After the excitement and baby names comes a new financial reality for new parents. Use this financial checklist for new parents to get started.

I love my son, but he’s like a tiny, reverse ATM. We’re not feeding him cash, but it’s certainly going somewhere. Having a baby means a new financial reality for a lot of people.

Not only do expenses start adding up for new parents, but it’s a new world of financial responsibility. Before the new baby, you were young and free. Living on dual incomes and not too worried about your financial future, you had it made.

Now you’ve got a responsibility to provide for yourself and your little bundle of joy, which can sometimes be a little scary.

We had been married four years before we had our son and thought we were financially prepared. Even with two good jobs and my freelance income as an investment analyst, the expense of being new parents caught us off guard.

Don’t let new parent expenses catch you by surprise. Use this financial checklist for new parents to be ready for a baby.

Financial Checklist before the Baby

Plan insurance, prenatal, and delivery costs

A survey of Maryland new parents found an average premium of $418 per month for health insurance with a $4,000 deductible and 30% out-of-pocket costs. The out-of-pocket costs for delivery ended up being around $2,700, so the total cost to have a baby came to about $6,700, not including insurance premiums.

You’ll need to see the doctor several times for prenatal checkups and tests, adding between $750 and $1,500 to the total expenses. Make sure you open a flexible spending account (FSA) if your employer offers one. You can put up to $2,550 from your check, which comes out pre-tax.

Pre-baby shopping needs and how they fit your budget

You’ll need a lot of stuff for your new baby, from one-time purchases like a crib to almost daily trips to the store for diapers. Plan ahead and start hitting the garage sales. Babies grow out of clothes, toys, and other items so quickly that most are in still-new condition, and you’ll get them for less than half the cost at a garage sale. Make sure you examine all straps and latches on strollers and the expiration date on any used car seat.

Before the baby, you’ll need to start buying prenatal vitamins, maternity clothes, larger bras, and a leg support pillow for the new mom.

For the new baby, you’ll need the following:

  • Receiving blankets (5)
  • Newborn diapers
  • Playpen
  • Bassinet (newborn) and a crib
  • Mattress pad and sheets
  • Baby monitor
  • Changing table and diaper pail
  • Car seat
  • Stroller
  • Infant bathtub
  • Nasal ball sucker
  • Arm-pit thermometer
  • Infant Tylenol
  • Bottles (6+), two-weeks baby formula, bottle cleaning brush, and drying rack
  • Breast pump, nursing pads, and nipple cream

Register on as many baby product websites as you can. Many will offer free samples for new parents and continuously send you coupons.

Plan your budget for after the baby comes

It becomes a little more difficult to budget after a new baby because it seems something always comes up. Your shopping list will change as the baby gets older, but there will always be a few things you’ll need to pick up. BabyCenter estimates a newborn baby will cost between $10,000 and $12,500 for the first year and slightly more for the second year.

Recurring baby expenses:

  • Baby shampoo
  • Disposable diapers
  • Wipes
  • Pacifiers
  • Formula

Plan for maternity and paternity leave

Check your state laws and company policy for how much leave you can take when the new baby is born. You may or may not be paid during your absence, but most states require that your job be waiting for you when you return after a short leave.

Time to put a little more cushion in your emergency fund

All these new expenses and you’ll want a bit extra just-in-case money. While most people are okay with three or four months’ expenses in an emergency fund, you might want to boost it to six months of expenses until your baby is a couple of years old. You can’t cut down on most baby expenses like you could your own if something happens, so it’s best to have a little extra cash set aside. Find out how to invest your emergency fund for higher returns and safety.

Financial Checklist for After Your Baby is Born

Health Insurance

You usually have 30 days to add your new child to your health insurance policy after birth and up to 60 days for many employer plans. If you didn’t sign up for your company’s FSA program, make sure you do that. Find out how much insurance you need for your family.

Check your life insurance policy and Will

You may need to check your life insurance policy and up the coverage a little. If something were to happen to you or your spouse, they’d have another mouth to feed, and you don’t want to leave them without a financial safety net.

Check your disability insurance

You are more likely to need disability insurance than life insurance, so make sure you have enough. The standard rule of thumb is to cover about half of your current salary. You could be injured for a year, or more, so your emergency fund might not cut it if you get hurt.

Don’t forget your own financial future

It can be easy to forget about your own financial goals with all the financial planning around a new baby. Don’t neglect to save for your retirement and other goals, even if it’s just for a few years after the baby is born. You may not be able to save quite as much, but keeping the habit of saving a little will help keep you on track. Get up to a $2,000 cash bonus when you open a Scottrade account.

Review your investment risk tolerance

Having a new baby may mean your tolerance for investment risk decreases a little. The grand vacation plans and beach-side retirement may take a back seat to protect the financial future of your new family. This means changing your asset allocation of stocks, bonds, and real estate and changing the investments within each asset. Check out this article to find your investment risk tolerance and how it affects your investing strategy.

Saving for education

The price tag for a college education keeps rising faster than inflation and just about any other price gauge. I paid for all my secondary education through loans and always said that my future kids could do the same instead of coming to the Bank of Mom and Dad. My opinion has changed a little with our son, and I want to be able to help him at least with some of his future education costs.

Check to see if you are in one of the 33 states or the District of Columbia that allows for a tax deduction of 529 plan contributions. These are separate investment accounts set up for future educational costs. Contributions may be deductible from your income taxes and grow tax-free within the account. Anyone named as a beneficiary, including yourself or your spouse, can use the funds for education costs.

We’ll cover more tips and tricks for new parents and financial planning around a new baby in the coming posts. I’d love to hear your stories of how you saved money or planned expenses for your family, email me or leave a comment below. Don’t forget to check out 30 Expert Ideas on Teaching Kids Money-Saving Tips

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