make these a priority and commit to working toward these goals even amidst all the new kid-related expenses. You can’t be your best self if you spend all your time worrying about money.


The next several months are going to be an exciting time as you prepare for your family’s newest addition. These can some of the best days of our lives, so enjoy them. Do your best to prepare for the future without letting financial stresses weigh you down.

By following these six tips, you’ll be able to spend less time worrying about money and more time doing what’s important, loving on your growing family.

If saving money is at the top of your to-do list, make sure you check out our list of the 27 best ways to make some extra money on the side. Some additional income could make a huge difference in reaching your goals.

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