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Your month-to-month financial guide to prepare for a baby

What we'll cover

  • Some financial considerations when having a baby

  • How to help increase your savings when you're expecting

  • Month-by-month to-dos to help prepare financially

If you have a new baby on the way, you're probably busy decorating the nursery, deciding on names for your little one and getting everything you need from bottles to a bassinet. Even with health insurance, giving birth can cost $2,854 on average in out-of-pocket payments, including pregnancy, delivery and postpartum care. Amid all the excitement, make sure financial preparation is part of your plans by using this month-by-month guide.

Month 1: Build a baby budget

Between bottles, clothes and a stroller, baby-related costs can add up quickly. But remember, budgeting is all about balance. Decide what's important to you, and make cuts where necessary so you can splurge in other areas. You can always adjust the numbers, but having this baseline will be a big help in those busy first months after the baby arrives.

Month 2: Start saving

To get ready for the new expenses, start prioritizing saving. Now could be a great time to open up a savings account that makes your money work for you. An Ally Bank Savings Accoun t not only compounds interest daily, but you also can use smart tools like buckets and boosters to supercharge your savings to stash away cash that much faster.

Month 3: Create a plan to tackle debt

If you have credit card debt, student loans or any other type of debt, make a plan to tackle it. You can take a number of approaches to paying down debt , so do a little research to find the method that works best for you. And remember, it can be possible to pay down debt and save at the same time.

Month 4: Consider childcare

When your baby arrives, will you be taking unpaid time off work? Put a plan in place to prepare for changes to your income. If you're headed back to work after leave, you may also want to factor in the cost of childcare. Families spend an average of 27% of their household income on childcare expenses, and a poll found 59% of parents planned to spend more than $18,000 per child on care in 2023. You can start looking at daycare or other childcare options now so you can budget for the expense when the time comes.

You can start looking at daycare or other childcare options now so you can budget for the expense when the time comes.

Month 5: Shore up insurance

Your little one is depending on you, so if you don't already have life insurance , now might be the time to consider it. If you do have a policy, you may want to increase your coverage to help protect your family's future. Comparison shop to look for the best deal to fit your needs.

You could also take a close look at your health insurance to see how your plan and costs may change when your baby is added to your policy.

Month 6: Check in on shared financial goals

Now might be a good time to touch base with your other plans for the future. Are you considering homeownership ? What are your goals for retirement ? If you have a partner, start an open and honest conversation about how your growing family fits in with your other dreams.

Month 7: Plan for your child's future

It's hard to imagine your child going off to college before they're even born, but it's never too early to plan ahead for future expenses like a college education if you can. You may want to open a 529 account, which is a tax-advantaged investment account your child can use for education expenses down the road.

Or you could use a custodial brokerage account to invest on behalf of your child. When they reach adulthood, the assets in the account automatically become theirs.

Month 8: Make an estate plan

Your child is depending on you, so it's important to prepare for providing for them in your absence. Comprehensive estate planning can include a will, durable power of attorney and a medical power of attorney. You can specify a guardian for your children if you can't be there. And with a will or trust, you can safeguard their inheritance.

Month 9: Make a money education plan

One day, you'll need to talk to your child about money and the financial guidance you want to give them. You may want to begin thinking about how you'll make impactful money memories with them. Get a head start on how you want to teach financial fundamentals and help them start building smart money habits.

Make the most of your prep time

Your little one will be here before you know it. While you wait, start to properly financially prepare so that when your baby arrives, you and your bank account will be more than ready.

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