So, you’re getting ready to welcome a new baby into your life—congratulations! Parenthood is one of the most rewarding journeys you’ll ever embark on. As you prepare for your little one, it’s important to think about how your finances and lifestyle may shift. Here are some key financial moves to make when expecting a baby.

Reassess Your Budget

Welcoming a baby comes with upfront costs. Between a crib, stroller, car seat, and other essentials, the price can easily surpass $1,000. However, with a little research, you can find safe and quality items at more affordable prices. Discount stores and online retailers are good places to start, and don’t overlook the potential savings from yard sales, Facebook Marketplace, or hand-me-downs from friends and family.

Beyond the initial purchases, your budget will need to account for ongoing costs like diapers, formula, and clothing. You’ll also have childcare expenses, whether it’s daycare or a babysitter, along with out-of-pocket medical costs. As your family grows, you might even consider moving to a larger home, so it’s wise to plan ahead for increased housing expenses as well.

Take time to redo your budget and figure out how much your monthly expenses will change. If you’ve never had a formal budget, now is a great time to start. Try to set aside funds for an emergency fund too—it’s always helpful when dealing with unexpected costs.

Consider Whether One Parent Should Stay Home

Caring for a newborn is a full-time job. As you navigate parental leave and the possibility of both returning to work, it’s worth discussing whether one of you might want to stay home with the baby. Some families find that the financial benefit of having two incomes isn’t as large as they thought, especially when factoring in high childcare costs and work-related expenses like commuting.

Take the time to run the numbers. Compare the peace of mind that comes with staying home with the financial benefits of continuing to work, and consider flexible options like part-time work if possible.

Review Your Insurance Coverage

Medical bills during pregnancy and beyond can add up quickly. Before your baby arrives, it’s essential to review your health insurance coverage to ensure it meets your needs. Most health plans will allow you to add your baby within 30 days of birth or adoption, so reach out to your employer or insurer to get the process started.

Now is also the time to consider life insurance. Though it’s uncomfortable to think about, having life insurance protects your family financially if something were to happen to you. The death benefit can help cover debts, living expenses, or even future education costs for your child. If you already have a policy, you may want to increase your coverage to reflect your growing responsibilities.

Update Your Estate Plan

With a new baby, it’s crucial to either create or update your will. This ensures your child’s future is protected should something happen to you. You’ll want to designate a guardian for your child in your will, along with a contingent guardian in case your first choice is unable to serve.

It’s also a good time to consider setting up a trust and naming trustees, which could help manage assets for your child. Don’t forget to complete a healthcare proxy and durable power of attorney so someone you trust can make medical or financial decisions on your behalf if needed.

Start Saving for College Early

The cost of college continues to rise, and by the time your baby is ready, tuition could be much higher than it is today. That’s why it’s smart to start saving as early as possible. A college savings plan, like a 529 account, allows you to grow your money with tax advantages.

Even small contributions can make a big difference over time, so set up automatic transfers and encourage family members to contribute in lieu of gifts. A financial advisor can help you explore the best savings options for your family.

Take Advantage of Tax Benefits

Having a child can be expensive, but there are several tax breaks that can help offset some of the costs. You may qualify for the child tax credit, the child and dependent care credit, or even the earned income credit, depending on your income level.

Be sure to apply for your child’s Social Security number after birth so you can claim these credits when tax season rolls around. A tax professional can guide you through maximizing these benefits.

The Bottom Line

Welcoming a baby is a life-changing and exciting experience. While you don’t need to be wealthy to provide a good life for your child, it’s important to plan ahead, especially when it comes to your finances. By making key financial moves when expecting a baby—like reassessing your budget, updating your insurance, and starting a college fund—you can set your family up for success and focus on enjoying the moments that matter most.

At Navalign Wealth Partners, we get that preparing for a new baby can feel overwhelming, especially when it comes to finances. Whether you’re figuring out your budget, planning for future expenses, or thinking about college savings, we’re here to guide you every step of the way. Let’s create a financial plan that gives you peace of mind, so you can focus on what matters most—enjoying life with your little one. Let’s get started today.