Mother who has prepared for the birth of her baby.

6 things to do with your money before having a baby

Whether you’re a new parent or you’ve got a little one on the way, the time to plan for your family’s finances is … now. Here are 6 ways to get started.

1. Start an emergency fund.

It’s most important to set aside some money for unexpected expenses, says Robert Payne, senior financial services representative with Principal® in Greensboro, North Carolina. A solid emergency fund holds 3 to 6 months' worth of your take-home pay. If that sounds like too much, just make it a goal and save a little each month in a high-interest account. Browse for best rates. 

2. Create a budget—and stick to it.

Develop a budget that takes into account current living expenses, plus new-baby-related ones. Besides ongoing costs—health insurance, copays for doctors' visits, diapers, formula, food, clothing, daycare—factor in 1-time charges for things like outfitting the nursery and stocking up on baby gear.

3. Consider saving for college.

It's never too early to start squirreling away money for higher education. When you start early, you can set aside small amounts that add up over time. Read up on your state's college savings program, which may offer preferential tax treatment.

4. Keep saving for yourself.

Your instinct may be to give all to your baby. But remember to take care of your financial future, first. “Keep funding your retirement—at least up to your company's matching contribution, Payne says. Skimping on contributions to save for future college expenses could hurt your retirement savings. Learn how to balance both.

5. Know your benefits.

Talk to Human Resources about changes you’re allowed when the baby comes. You may want to enroll in benefits you previously skipped, such as long-term disability or a flexible spending account (FSA) to pay for daycare. Check if your job offers individual disability insurance—it helps protect your paycheck in case you get sick or hurt and can’t work for a while.

6. Plan ahead.

Payne suggests meeting with a financial professional to help ensure you have adequate life insurance coverage, as well as consulting with your attorney to draw up a will. Although you may not want to think about worst-case scenarios during such a happy time, you can rest easier knowing your family will be taken care of if you aren't around.

Next steps:

  • Where are you now, money-wise? Get your financial snapshot in 3 steps.
  • What kind of life insurance do you need to for a growing family? Take our quiz to find out.
  • Could you support your family financially if you got hurt or sick and couldn’t work? This calculator can help you find out what you might need for adequate disability insurance coverage.