Baby on the Way: Planning for the Financial Impact of Children

Sep 23, 2025 2 min read

Congratulations! Your household is growing. It’s exciting to add a new member to your household. But amid the joy can come concerns about childcare expenses and family financial planning. A growing family requires a retooled household budget, from health insurance to college funds. 

The good news is that following a few financial tips for new parents can go a long way. So, if you’re expecting, take a look at these considerations for financial planning for new parents, and be ready when your bundle of joy joins your household.  

Review Your Health Insurance 

Start by setting a great foundation for everyone’s health. When you’re beginning to think about having a baby, look into the health plans available to you and decide which policy best supports a growing family. 

Compare deductibles, co-payments and premiums, and take a close look at the maternity services that different plans provide. You may want to factor in potential coverage needs like:  

  • Fertility treatments
  • Prenatal visits 
  • Midwife services 
  • Neonatal care

Once you weigh the pros and cons, choose the policy that best supports the exciting step of growing your family. 

Budget for Monthly Childcare Expenses 

Planning for your child’s future requires financial planning, too. Part of that planning requires a commitment to staying on a budget and paying down debts. Household expenses will increase when you add children to the equation. Diapers, food, formula, baby furniture and clothing are just the beginning.  

And don’t forget the cost of daycare, which for many American families is one of the largest household expenses each month

Plan for Large Purchases

Maybe your current vehicle is not the most practical for a growing family, or maybe your home is too small. If you determine buying a new house or a new car makes the most sense for your family’s future, clear up any issues with your credit report and start tracking the inventory in your price range.  

If a new home does not fit in your budget, consider remodeling your existing home to create a safe, comfortable space to expand your new family. 

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Consider Your Sources of Income 

When you’re thinking about the future of your family, crunching the numbers is an important step to get a snapshot of what things may look like financially.

Here are some important questions to ask yourself when you’re thinking about your newly growing family: 

  • Will you and/or your partner continue to work once the baby arrives? 
  • How much parental leave does your employer offer, and how much can you afford to take without incurring a financial setback? If you’re self-employed or you own a small business, how will you structure your work to create parental leave?
  • When you return to the workplace, will it be full-time, at the same wage you earned before having your baby? If not, what changes will be in place?
  • Is your employer open to part-time, remote or flexible work schedules to fit your growing family? 

If the cost of childcare is prohibitive in your situation, a parent may decide to stay home. If that’s the case, try to live on one income for a few months to determine if that will meet your family’s needs.  

If living off of one income doesn’t work, consider how a parent staying home with children can continue their professional path in a different capacity, such as through freelance or part-time work.  

Reevaluate Your Financial Priorities

Being responsible for a child means you need to plan for their future if something happens to you. 

First, you should update your will to name a guardian for the child and make sure your assets are properly distributed.  

Second, you should consider taking out a life insurance policy to protect the family in the event of tragedy.  

Remember, the sooner you start a college fund the better, and don’t overlook your own retirement planning.  

By taking the reins of your family’s financial decision making, one day you can pass those good financial habits onto your kids while also having set them up for success.  

Get Started

If you are ready to expand your family, reach out to Farm Bureau to discuss preparations like a 529 plan for your child’s college savings, life insurance policies to ensure your family is protected and an emergency fund to handle unexpected expenses.

Want to learn more?

Contact a local FBFS agent or advisor for answers personalized to you.