There's no way around it: having a kid is expensive. You'll pay for your child's expenses for at least 18 years, but the initial costs are overwhelming -- and may come as a surprise to new parents.
Not everyone has the luxury of planning for their new child's arrival, and you can't prepare for every contingency that'll happen until they're on their own. But if you can, you should definitely take some steps in anticipation of the financial hit you'll take.
Sit down and think objectively about your life and your financial situation. Are you and your partner committed to each other? Has your partner agreed to help support the kid, even if you two split up? (Keep in mind that this isn't just about paying money -- it's about things like childcare and household labor, which can also incur a financial cost.) Is there anyone else in your life who's offering support, like a cousin or a grandparent? What does your career look like? How much money are you making, and what benefits do you receive? What possibilities do you have for advancement over the next two decades? How much debt are you carrying?
Nobody's financial (or personal) situation is perfect. But by assessing your situation and making strategic moves to ensure your cashflow is secure over the foreseeable future, you'll be a step ahead of the game.
Ideally, you should have a cushion of money ready, to handle upfront costs related to your new family member. Experts recommend anywhere between $5,000 and $10,000 to cover prenatal expenses, as well as items like baby food and diapers.
Remember that this money is in addition to any other savings you have set aside, such as for bills or retirement. Saving up all this cash can be a tall order for many parents. But every little bit will be less you have to worry about down the line.
A gift registry doesn't replace the money you need to save up. But it will distribute some of the costs, and your family and friends are likely ready to help with new or used items. Think realistically about the clothes, diaper, crib, carseat, stroller, and other things you'll need (or just want) to provide your new child with.
As you show people your registry, some people in your life may step up and provide. Others may not have the money, but asking for help with the registry may open up avenues by which they can help -- such as by providing childcare, cooking you meals, or assisting in other ways that will still save you money (and allow them to show you their love).
Health insurance is a must for any prospective parents. Prenatal checkups, plus the cost of actually giving birth in a hospital, can mount into overwhelming costs without insurance to pay for it. And those are just baseline costs, which leave aside the possibility of your new baby needing special medical care before, during, or after delivery.
As you're contemplating health insurance, look carefully at what it covers. Most plans will cover childbirth, but some may come with high deductibles, or have limits on how much they pay out. It's likely you'll have to pay at least some money out-of-pocket to deal with costs, and that's where that $5,000 to $10,000 cushion comes in.
Some employees are hesitant to tell their job that they need time off for a baby. They may worry this may make their job situation more precarious. Thankfully, this kind of discrimination is illegal in the US.
Just like how you should always take your vacation time, you should always file for maternity or paternity leave, if it's available to you. This is an important time, practically and psychologically, for you to recover from the birth and adjust to your new life. By taking paid leave during this time, your quality of life will significantly improve, and your finances will remain steady.
Life insurance helps you prepare for the absolute worst. Most life insurance pay out in the event of your death, but some may also pay out in the event of terminal illness, so it's a good idea to look into the exact terms of the plan you're considering. If you're young and healthy, life insurance may seem unreasonable. But morbid though it may seem, anyone can die at any time, and you want to make sure your family is provided for -- even if you're no longer around.
Again, anyone can die at any time. Whereas dying without life insurance deprives your family of a potential benefit, dying without a will creates a serious headache for your family. Your assets -- and debts -- will have to be distributed as dictated by state law. That can take a long time, and might leave your loved ones high and dry.
So go to a lawyer and start working on a will, even if you're sure you have plenty of time left on this planet. Be sure to meet back up with your lawyer to update your will every few years, to reflect any changes in your family or finances.
Financially preparing for a new baby can be difficult, even if you've normally had enough money. By proactively taking steps to shore up your financial situation, put a little extra into savings, and get health and life insurance, you'll be ready to support your new arrival for many years to come.