Financial Planning Tips Before You Are Pregnant

I have a two part series for you today – all about getting financially ready for a baby. I’ve been asked this question by a college friend but I think there are many women who wonder about this. How can I be financially prepared to start my family even before I am pregnant?

If you are reading this article, it’s because you are interested in having a family someday and you want to be as financially responsible as you can. Well done! It is an admirable goal and one that I shared. If you’re already pregnant, you still have 9 months (more or less) to tackle these goals as well. Anything you do before the baby is born will help you after the baby is born!

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If you are starting to think about having a baby, check out these 5 financial planning tips before you are pregnant. Excellent advice from a frugal mom!

For those of you unfamiliar, let me start by sharing our story in a nutshell. My husband and I married when we were a bit older (30 and 27 respectively) and waited a bit before having children. Then, we struggled with infertility before actually getting pregnant. Our son was born almost 5 years after we were married. We were blessed with a daughter 2 years later, and another daughter 2 years later. Yes, that is 3 kids within 5 years.

My husband and I learned a lot the first time around, especially since we were determined that I would stay home with our children. Even so, we learn new things with every baby as we financially prepare.

Here are 5 financial planning tips you can tackle before you are pregnant. (If you are already pregnant, tackle these tips and read more in the follow-up to this article, Financial Planning When You Are Pregnant.) This is what we did to financially prepare for our babies.

1. Pay off all your debt – or as much as you can.

This makes such a difference because it will give you so much freedom! Put paying off debt at the top of your list to get ready for a baby. We worked hard at this and only had a bit of debt remaining on the Tahoe when our son was born and paid it off when he was 9 months old, so we are now debt free (except our mortgage). It’s a wonderful feeling, and makes staying home easier on the budget too, when you don’t have debt payments.

2. Build an emergency fund with 3 months expenses, especially if either spouse plans on staying home with baby.

And by 3 months, calculate just the absolutely necessary expenses. This is different for every family. For us, we set a $5000 goal for our emergency fund, knowing we had an additional $5000 that we can access as cash value in old life insurance policies, in the case of a true emergency. At the very minimum, I recommend having at least $1000 in an emergency fund before baby is born.

3. Establish a budget and live within your means.

Maybe you are already living quite frugally (as we were) but I know it was the reality of getting pregnant that finally convinced my husband to cut cable so we could save that extra $80 a month. Cut expenses now so you can tuck money away for baby. If possible, try to start living on one income as an adjustment period, especially if you are planning to stay home with the baby.

To help you establish your budget, I recommend setting up various savings accounts to help you track your financial progress towards baby. Set up accounts for your emergency fund as well as insurance and anything else you want to be prepared for. We use online saving accounts to help us keep our money budgeted for various expenses. I’m a firm believer that you can’t have too many savings accounts if it helps you be prepared. We currently have 15 savings accounts…and are still adding more! 

4. Save for insurance and the cost of delivery.

First, you need to be sure you are ready for a baby insurance wise. Whose insurance will the baby be on and how much will you pay each month? Also, if you are planning to stay home, what will your insurance cost? Save and budget for these expenses now. Although we do have high deductible costs, out family is incredibly blessed in that Andy’s school still covers insurance for the worker, spouse AND children. It’s unfortunately becoming a rarity. We do still have to budget for the high deductible portion of our plan, which leads me to the second part of the tip.

I recommend saving up for the cost of delivery. When we got pregnant with our first born, our schools had just switched to a high deductible plan, which meant I knew we had to cover $5700 before we met our deductible (yikes!) but everything was covered after that. Our school covered $2000, so we put all of my piano earnings aside so we had the remaining $3000 ready to pay for all the costs when Nathan was born. It was a blessing because Nathan ended up being in the NICU for 4 days, and I had an emergency c-section so stayed at the hospital 5 days, instead of the typical two. I didn’t have to worry about costs once because I knew our insurance would cover everything and we had the cash ready to pay our deductible.

5. Start stockpiling diapers. 

Diapers can be one of your biggest expenses with a baby so start saving early. Since diapers won’t go bad, it’s easy to start buying diapers long before you are pregnant. We use disposable diapers, and thanks to shopping on diapers for almost 2 years before he was born, to date, I have spent less than $100 for ALL of my 19 month old’s diapers. Watch for great sales and buy before you need them. I aim for $0.10 a diaper or less as my target price, and use my grocery budget to help me buy diapers. This will save you so much if you are practically planning ahead.

Read this step by step guide to stockpiling diapers to get started. If you want to use cloth diapers, start building up a stockpile of those by watching for sales on various websites, cloth diapering re-sale sites or even on Craigslist.

Remember, babies aren’t nearly as expensive as everyone makes them out to be. You can breastfeed to save money on formula. Shop at at thrift stores and garage sales for clothes. Make your own baby food. The list is endless.

For more information on the true cost of having a baby, check out this well-researched article on Mom Loves Best about the Real Cost of Having a Baby in America Today. I found the costs a little high (since we pinch pennies and have had 3 babies much cheaper than this), but their baby calculator is a good tool for first time parents. I like how it allows you to adjust the costs for so many different baby budget areas.

We did a lot to prepare financially before our son was born, but we could have done more. That’s always true. There is always more to do and save. It really is true that you’ll never be fully ready for a baby. That said, I believe these 5 tips will help give you a solid start to being financially ready for a baby.

Once you have worked on these financial planning tips, go ahead and tackle the next 5 financial planning steps when you are pregnant. 

What other financial tips would you give to others preparing for a baby? What did you do – or what do you wish you had done?

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  1. These are excellent! I laughed because it’s pretty much the same list my husband and I put together and with the help of Dave Ramsey we were able to pay our debt off and save a 6 month emergency fund in just 1 year! Now we are trying to get a down payment saved and In the beginning of the new year we are starting a baby fund and I’m keeping an eye on offer up and craigslist for like new cloth diapers! 🙂 we have a higher deductible too $3,000! But thankfully we’ve been letting our HSA build up over the last year and a half and just have over that which will cover all baby Doctor costs 🙂 again great list! Also see if you have any family, friends or members of your local churches that might be willing to just donate their gentle used clothing and items they no longer need 🙂

    1. I’m glad to hear it, Rebecca! Congratulations on paying off your debt and saving your emergency fund. You were determined – and that will serve you well in saving up that down payment and your baby fund. Accepting donations from family and friends is something I am always happy to do, too! Thanks to stopping by, Rebecca, and I’m glad our lists line up!

  2. Not the happiest thought but dont forget to update your wills and insurance policies. We accidentally found out some life insurance underwriting is actually more forgiving on the pregnant woman and you may receive a better rate. Never hurts to check. Also see what discounts your car insurance may offer for carseats or if you get any health insurance discounts for baby care classes and CPR and the like.

    1. All good points, Leslie. Thanks for adding those on to the list! You do indeed what to be as prepared as you possible can – whether it’s a happy thought or not!

  3. Is your husband a teacher, Kristen? My hubby is a public educator as well (VP) so I understand the high costs. We don’t have a high deductible but we pay $1600 every month. Wowzers!

    When we had our first, the teachers held a diaper drive. We were set. That was better than any baby shower;0)

    1. What a blessing – diaper drives! I love practical gifts like these. Yes, my husband is a teacher at a small parochial school. It is a step cost of insurance every month – which balances out our high deductible.

  4. I agree with you that all these are great things to do while you are waiting for baby. In fact it would be good to be debt free and have money in savings before you get married. But I would also caution people to not wait to have children (or wait to get married) until they think they are financially ready. Because we have all seen friends that getting pregnant was not as easy as they expected and they regret waiting as long as they did to start trying. Even if you don’t feel financially ready, the finances will work out. You will probably never feel completely financially ready to have a child. You can be frugal parents and it doesn’t need to be expensive to raise a child.
    But everything you suggested is great if you don’t find Mr. Right right away, you don’t conceive right away, or even if you just have 9 months before baby arrives. Every little bit you can do to save and budget and get out of debt helps.
    I would also add that even if #2 or #3 arrive much sooner than you had planned, the finances will work out there too. I had 3 in 4 years. It was a little overwhelming at first, but now I am glad that we changed diapers, were sleep deprived, etc. in a little over 5 years and were done. All 3 of my boys move on to the next stage of their life at the same time. Currently we are at the pre-puberty age that all 3 want to sleep in as long as possible. I think financially it works well on things like pass clothes down from one to the next when they are born close together. And we are ready to resell clothes and toys at the same time since they are close in age. There are advantages to them being close together and some of those are financial.

    1. All excellent points! Sometimes our plans are not God’s plan, as you and I both well know. And I love your point about having several close together and the benefits of that. Thanks for sharing all these thoughts with us!

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