How to Welcome Your New Baby with a Solid Financial Foundation

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Michedolene Hogan
Michedolene Hogan, publisher of, lives in a quiet rural neighborhood of NC. She and her four children enjoy the quiet atmosphere after years of living in Southern CA cities. On two acres of land she has found the perfect atmosphere for working as a freelance writer covering a wide range of topics. She prefers writing about alternative allergy solutions but enjoys dabbling in other topics as well. In her spare time she and her family enjoy working with rescued dogs from high kill shelters around NC that need a little special TLC to re-learn how to be part of a family.
Michedolene Hogan
Michedolene Hogan
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If you’re like many married couples who have debt from things like student loans, the purchase of a new vehicle, or just bad decisions with credit cards, then before you welcome the pitter-patter of little feet you’ll need to make great strides in improving your financial status. New babies change the dynamics of the family budget like no other. This tiny little person you created and planned for also created the need to spend more money – more money on insurance, more money on childcare, and more money on supplies like diapers and formula.

American President Herbert Hoover once said, “Blessed are the young, for they shall inherit the national debt.” Perhaps this is true, but with careful planning your children won’t have to inherit your personal debt. By setting a healthy example of how to handle finances, you can actually prevent your children from making bad habits of their own as they grow up to accumulate their own financial reputation. Here are some ways to tackle your bills and perhaps pay them off quicker in spite of all the changes associated with a new little family member.

Know What You Owe

Sit down with your spouse and make a list of all the debt you owe. This will help you make decisions about things like what you can afford to pay for childcare. Another option is that one parent may decide to quit their job and stay home, or telecommute in order to work at home. But the most important fact you must consider is this: how will you afford the child in the first place? Babies are expensive! From birth to age 18, a child’s expenses can easily total amounts of $125,000 or higher. And that’s without a college education.

If you owe a ton of debt prior to bringing a baby into the world, your debt might begin to resemble a bottomless, black hole from which you can never climb out and be free. Nothing is further from the truth. Debt management plans are one of the most successful ways to pay down debt while adding to your savings account at the same time.

Plan for Changes

Some changes you can plan for before a new baby arrives. What room of the house can be redecorated for use as a nursery? Or perhaps the master bedroom is large enough to accommodate the crib for the first several months. If you work and your job offers benefits, then you’ll need to arrange to have the baby added to your health insurance plan. Here are some other points to consider before your baby arrives.

  • Life, disability, and other types of insurance – Do you need it? If so, what kind of coverage is best for your family? Does whole life or term life insurance offer your family the most benefits? What are the benefits of other types of insurance, such as disability? Are you willing to risk going without the added protection?
  • Wills
    – Without a will, your personal belongings, including your vehicles and home, are left in the hands of the court. But more importantly, without stating who will care for your children in the event of your death gives the court power over this emotionally difficult decision as well.
  • Taxes – Now that you have an extra dependent, it’s likely to affect how you fill out your annual tax papers. If each parent files separately, who will claim the new little person? If you’re in the United States, then have you registered for a social security card for the new baby?

Avoid Common Financial Mistakes

Parenthood is a distracting job. If you don’t believe me, try changing an infant’s diaper while keeping an eye on a three-year-old. Or try grocery shopping with an entire group of your offspring. And if you’re a real thrill-seeker, take an entire brood of children to the shopping mall in your nearest city without the assistance of another adult. It’s just enough to get through the day and meet the bare minimum level of responsibility without caving under the pressure, much less constantly balance the household budget on top of everything else.

However, avoiding common financial mistakes is easier than you’d think, especially once they become a habit. First of all, pay off the credit cards and cut them up. If you have to use a one-time debt consolidation loan to accomplish this, you’ll thank yourself once you’ve made the last payment and are relatively debt-free. Using credit cards is too much like disposable income but carrying cash makes you aware of just how much you have for that outing, or even for the week if you’re able to discipline yourself.

Another great way to save money when raising a family that passes along good financial habits to your children is starting a loose change jar. One stay-at-home-mom blogged the suggestion to save all loose change, from jeans pockets when doing laundry, beneath couch cushions, or wherever, in a jar. Once the jar is full, use the machine at the bank to see how much your family has saved. Part of the money goes into each child’s saving account while the rest is used to buy something for the whole family whether it’s pizza and a movie, or a new video game.

Finally, the most important way to save money, regardless of your family dynamics, is to sit down as a family, make a list of goals and priorities, and then stick to them no matter what. One goal should be to save money for future what if situations. What if little Tommy decides he’d like to go to an Ivy League school instead of community college? What if little Susie needs to purchase a trumpet to play with the school marching band? Or what if it’s something unrelated to the children, such as a flooded basement or a tree crashing through the roof of your home? Being responsible with money gives you an edge over those who aren’t, and the more savvy you are with your dollars, the more likely it is that your child will continue those same habits and eventually pass them on to future generations as well.