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Five baby steps to start your family on the right financial path


A mother and her young daughter holding hands and running on the beach at sunset

In all the excitement of decorating the nursery, it’s easy to lose sight of getting your financial house in order. Nowthat you’re a parent living on two hours of sleep and takeout, that goal may seem totally out of reach. But you don’t have to lose even more sleep worrying about it. Checking a few of these things off your list will help keep your finances under control, even if nothing else in your life seems to be.

1. Build a baby budget

For a middle-class family, the average cost of raising a child is nearly $14,000 a year.1 That’s about $250,000 of expenses by the time they’re 18. Consider increasing your monthly budget by at least 10% for the first year to cover those new expenses.2 Be mindful that if it’s your first child, your spending may be higher than if it’s your second or third child. Large, one-time purchases like swings, cribs, changing stations and car seats can really add up.

2. Replan your health plan

Be sure to add your new addition to your medical insurance coverage. Most plans give you between 30 and 60 days after delivery to add your child. If done in that time frame, your baby should be covered retroactively.3

Brace yourself, because your little one is going to rack up some bills. According to a 2019 survey, a baby’s first-year medical expenses average more than $2,200.4 But you can turn that to your advantage. If you have been putting off medical procedures, consider having them during this first year. Costs associated with your new baby will likely hit your annual deductible and allow you to save a lot on your own medical expenses. 2

3. Start a college fund

Open a 529 plan and encourage grandparents and others to make contributions in lieu of gifts. They offer tax-deferred growth, and any earnings could grow faster than a taxable account. A 529 college savings plan also entitles you to federal tax-free distributions for certain qualified expenses.

As of 2018, each parent and grandparent can contribute up to $15,000 annually per child and exclude these contributions from gift taxes.2

4. Protect your nest with life insurance

You don’t need to break the bank to gain some peace of mind. Simply put, life insurance is a good thing to have if you have a family to protect or a business to maintain. Because life insurance isn't just about your death—it's about your life too. It's peace of mind for you and protection for the people you care about most.

Term life insurance is a straightforward, low-cost option that provides financial protection for a set period of time (such as 10, 15 or 20 years). You can customize the amount of coverage and the duration of your policy to protect your growing family.

For added financial security, consider permanent life insurance. It provides protection for as long as you live plus a cash value component that can give you financial resources to help with big moments, like sending a child to college. 

A common rule of thumb is to purchase life insurance that’s roughly 10 times your annual income. Everyone’s financial needs are different – that’s why it may help to use a life insurance coverage calculator for assistance.

5. Save something for yourself

It’s easy to get swept up in providing for your child and put your own retirement savings on the back burner. Rather than making your future financial security an afterthought, take advantage of your employer-matching 401(k) contributions—which is “free money”—or open your own IRA. Set up automatic withdrawal of your retirement contributions, so you don’t have to think about it every month. By starting to save early, you gain the benefit of years of compound interest—and you ensure that your kids won’t be stuck paying for you later in life. 3




This article is not an endorsement of any particular product, service or organization; nor are they intended to provide financial, tax or legal advice. They are intended to promote awareness and are for educational purposes only.