New Baby, New Budget: Your Financial Checklist for Parenthood

Mar 31, 2025

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"Behold, children are a heritage from the Lord, the fruit of the womb a reward." – Psalm 127:3

Children are a precious gift from God—a reward and a heritage to be cherished. With the incredible joy of welcoming a newborn also comes great responsibility, especially in managing finances wisely.

To help new parents navigate this season, here’s a New Baby Financial Checklist to ensure you’re covering all the essential financial bases.

1. Add Your Newborn to Your Health Insurance

In the whirlwind of 2 AM feedings and endless diaper changes, don’t let updating your health insurance slip through the cracks. Most plans allow a 30-day window after birth to add your baby to your policy.

While you’re at it, double-check that your plan covers:

Pediatric care
Vaccinations
Emergency hospital visits

Thankfully, welcoming a new baby qualifies as a “life event,” meaning you can make necessary adjustments to your plan.

2. Secure Life Insurance Coverage

Life insurance isn’t for the baby—it’s for you. Ensure you have a term life policy that provides at least 10 times the primary breadwinner’s salary in coverage.

Don’t overlook the caregiving spouse, either! If something were to happen to them, the cost of childcare could be significant. Securing life insurance ensures financial stability for your growing family.

3. Update Your Budget

It’s time to add a “Baby” category to your budget. When estimating how much to allocate, consider these new expenses:

Diapers and wipes
Baby clothes (that seem to shrink overnight!)
Baby food and formula
Medical expenses

These costs add up quickly. You may need to adjust other budget categories to stay on track, but planning ahead will reduce financial stress down the road.

4. Create or Update Your Will

A will isn’t just about distributing assets—it’s about securing your child’s future. One of the most critical decisions in your will is naming a guardian for your child in case both parents pass away.

While this can be a difficult decision, it’s essential to have a plan in place. Pray for wisdom and choose someone who shares your values and would provide loving care if the unthinkable happens.

Proverbs 13:22 reminds us: “A good man leaves an inheritance to his children’s children…” This inheritance isn’t just financial—it includes faith, wisdom, and values that shape their future.

5. Build or Strengthen Your Emergency Fund

If you don’t already have an emergency fund, now is the time to start. Aim for 3 to 6 months’ worth of living expenses in savings.

A new baby comes with many surprise costs, from medical bills to strollers that cost more than you expected. If a financial emergency—like a job loss—were to happen, having this cushion would be a huge blessing.

6. Update Your Taxes

With the arrival of your baby, your tax situation changes:

Child Tax Credit—You can claim your baby as a dependent on your tax return, which may qualify you for a $2,000 tax credit.

Adjust Your W-4—Update your W-4 form at work to ensure your withholding reflects your new family size. You may be able to withhold less, increasing your take-home pay.

7. Start an Education Savings Fund

It may feel early, but saving for your child’s education now can set them up for success. A 529 plan is a great option—it can be used for:

Private K-12 tuition
Vocational or technical training
College education

529 plans also offer tax-free growth on investments used for qualified educational expenses. Bonus: Recent tax law changes now allow unused 529 funds to be rolled into a child’s Roth IRA (up to $35,000), making them even more beneficial!

8. Freeze Your Child’s Credit

Identity theft isn’t just an adult problem—it can happen to children, too. If you’ve applied for a Social Security number for your baby, consider placing a credit freeze with the three major credit bureaus.

This prevents fraudsters from opening accounts in your child’s name, protecting their financial future.

Welcoming a new baby is an incredible blessing, but it also comes with financial adjustments. By taking these steps, you can ensure a secure and stable future for your family.

Have you checked off all the items on this list? Start today and take one step at a time—you’ve got this!

On Today’s Program, Rob Answers Listener Questions:

Can you recommend a burial insurance of any kind?
I recently retired at 70 and have money in a 401(k) that I'm unsure how to handle. My wife keeps saying we should invest in gold, but I don't know much about the stock market. Should I get a personal advisor to help me reinvest this money?
I'm a federal government retiree with a pension. I'm 61 years old and have no debt besides my house payment. I'm not currently investing in anything. What would you recommend as an investment path for someone in my retirement situation?
We have a 22-year-old adult daughter who lives with us. She is only responsible for paying her car insurance. We would like to know if it's biblical to start charging her rent to live with us and, if so, how we should determine the right dollar amount.

Resources Mentioned:

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