Having a child
The average total child-rearing costs for a child born in 2013 and living at home through age 17 is now $245,340.1 Protect your growing family and learn how to prepare financially.
Budget for your new arrival
- The medical costs of bringing a new life into the world can add up, so plan ahead and budget for them. Make sure that you’ll be able to cover any out-of-pocket expenses for prenatal and maternity health care, for example.
- Insurance coverage varies widely, so check with your health care provider or human resources office about any co-payments, coinsurance and deductibles you can expect, as well as your insurance coverage and reimbursement policies.
- To be baby-ready, you’ll need a crib, changing table, car seat, carriage, food prep equipment, infant clothes and more, so budget accordingly. Also factor in the costs for potential new expenses for child care, babysitting and preschool.
- Paying for baby food and medical care can increase your monthly spending. Also consider the need for new clothing as the baby grows; diaper services or supplies; laundry and dry cleaning.
- Think about how your income might change if you, your spouse or both of you choose to reduce your work hours. Compare the benefits and costs of stay-at-home parenting with paying for child care.
Explore potential employer-provided benefits
- A Health Care Flexible Spending Account lets you set aside some money each year on a pre-tax basis to pay for eligible medical costs during that year. A Health Savings Account, if available, may allow you to accumulate significant health care reserves on a pre-tax basis to pay for major future medical expenses.
- Companies must generally offer their employees some time off around the time of childbirth. Your HR or personnel office can explain your benefits and how to qualify for them.
- Caring for a newborn is a lot of work. If you are considering adjusting your time on the job, look into job sharing and telecommuting opportunities.
- If you are adopting a child, your employer may offer incentives or subsidies.
Ensure that your life and disability insurance policies are adequate
- A major role for life insurance is to provide resources for loved ones when you cannot do so. It stands to reason that as your family grows, so will the needs that insurance should cover. Will you and your spouse both have enough insurance coverage in your new circumstances?
- Disability insurance can help protect your family’s income. Parenthood creates new possibilities, but also new responsibilities and new risks to consider. Do you and your spouse both have adequate disability insurance coverage?
- A new family member means a potential new insurance beneficiary. Are your beneficiary designations up to date?
Review your existing estate plans
- Be sure your new child is accounted for in your will and your spouse’s will. If you assigned shares of anything by percentage, make sure those percentages reflect your intentions in your new circumstances.
- Evaluate the impact of the new family member on any trusts you currently control or plan to create.
- If you have existing guardianship arrangements, be sure to explicitly include your new child. Consider designating a guardian if you have not done so.
- Review any letters of intent and similar expressions to be sure they reflect your wishes for the newest child.
- Be sure that any retirement account beneficiary designations accommodate your new child’s interests.
Make sure that all aspects of your health insurance policy are up to date
- You or your doctor may need to tell the insurance company about your impending new arrival well in advance of your due date.
- Many policies cover prenatal care and childbirth as a package, but to qualify, you may need to select an obstetrician from the insurer’s list and plan to give birth at a facility designated by the insurer.
- If you do have an open choice of providers, will your preferred obstetrician and pediatrician be considered in-network or out-of-network for insurance reimbursement and referral purposes? A provider’s status in your insurance plan may affect not only your out-of-pocket costs but also your access to hospitals, imaging centers and laboratories.
- Many policies have specific procedures for adding coverage for dependents; check with the company beforehand.
- USDA, 2013
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