A New Addition and New Financial Challenges

It’s no secret that I’ve fallen off the face of the earth when it comes to all things blog and social media related. What might have been less well know is exactly why. Let me sum it up in one word… MOTHERHOOD. For those of you that are already raising children, I’m sure you are well versed in the triumphs and challenges of raising a family while maintaining your everyday life. I, on the other hand, totally underestimated just how draining having a newborn around the house can be. I’m happy to report that we are all starting to adjust nicely and that our little daughter, Zoe, is now nine weeks old and finally letting me get back to writing these articles.

Meet Zoe! She's the latest addition to our family/our newest budget line item.

Meet Zoe! She's the latest addition to our family/our newest budget line item.

With that said, I wanted to discuss some of the financial changes and challenges we made to make room for our expanding family.

Having Those Uncomfortable Conversations

I thoroughly enjoy managing the finances in our household. My husband, Nate, and I have combined our finances since it made sense for our family (though it might not make sense for your family). I make sure the bills are paid and our investments are on track, and though I discuss all large financial decisions with him, he spends almost no time physically managing our finances. Before we headed off to the hospital to have Zoe, I made sure to make a list of all of our investments, bills, due dates, passwords, etc. and made sure that Nate knew exactly where to find this information and what to do with it. It’s always a good idea to have this compiled somewhere. The last thing you want your family to have to worry about when you’re sick (or worse) is how to pay the mortgage on your house. Sit down and spend an hour compiling this information. Don’t leave these things undocumented.

Making Sure Our Family is Financially Sound

The next thing that I focused on was ensuring that my family would be taken care of if anything happened to Nate or myself. It’s one thing to leave your spouse to fend for him or herself, but it’s magnified times 1,000 when there are kids involved. Even if one of you plans to be a stay at home parent, you may want to consider having life insurance to cover the cost that you would have to pay for daycare if you weren’t around to raise your child.

To learn more about buying life insurance read our article here.

Additionally, we made sure that we had our wills updated and gave copies to our parents. We also updated the beneficiaries on our investments. For example, we each have some separate retirement accounts, which are now specifically designated to go to each other should something happen to one of both of us. By updating our beneficiaries we are saving each other months of headaches to access the funds in the event one of us dies.

Adjusting Our Budget

Budgeting is something I’m more than proficient in, yet when it came to adjusting our budget for a baby, I had almost no idea what to expect. Will you have to buy formula or pay for daycare? Will you have any medical bills you will have to pay out of pocket? Exactly how much will diapers cost you? The truth is that you just won’t always have the answers to these questions.

I added two categories to our budget; one for daycare and one for general kid related expenses. Daycare was easier to estimate once we had chosen which school she would attend, but the other expenses were nearly impossible to estimate. I had no idea that Zoe would hate one type of bottles, and I would need to buy all new bottles a month later. I had no idea that she would be allergic to one diaper cream and need a different one. Staying flexible has been key to this process. I am still monitoring these expenses monthly and getting smarter as we go. By tracking these expenses, I’m getting closer to understanding what our typical monthly spend will be. Of course, like everything baby related, once your figure it out it changes, so the best thing I can do is be ready to roll with the punches.

Thinking About Our Child’s Future

We’ve discussed establishing a college savings fund on the blog in the past and there are a few other things I wanted to mention about it in this context. When I posted the article about 529 savings plans, many people commented that they would look to do that when they have children, but you don’t have to wait! You can open a 529 at anytime… in fact I opened our 529 plan before Nate and I even thought about starting a family. All you have to do is list yourself as the beneficiary when you set it up, and when you receive your child’s social security number, you will be able to change the beneficiary to your child without any tax consequences. Also, be sure to automate a regular portion of your paycheck to automatically transfer to the 529 account on a pre-tax basis. This will maximize your tax savings and investment potential and can be accomplished by working with your payroll or HR department to make sure that these contributions are being executed correctly. Don’t miss out on this opportunity to avoid tax by making contributions out of your take-home pay.

These are just a few items that are good to consider when you’re starting a family. Even if you already have children it is never too late to take on any of the tasks listed above. It’s better to take action now than to wish you had later!


Written By: Lindsay Dell Cook

Lindsay Dell Cook is a CPA, finance writer, and founder of Budget Babble. She lives in Philadelphia with her uber supportive husband and adorable daughter. When she's not working, she enjoys spending time with her family, taking their lovable mutt for walks, or reading a good book while buried under a pile of cats.