Girl in graduation cap and gown hugging her mother

Growing a family


Starting or growing a family is thrilling, emotional and truly one of life’s greatest joys. However, from a financial perspective, it’s not exactly an inexpensive joy. But there are things you can do to get organized now and prepare your home — and your finances — for the new member of the family.

Plan for new expenses

Budgeting for new expenses is an important step to take when planning for your new addition. If this isn't your first child, you can assess how another child will affect your budget.

Costs to take into account


  • Groceries: New expenses, like diapers and formula, will add up quickly.
  • Housing: You may need more space as your baby becomes mobile.
  • Transportation: A larger, safer or more reliable vehicle may be something to consider.
  • Clothing and household items: Stocking up on baby essentials, such as furniture, bedding and clothing, can be costly. Your monthly budget could also be higher as your child grows and his or her needs change.
  • Medical: Larger insurance premiums, doctor visits, hospital stays and co-pays may affect your bottom line.
  • Education savings: Consider monthly contributions into a college savings plan, such as: a Coverdell Education Savings Account (CESA), a 529 plan, or a Series EE or Series I savings bond. A Uniform Transfer to Minors Act (UTMA) custodial account could also be used to save for college.
  • Emergency savings: If you haven't already done so, now is a good time to build a fund for unexpected illness, job loss or other surprises. It should be enough to cover your living expenses for at least 3 – 6 months.
  • Retirement savings: With new baby expenses, it can be tempting to cut back on saving for retirement. But securing your own future is especially important if you have children — you don't want them to be responsible for your future health care or housing costs. Try to save at least 10% of your salary.
  • Life insurance: Explore insurance options so that your child will be cared for should something happen to you or your spouse.
  • Child care: Depending on where you live child care costs can range from $18,442 – $26,102 annually.1 Compare the cost of professional child care against what you'd lose in annual income if one parent quit working to stay home. You might be surprised.

Explore child care options

Family members


If you have the option, child care by a family member, such as a parent, grandparent, aunt or uncle, is often an ideal solution. You know and trust the person, plus your costs are greatly reduced.

Day care centers


Center-based day care has the benefit of consistency — it never gets sick or is late to work. Plus, centers are typically licensed and monitored by your state for basic health and safety practices.

Such oversight comes with a price, however. A recent study from childcareaware.org showed families could spend 36% or more of their annual household income on infant childcare. Keep in mind that these costs can vary widely from one state to the next. Look into the costs of your local day care centers -and start budgeting now.

Nannies and nanny-sharing


If you have more than one young child, having a nanny is often comparable to — or even cheaper than — center-based day care. Often, you can hire a nanny through an agency that is also the nanny's employer and handles the business concerns of hiring a sitter.

An alternative is a nanny-sharing arrangement with another family, in which the caregiver watches multiple children simultaneously for a significant cost savings.

Family child care providers


Family child care providers supervise kids in a home-like setting, usually the provider’s own residence. Licensing requirements vary greatly by state — with 27 not requiring a license until five or more children are cared for in the home. Consequently, the costs are less than those of center-based care.

Plan for the future

Know your tax benefits


The addition of a child means your income tax situation will change. There are a variety of tax deductions and credits that may be available to help new parents, including those who have adopted a child.

Be sure to discuss any anticipated tax benefits with your tax advisor, as each person’s circumstances will vary.

Start saving for college


It’s never too early to start setting aside money for college. Start saving now and give your savings and investments as much time to grow as possible. In addition, some investment vehicles have been created specifically to help parents save money for their children’s education. See “Saving for College" for additional tips to get started.

Safeguard your future


As your family expands, review your life and disability insurance, and consider increasing the amount of coverage. Amend the beneficiaries on your important financial accounts, and choose guardians for the child (or children). Guardianship issues are particularly important if you are a single parent.

In addition, consider consulting your attorney for wills, health care directives and other documents that may help safeguard your family’s future.

Take the guesswork out of the financial implications of growing a family. Have a conversation with your financial advisor about your unique goals and how planning for the future can help your budget and meet your financial needs.

1ChildCare® Aware of America, childcareaware.org, Parents and the high cost of childcare, 2019