Financial Preparedness When You’re Expecting

 Expectant parents know that their world will soon be completely new and different with growing responsibilities and shifting priorities. Beyond the baby name discussion, registries, and nursery preparations, new parents need to make sure they've got their financial house in order. 

Here are some areas to get you started while you’re still expecting. 

Plan for child care. Finding appropriate child care or arranging for one partner to stay home takes work. If you're consider staying at home, look at how a change in cash flow will affect your family budget and how an extended absence from the workplace will impact your long-term career goals. Make sure that you account for lost benefits such as employer-sponsored health care and retirement savings. 

If you'll be using day care, look into using flexible spending accounts for the first $5,000 in spending or related tax breaks. Consider how day care costs may affect your cash flow and put money aside as soon as you can to pad for the additional costs. 

Maternity and Paternity Leave. Talk to your employer about your options for parental leave and your plans for returning to work. If your company offers any paid leave or short-term disability, discuss the details and get the process rolling. A recent study showed that men rarely take advantage of paternity leave offered by employers. Consider going against the grain to give your family some extra support during a once-in-a-lifetime period for bonding. It's a decision you will never regret and one you never get to go back and change. 

Health Care. The new baby needs health insurance just like everyone else. Figure out which employer plan you'll be adding to and talk to HR about how to get things added after birth. The year of birth may result in more medical expenses in general. Talk to your doctor's office about anticipated cost and evaluate whether you should increase your health savings or flexible spending account in anticipation of out of pocket costs. 

Do you have all of your pregnancy related financial items checked off? In my next blog, I'll explore more financial planning hints and tips for young families. 

Melissa Joy, CFP®is Partner and Director of Investments at Center for Financial Planning, Inc. In 2011 and 2012, Melissa was honored by Financial Advisor magazine in the inaugural Research All Star List. In addition to her frequent contributions to Money Centered blogs, she writes frequent investment updates at The Center and is regularly quoted in national media publications including The Chicago Tribune, Investment News, and Morningstar Advisor.


Financial Advisor magazine's inaugural Research All Star List is based on job function of the person evaluated, fund selections and evaluation process used, study of rejected fund examples, and evaluation of challenges faced in the job and actions taken to overcome those challenges. Evaluations are independently conducted by Financial Advisor Magazine.

Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.