Getting Your Financial Life in Tip Top Shape for Baby

Finding out that you’ll soon have a baby on board brings about a whole new set of questions, concerns and plans about your family’s future—and how you should manage your finances. Here’s a quick checklist to ensure you’re financial life is primed for parenthood.

Assess the costs of maternity leave.

New parents (including those that are adopting, and in same-sex relationships) are legally entitled to 12 workweeks leave under the Family and Medical Leave Act (FMLA), 1 provided they meet certain eligibility criteria, including having worked for an employer for at least one year who has more than 50 employees. What the FMLA doesn’t legally mandate, however, is that the time off is paid.

Soon after learning of baby’s future arrival, familiarize yourself with your employer’s policies about paid maternity/paternity leave, and/or short-term disability options for which you may be eligible. Inquire with your human resources department about opportunities to supplement unpaid portions of maternity leave with earned vacation and paid time off. Ask when you can adjust your pre-tax contributions to health care flexible spending accounts (FSA’s) and any dependent care plans your employer offers to offset forthcoming expenses. (Some employers may dictate when you may adjust these contribution amounts during specified periods of “open enrollment”). 6

Whether you qualify for FMLA or not, contact your health insurance provider to inquire about policies and coverage related to pregnancy and infant care, including deductibles, out of pocket responsibility, and policies about coverage for specific providers.

Discover It Card

Earn big‑time cash back that never expires.


Earn big‑time cash back that never expires with Discover it®.


Get the credit card that's got it all: Discover it®.

Discover it® gives you big‑time cash rewards with 100% U.S.‑based customer service.

Discover it® Card


Get the credit card that's got it all: Discover it® 

Discover it® gives you big‑time cash rewards with 100% U.S.‑based customer service.  


Earn big‑time cash back that never expires with Discover it®

Earn big-time cash back that never expires with Discover it. See Rewards

Identify where you currently stand.

By your bundle of joy’s 18th birthday, you will have invested about a quarter of million dollars into child-rearing, according to 2013 data compiled by the United States Department of Agriculture (USDA). 2

Overwhelming as that figure sounds, put it in context: The financial impact a baby has on your life has a lot to do with your current financial reality, lifestyle and spending habits (and the degree to which you’re willing to adjust them), whether both parents intend to work full-time once baby arrives—and the costs and opportunities those choices present.

Start your baby budgeting process based on what you know now: Your monthly household income, and your fixed, variable, and non-essential monthly expenses. Subtract total monthly income from total monthly expenses. If the resulting number is negative, you may need to eliminate or reduce some expenses, or generate more income, to prepare for the new financial demands of parenthood. If you have money leftover once you subtract monthly income from expenses, identify the optimal places to dedicate your surplus cash:

Medical expense for delivery:

Not including prenatal and postnatal care, NerdWallet 3 reports that people with healthcare insurance pay between $2,000 and $3,000 out of pocket for labor & delivery costs.

Unpaid leave.

Create a savings plan to supplement any portion of your leave that will be unpaid. Need a simple strategy? Arrive at the total amount of your lost income (how much you won’t be paid during leave), and divide it by the number of weeks until you expect to give birth. Establish an automatic transfer into a savings account (ideally, one that pays you interest) from each paycheck. For example, if you’ll lose $5,000 from unpaid maternity leave and are due to give birth in 16 weeks, strive to save $313 a week from now until baby’s birthday to account for the paycheck(s) you won’t receive.

Budget for predictable new baby needs.

Diapers, nursing supplies, formula and food, carriers, cribs, play mats and car seats. (The USDA also offers a calculator to help you estimate annual expenses based on the age of your child, size of your family, income, and where you live). 5

Create a new parent budget.

A few months after baby arrives, you may find that budget areas that once accounted for most of your spending—like travel, dining and entertainment—are replaced with new expenses (like childcare, diapers and food, and medical bills). Once you’ve settled into your budget plan for the here and now—take steps to ease your financial future. In a poll conducted by NerdWallet, nearly 45% of moms to kids who are now teenagers said they wished they’d started saving for college immediately after their children were born. 4 Some college savings vehicles (like College Savings 529 plan or a ROTH IRA), may offer tax benefits for your contributions, and qualified withdrawals. 8

Plan to protect your family long-term.

A new baby may present the need to purchase longer-term financial protections, including life and disability insurance, wills, and estate plans. 7 Because such items can be complex to decipher, seek the help of a qualified financial professional. He or she can advise you in selecting the products that fit your current finances and future goals, so you can feel confident that your family is financially prepared for whatever the future may bring.









Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

Up Next  

Protecting Your Finances During Divorce

Explore More Topics:

You Might Also Like...

Earn big-time cash back that never expires with Discover it. See Rewards