Financial Planning For A New Baby

Financial Planning For A New Baby

July 20, 2023

As many of you may or may not know, my husband and I are expecting our first child, a baby boy, this summer! Words cannot express our excitement for this new chapter in our lives. It’s hard to believe that our little one will be in our arms in just a few short weeks and just how much we have left to do before he gets here! 

As new parents-to-be, we’ve unfortunately realized that no one hands you a customized checklist of everything you need to do before the baby arrives. Your life completely changes with a new child, whether your first or your third, and advice from veteran parents and influencers on TikTok flies at you from every direction, making it difficult to decide what’s right for your family. 

As a CERTIFIED FINANCIAL PLANNER™ professional on the Chichester Financial Group LLC team, not only do I help our clients plan and work through major life transitions, but I also must plan for my own family.

Here are the financial planning conversations that are taking place in my house as we prepare to welcome our child:

When Baby Is a Future Dream 

We dreamed for many years of starting a family, and like many families today, we needed a little help from specialists to make our dream come true. A big hurdle for us was the cost of the fertility consultations and treatments, but here is how we were able to plan for those expenses:

  1. Look into your health insurance network to see whether fertility treatments are covered. If they are, review which providers are within your network and find the specialist that works best for you (we met with a few specialists before we chose a clinic that was right for us).
  2. Work with your doctor’s office to determine the cost of care: Once you’ve provided your health insurance details, your doctor’s office billing department should be able to give you an idea of the cost of your treatment plan based on what is covered and what is not.After our treatment plan was decided, our clinic gave us a rundown of what would most likely be covered and what would be out of pocket. 
  3. Take advantage of your HSA (Health Savings Account) benefits! Depending on your employer and the benefits that they offer, you may have the ability to save a portion of your paycheck into your HSA and even have your contributions matched by your employer! Our HSA was a great resource for anything not covered by our insurance. They also carry double tax benefits, and you are not restricted to using your balance within a single year. Click here for more information on HSAs. More to come in a future blog post!

Career and Cash Flow Planning

My husband and I discussed what our work life and finances will look like when the baby is here. When planning for a baby, there is no way of knowing their every need or even how your priorities will change after they arrive. However, we felt it was important to explore many possible scenarios and considered a few things:

  1. Expenses: What are our current expenses, and what potential expenses will we need to account for after the baby is here? These expenses can range from doctor visits to formula to childcare.
  2. Maternity/Paternity Leave: How long do we plan for maternity/paternity leave, and do our employers offer benefits for maternity/paternity leave? Will there be a period of time that we will go without an income? If there is a period without a steady income, what must we do to prepare for that? 
  3. Returning to Work: This is a big hurdle for many expectant parents. Childcare can be expensive, and support from family and friends is not always easily accessible. When deciding when, and if, to return to work, consider first, what it is you want for yourself and your family, then you can look into the options you have to make it work. Do you have family close by to help a few days a week? Are there daycare or babysitter/nanny services in your area? If neither is an option for you, talk to your employer about finding a way to accommodate your family’s needs. Getting creative and planning ahead of time (as much as reasonably possible) will take some of the stress away and allow you to budget for the cost. 

Covering Your Risk

  1. Emergency Fund: It is important to establish a savings account that can be used to fund any unexpected expense that is not covered elsewhere. A good starting point is to have at least 3 to 6 months’ worth of expenses saved up, but everyone has their own unique situation, and your needs may vary.

  2. Health Insurance: Review your current coverage to make sure it still makes sense for your family and add your child as a dependent. As you research, pay close attention to what will be covered during labor and delivery, post-partum care, and pediatrics. For example, breast pumps are typically covered by your health insurance.

  3. Life Insurance: Consider the costs of raising your child and what you would need if you no longer had the other spouse’s income. Note that underwriting can be a more difficult process during pregnancy; consider applying before getting pregnant or after the child is born.

  4. Disability Insurance: It is important to protect yourselves if one or both of you becomes disabled for either a short- or long-term period. Note that if you plan to use short-term benefits to pay for maternity leave, you must secure this coverage prior to getting pregnant. Some employers may offer these benefits, or you can also purchase a personal policy.

  5. Wills/Trusts: Having the proper estate planning documents is more important than most people realize. Estate planning not only covers death, but also disability, incapacity, and will help determine the guardian(s) of your children. This is something that we often see families overlook.

As the due date gets closer, the excitement and anticipation for this new chapter in our lives becomes more and more real. Going through this experience has given me a new perspective on the importance of planning for a new child. As you know, we at Chichester Financial Group LLC share a lot of our own personal planning with our clients to illustrate that we also must make the same decisions that you do. Our team is always here to help you if you are planning a family or experiencing any other major life transition.