Then Comes Baby In a... How Much is That Baby Carriage?!


Now that a baby is on your horizon, people are coming out of the woodwork to give you their two cents. It’s all very well intended, but the truth of the matter is you will never be completely prepared for parenthood—kids are funny that way. All you can do is seize today to get your finances in order before your baby’s googoo-ing and gaga-ing turns you into spend-spending mush. You should also bank some extra sleep while you can!

Step 1. Reassess your budget

Your lifestyle will go through more changes than your baby’s diapers, both of which will require a total budget overhaul. Allow for extra daily expenses like daycare, diapers and clothing, plus monthly increases in medical coverage, housing costs (if you move) and college savings accounts.

Step 2. Don’t let those non-essentials fool you!

New babies come with new things – lots of new things, including a crib, stroller, carrier, car seat, clothes and other essentials. And quite a few non-essentials, too. What they don’t tell you when you’re expecting is you really don’t need half the stuff you think you do, not right now…if ever. Outsource larger one-time purchases to family and friends, take what’s handed down to you and heed the advice of fellow parents who probably didn’t need that baby wipe warmer either.

Step 3. Find your tribe

In addition to guarding yourself against non-essential purchases, take advantage of this awesome thing we have called ‘the Internet’. It’s bursting at the webs with discount retailers, coupons, blogs and opportunities to save big on your baby.

Step 4. Evaluate your back to work plan

Depending on your circumstances, one of you might decide to stay home from work to cut down on the cost of childcare. This is a huge decision that might benefit you in the short term but may harm you in the long term. Who knows? We’re not talking about a one-size-fits-all onesie here; it’s a financial issue that requires in-depth consideration from both partners.

  • Run the numbers to see what option makes the most sense for you financially
  • Decide what your work means to you emotionally
  • See what your employer is willing to do for you realistically, including flex-time, work-share, telecommuting, flexible spending accounts (FSA), and parental leave time

Step 5: Up your insurance

Kids are expensive once they get here; getting them here will cost you a pretty penny, too. That’s why good medical coverage for you during pregnancy and delivery and for your baby after he or she gets here is essential. The importance of life insurance takes on new dimensions now, too. If you haven’t already, buy a life insurance plan.

Step 6: Update your estate plan

Since we’re on the topic of your mortality, you and your spouse would be wise to update your wills. No one likes to think about it, but it’s your sacred responsibility to make sure your child is looked after should tragedy strike.

Step 7: Start saving for junior’s education

Tuition costs in this country are staggering. Don’t count on them toppling anytime soon. Now’s a good time to set up a college fund and encourage family members to contribute to it. Here are a few ways to get started. 

Step 8: Look on the tax incentive side

Freaked out yet? Here’s a break for you. Four, to name a few. Raising children is rife with obvious rewards, and not so obvious ones, too, including:  

  • Extra tax exemptions
  • The child tax credit
  • Child and dependent care credit (for qualifying child-care expenses)
  • The earned income credit (if your annual income is below a certain level)