How to Prepare Financially for a Baby

Erin Artfitch
How to Prepare Financially For a BabyPhoto byErin Artfitch/

Learning you’re about to become a parent evokes a rainbow of emotions, from butterflies-in-your-stomach giddiness to outright terror. Because as joyful as the journey into parenthood can be, it’s also filled with many unknowns.

One of my greatest fears as a new parent was this: how am I going to afford this baby?

That question kept me awake at night. At the time, my husband and I lived on one income in Seattle. The cost of living was steadily rising, as were the medical bills piling in our mailbox.

It was a bit of a struggle for a while, but we made it through.

We learned from our mistakes, and by the time our next pregnancy came around, we were ready.

Below are 9 ways I believe every parent should prepare financially for a baby. Whether you’re expecting or getting ready for the future, these tips can help reduce your anxiety and help you walk confidently into this beautiful new phase of life.

9 Tips to Help You Prepare Financially for a Baby

Start a Monthly Budget

I’m sure you’ve heard this before. Sit down, look over your bank statements, and see where your money is going. Get yourself on a monthly budget.

Let me first encourage you: a budget is nothing to be afraid of. It’s only a tool to monitor your cash flow. Understanding where you spend your money will help you minimize debt and save for the future.

Many people use spreadsheets or worksheets to monitor their monthly budgets. Over the years, I’ve found that this system just doesn’t work for me. So, I’ve turned to apps.

My favorite app is Mint. Mint automatically categorizes your transactions and tells you in real-time how you’re doing with your budget.

You simply categorize your transactions every so often (for example, one month a Costco visit might be under the groceries category. Another month a visit to Costco might be classified under home goods).

Whether you need to go through each of your bank statements manually or sign up for a secure app, figure out a method that works for you.

Cut Expenses

The next important way to prepare financially is to make room in your budget for that baby.

Believe it or not, this wasn’t the most painful part of the budgeting experience for us. After looking at our monthly spending, we realized that we were spending money on things that just didn’t matter.

Here are a few easy expenses to cut out of your budget:

  • Cable: Can you switch to streaming?
  • Streaming: Do you need Netflix, Hulu, Discovery+, and Peacock? Analyze which shows streaming services you utilize.
  • Internet: Do you need that lightning-quick upload speed? Is there a slightly slower plan you can move to?
  • Coffee: Try removing coffee shops from your budget or switching to tea (which is usually half the price of a coffee).
  • Grocery: Grocery pickup is a fantastic way to monitor your food allowances more carefully.

Make a Birth Plan

The national average for giving birth is about $18,000. I don’t know about you, but that number makes my throat a little dry.

If you’re in the first trimester, I’m not advocating creating an elaborate birth plan that encompasses every detail of your ideal birth. However, if you have an idea of how you want to give birth, you can begin to prepare for it financially.

Do you plan on giving birth naturally at a birth center? Or take the more traditional route of going to the hospital?

Things that can impact your finances that are specialized to your birth plan might be:

  • Taking a natural birth course
  • Paying a Doula
  • Giving birth at a birthing center (that may or may not be covered under insurance)
  • Giving birth at home
  • Encapsulating your placenta
  • Recovering in the hospital vs. recovering in a birth center

Track Your Baby-Related Expenses

Once you know what baby-related expenses to expect, make sure you track those expenses. This is very important for a couple of reasons:

  1. It keeps you on track, especially when you’re buying furniture and nursery items.
  2. Pregnancy and baby-related medical expenses might be tax deductible
  3. Tracking your expenses eases your anxiety. You know how much you’re spending and it doesn’t feel as overwhelming.

Once again, find a system that works for you. Many parents like to track their expenses through Google sheets or printable budgeting worksheets. If you prefer to use an app, remember that you can categorize each baby-related transaction with the Mint app.

Create an Account Specifically for Baby’s Needs

I find this tip particularly helpful if you’re preparing financially for a baby before you’re pregnant. Allocating money to your savings account is helpful, but pooling it in a specific account for your baby helps you monitor the funds a little easier.

Using a separate bank account can help you track expenses while you’re pregnant and afterward, during your baby’s first year of life.

Get Health Insurance

Remember that $18,000 we talked about earlier? That was just for a vaginal birth. C-sections are higher.

Health insurance is the key to covering that bill. If at all possible, get on a health insurance plan before you become pregnant. Most people join their employer’s health insurance plan, but if you’re not a full-time employee, that can be difficult.

Try these options:

  • Affordable Healthcare Act (search the marketplace)
  • COBRA (Consolidated Omnibus Budget Reconciliation Act. Essentially, this is continuation coverage)
  • Medicaid
  • Private Insurance Companies (such as eHealth Insurance, Blue Cross Blue Shield, Oscar, and Kaiser Permanente)

If you’re already expecting, you may still qualify for Medicaid while you wait to qualify for special enrollment.

Open an HSA or FSA Account

If you plan on having a baby within the next year, it may be a great idea to open an HSA or FSA. HSA stands for Health Spending Account. Pre-tax money is deducted from your paycheck and put specifically into this account. From there, your medical bills are either automatically deducted from this account or you’ll receive an HSA debit card.

For items that aren’t covered under insurance (like a doula), you can submit your claims directly to the HSA account.

Your maximum is usually determined by your employer.

This is a great option for budgeting medical expenses and using pre-tax money to pay medical bills.

Don’t Forget to Save for Post-Baby Expenses

Most parents concentrate on saving up for the baby’s birth and pregnancy expenses. However, don’t forget to plan for your postpartum expenses.

You will be taking your baby to the doctor a lot during that first year. In fact, your baby will visit his pediatrician at least six times before his first birthday. That’s not counting sick visits, breastfeeding problems, or any other common newborn ailments.

Then, there’s you. Visiting the doctor after you have a baby should be non-negotiable. You’ll need to visit OBGYN for your initial postpartum check-up, and then again for the long-awaited 6-week checkup. You might also want to plan for pelvic floor therapy as well, which can help new moms recover from the physical strain of birth.

Save for Maternity Leave

Not only do new moms deserve to recover after giving birth, but their bodies also need to as well. Unfortunately, many moms are forced to choose between recovery and survival. While the government can protect your job if you decide to take maternity leave, it does not protect your income. Leaving work for 90 days is often financially impossible.

Therefore, saving for maternity leave is one of the most important ways to prepare financially for a baby.

First thing to do: check with your employer about their FMLA policies. If they do not offer paid maternity leave, ask about short-term disability insurance. Most likely, you will only qualify for this if you are not currently pregnant.

You can use your vacation time, but you will also want to save up for at least two weeks of income. Even if you qualify for short-term disability insurance, your coverage likely won’t go into effect for two weeks postpartum.

The Best and Final Tip for Preparing Financially for Having a Baby:

Take it one step at a time, and expect unexpected expenses.

Unlike many expensive life events, having a baby is something you can often prepare for. This is a huge gift. Preparing financially for a baby takes a little extra effort, but it alleviates so much anxiety.

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Mom of Two | Writer | Small Business Owner | Erin is passionate about helping new and expecting moms overcome the challenges of early motherhood. Her goal is to help women thrive and enjoy their journey into motherhood to its fullest. You can find more pregnancy and baby-related tips at

North Carolina State

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