Starting a Family

The financial impact of having a baby

When you're thinking about adding to your family, there are no hard and fast rules about what your finances should look like — it ultimately comes down to personal preferences and what works for your family. Here are some things to keep in mind as you plan.

Planning for debt

If you have outstanding balances on credit cards, it might make sense to lower the interest rate on those debts using your home's equity or through an unsecured loan with an interest rate that's lower than what you're currently paying. Or perhaps it isn't existing debt that is of concern — expanding your family may mean purchasing a family car or moving to a bigger home. Now is the time to think through what your family needs and can afford.

Explore lending options

Whether you want to consolidate credit card debt or upgrade your car or home, we have tools to help.

Impact to income

The cost of child care is a one area to consider carefully as you plan for a baby. Looking strictly at new expenses vs. lost income, having one parent stay home may seem like a no-brainer. However, there are some tools you can use to reduce the impact of daycare costs without sacrificing career growth. Ultimately, it comes down to preference — but don't ignore the tools available to help working parents with the cost of dependent care.

Accounts for daycare expenses

Learn more about dependent care flexible spending accounts, then contact your employer to see if they sponsor this type of account.

Baby-proofing your budget

Having a child will undoubtedly require some financial adjustments. Whether you plan to become a single-income family or send your baby to daycare, practice adjusting your budget for these changes. This exercise will help you reduce spending in other areas ahead of time. The money set aside could even fund some of the pre-baby expenses that come up, like:

  • Maternity clothing
  • Furnishing a nursery
  • Non-medical prenatal services like prenatal workouts or massage
  • Going on a Babymoon
  • Home improvements (like putting in a shed to make way for all your new baby gear!)
  • Putting a down payment on a family vehicle

Planning for health care costs

Another consideration will be the change in health insurance premiums. Compare your and your partner's work-sponsored plans to see which would be a better fit to add your baby. No matter which you choose, this will likely be an increase in monthly cost. If you are in a qualifying high-deductible health plan, a health savings account could be an option to provide tax savings on your growing family's health care costs. 

Birth expenses

Consider opening a health savings account and making the maximum contribution to help fund the cost of birth.

Saving for the future

There's no doubt you have hopes and dreams for your new family member, and it's never too early to start setting aside money to help fund those dreams. Whether it's a savings fund for college or a special trip you hope to take with your child to celebrate a milestone, there are goal-based savings tools to help you get there.

Goal-based investing

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