Financial Preparation for Expecting Parents: Key Considerations

Expecting parents should enhance their emergency fund and review insurance plans to prepare financially for a new baby.

### Financial Preparation for Expecting Parents: Essential Tips and Resources
* 👶 Expecting a baby in March brings excitement, but **financial preparation is crucial**, especially since the wife will be on maternity leave for about **three months**.
* 💡 To assist in this process, a new child checklist resource is available at moneyguy.com/resources, covering important areas like **cash flow, insurance, taxes, and long-term planning**.
* 💰 It's essential to evaluate new budget items and ensure your emergency fund is fully stocked with **3 to 6 months of living expenses** to avoid financial strain during maternity leave.
* 📊 Planning for additional expenses such as diapers and nursery items is important, and bolstering your **emergency fund** can provide **flexibility for unforeseen costs**.
* 📝 Reviewing subscriptions and analyzing financial habits can help identify **unnecessary spending**, allowing for **better budgeting** as new parents.
* 🚗 Consider the practicality of your vehicle and avoid overspending on baby products; prioritize **safety over brand prestige** to **save money**.
* 📋 Make sure to understand your health insurance coverage, including **deductibles and benefits**, to avoid surprises during this significant life change.
* 💼 Being proactive about insurance options and adjusting your plan can lead to **savings while ensuring adequate coverage** for both mother and baby.

My wife and I are expecting a baby in March of next year, which is so exciting! Congratulations. She makes a significant part of our income and will be on maternity leave for about three months. What is the best way for us to prepare financially? Uh, we do have a new resource about...

This. First of all, I want you all to speak to it, but as they do that, or after they answer, head to moneyguy.com/resources and make sure you grab our new child checklist resource.  It has some categories just for you to think through, like cash flow, insurance, taxes,

long-term planning—things that maybe you should think about and have a conversation about as a couple as you're thinking about having a new baby. So, with that said, what do you guys have to say to Louise? Well, by the way, is this something we should let...

...Reeve give some insight on? I mean, some talking about an expert in-house. Maybe you should start this one off, as you think about maybe being a few months away from... I know, they're trying to get me to tell everybody that I'm having a baby, which is probably good, because I'm going

to disappear fairly soon. Public news, huh? I don't think she said it on the show, so I don't... I don't care, but I just haven't said anything about it yet. But yes, no, I am... I have a baby already; he's uh, two, and

then I have one on the way very soon. So, yeah, I'm thinking about this a lot, and a lot of the stuff that is on our checklist is great, because it's just like any new budget items that are going to come in, any new line items if that's a...

Big deal, and you're tracking budgeting, um, making sure your emergency fund is up to date and has enough in it. A big one for me the first time around was just thinking about insurance, like, "Oh, I'm adding another person to my insurance; what is that going to cost me?"

Per month, so like that's going to be coming out of my paycheck. And how many days do I have? Which is usually 30 to 60 days you have to add that baby to the insurance. So be sure that you kind of ask your employer all about that, um,

things like that. And then, uh, you guys got on me about wills and life insurance. Wow, we are crushing it! And that took me a little bit longer than it should have, but I think that's a very relatable thing, so I'm happy to share that, even me,

who's hanging out with them every day. Every time we would have it come up in a show, one of them would go, "Do you have life insurance?" And I'd be like, "I... I've looked into it; like, I've been talking to somebody." And then finally I was like,

yes, I have it now. So definitely do that, and this is just your reminder to do that. What else? I mean, what else? You crushed it! I think you actually really crushed it, Louise. The big thing that I would, you know, obviously, uh, having

hopefully you've been following—you hold the thing up—hopefully you've been following the financial order of operations, and I'm hoping that you've gotten at least a step forward where you have a fully funded emergency reserve. And so what that means to us is that you

You should have somewhere between 3 to 6 months of living expenses in liquid cash available. But you said your wife earns a large chunk of the household income, and she's going to be on maternity leave. You didn't say

if it was paid leave or unpaid leave, but I would imagine you probably don't want to go into maternity leave—let's assume it's unpaid for a moment—and just pull all that money out of emergency reserves,

because you don't want to completely deplete that while you're on leave. Although that is an example of what it would be for. So I think one of the big planning opportunities you can explore is to think through the things you know are going to happen.

I'm going to have to buy diapers, wipes, nursery stuff; we're going to have insurance costs—all these additional budgetary line items. But one of the things my wife

and I did when we were expecting our first child is we just didn't know what we didn't know. There were a lot of unknown unknowns. So if you can beef up your emergency fund just a little bit to give yourself a

little bit of flexibility and time, it's not a horrible thing. So if you are lean on your emergency cash, I would think about bolstering that a little bit between now and March. In a worst-case scenario, your baby gets here and expenses aren't as high.

As you thought they were well, then you can just redeploy those excess funds in your Roth IRA or in a taxable brokerage account. But I think having that margin there when life throws all the newness of a baby at you will hopefully let the money be kind of one less thing that

you're having to think about in those moments. Well, but it is part of that nesting phase where you're already, in addition to, like, painting the baby's room, assembling all the furniture—um, that in 3 years they'll tell you now could potentially kill the kid—but you

know, you have to go buy all new furniture. I mean, it's a brilliant tactic, but it's um, it's one of those things where I want you to go ahead and start thinking about, just like you do spring cleaning, maybe this is the

time to, you know, clean out the closets, look around your house, see if there's things you could sell to make money off of, as well as go ahead and analyze everything that you're doing financially.  You'll look—without a doubt—you're going to be spending a little bit more money, um,

so why not check all your subscriptions? Check to make sure there's not money that, you know, in the past you just didn't put a lot of thought towards it and it's just leaking out in ways that aren't necessary. Make sure you analyze, you know, what are we doing,

what's the plan for cars? In case one of you is driving around in a two-seater and now you... That's a huge one; that was the one you had to tell me about early on. Yeah, pay attention. I have a third that'll be my thing, like, oh, and then and...

Then I'd also—I mean, don't feel, don't fall into the trap that if this is your first child, don't fall into the trap that you have to buy the best of everything. I mean, that's the thing that I was always amazed by is that...

If this is your first kid or not your first kid, it's so ridiculous. On cue, they—they get you. There's a whole industry trying to get you to buy the most expensive. I want you to get the safest. I mean, make sure you protect your child, like on the car

seats and all that stuff, but it doesn't have to be the one that the Instagram people are pushing and all the fancy folks are. It's true though, because we fell into some—I guess I, you know, it's just the things I do.

Think about when we had like our second child; it didn't matter. I mean, the stroller was, instead of this big fancy thing that had to break down like an origami engineering marvel of the world, we just had this like...called a stroller. It's like a seventeen—it looked like it could

have been an umbrella. It's like an umbrella stroller. You're like, 'Oh, it's a stroller,' you know? So it is interesting how you change between children. So don't fall for the prey. It's just like—and I know people

will hate it when I say it—it's like the baby wipe warmers and all that stuff. That's—that's superfluous. You know, a lot of times it's sold to you...um, you know, I don't know, do y'all use all those fancy

Warmers and things like that. We never did the baby wipe warmer; that was never a thing. And by the time we... some of the things are fine and nice, but some of them are really not needed. By the time we got the third kid, it was just like, "Ah..."

Whatever, you know what I mean? The other kids will take care of them. Uh-huh. That's right. That's kind of the way... that's right. No, that was a good answer. Hopefully that helps you out, Louise. This is very... I did have one other thing. It's

just so personal, because personal finance is personal, but just make sure you know how your insurance is working. Like, step one is: deductibles covered? Have you covered step one? Now's the time to really know that. And this is both for mom and baby, like deductibles. So just think about that.

You know, think so. That's maybe the other thing that wasn't a surprise, but I had to go do a little bit of research and legwork the first time. And I love you mentioned like the benefits, because if you're on health insurance, I mean a lot

of times we tell people that when you're doing family planning, it's okay to beef up your insurance. But if you know now things are going back to normal, go go look at your options again to make sure that your health insurance does reflect your choices. Because sometimes those

Cadillac plans that cover all the pregnancy, they're kind of expensive on an ongoing basis, so you might want to drop back down to a more affordable plan. So just be proactive; look at your health insurance. Don't just do what you did.

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Utilize the new child checklist resource at moneyguy.com/resources for guidance on financial planning.

Consider aspects like cash flow, insurance, taxes, and long-term planning.

Budget for new expenses, ensure an updated emergency fund, and review insurance costs.

Incorporate the cost of adding a baby to health insurance and the timeframe for doing so.

Address wills and life insurance promptly.

Maintain a fully funded emergency reserve (3-6 months of living expenses).

Avoid depleting emergency funds during unpaid maternity leave.

Plan for increased expenses related to the baby (diapers, wipes, nursery items, insurance).

Boost the emergency fund for flexibility and to handle unexpected costs.

Reinvest excess funds after the baby arrives if expenses are lower than anticipated.

Additional Financial Tips and Considerations

Declutter and sell unwanted items to generate extra income.

Review subscriptions and spending habits to identify areas for cost reduction.

Avoid buying the most expensive baby products; prioritize safety and practicality over luxury items.

Consider the necessity of extra baby items like wipe warmers.

Understand your insurance coverage, including deductibles, for both mother and baby.

Review and adjust health insurance plans after pregnancy to find a more affordable option.