A first baby is an exciting time. But it’s also a major life change—including financially. Planning ahead can take some of the financial stress away and let parents focus on spending quality time with their new little bundle of joy. Here are four ways new parents can prepare financially for their first baby:

Emergency fund

An emergency fund is an important part of financial planning at any stage. But it’s even more important with someone else depending on the family … and who could result in an unexpected bill. It’s typically a good idea to have about six months’ worth of expenses saved in an emergency fund. While it’s understandable if new parents aren’t quite at that mark, it’s a financial goal to work toward.

Life insurance

Bringing home a new child can be a good time to think about getting life insurance (or adding to existing coverage). New parents often decide to get their first life insurance policy to provide financial security if the unexpected were to happen. Life insurance can replace lost income if a spouse were to pass away. New parents on a budget often opt for term life insurance, which tends to be an affordable way to get a large death benefit.

College funding

College may seem like ages away for anyone with a new child, but early planning for tuition costs can alleviate stress down the road. Parents may want to research the best ways to lay the groundwork for a college fund and how to get the most out of it—whether it’s a 529 College Savings Plan, a Coverdell Education Savings Account, or something else. College costs have increased over the years, but saving for tuition early on can make the whole process easier to handle. Adding even small amounts to a college fund can make a big difference once the child is old enough to start looking at schools.


Many families need childcare soon after their new baby is born, while others can wait a few months or years before they require assistance. Regardless, it can help to understand the choices and plan ahead. There are several different childcare options, including in-home nannies, daycare, public pre-K programs, and private preschools. Parents may want to research prices and options before the baby arrives. Having a good idea of what costs will look like can help new parents plan for expenses and choose the best childcare option for their needs.

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