And Baby Makes Three . . .

Guest Post by Brittney Castro, CERTIFIED FINANCIAL PLANNER professional
and creator of

According to a recent study by the US Department of Agriculture, estimated costs of raising a child born in 2010 through age 17 in a middle-income household is $286,860.1  Given this price tag, couples who are planning to become parents need to plan ahead. 

If you are about to start your family, here are some helpful tips to consider as you navigate through this new life stage.

Review your Spending Plan
As you can imagine, having a child definitely changes up your cash flow.  New expenses associated with having kids such as diapers, formula, and child care all need to be calculated and factored into your spending plan.  The goal is to make sure you can afford these additional expenses and still save for your goals.  Of course, some new sacrifices may have to be made, so it is important you and your spouse discuss what areas you can cut back on if need be.  As your children grow up, continue to review your spending plan on a regular basis to ensure you are keeping up with all the changing expenses of your child, i.e. child care, day care, school tuition, after school activities, etc.

Decide on Childcare
Is staying home to raise your children an option, or will you need to find childcare? About 55% of women return to work within the first 6 months of having a baby2, which means most women will have to factor in the additional costs of childcare into their spending plan.  Depending on where you live and what type of care you choose, full time day care for an infant can range from  $4,560-$18,773 annually!

You will also need to consider the legal aspects of hiring help.  Lisa Pierson Weinberger, attorney and owner of Mom, Esq. states, “Whether you're about to have or adopt a baby, thinking about childcare or preparing to return to work, there’s a whole range of employment-related legal issues to consider.”  She helps women in this stage understand the legal issues of childcare and ensures they are protecting themselves, their family, and their assets.  For more information check out her website,

Review your Health & Disability Insurance
Before you have a baby, make sure you understand how much of your childbirth costs are covered by your current health insurance plan.   Once your baby is born, make sure to add your child to your health insurance plan. Also, check your disability insurance to see if you get any benefits while on maternity leave.

Get Life Insurance
Now that you have brought your little bundle of joy into the world, you want to make sure they are protected financially if something should happen to you or your spouse.  Get life insurance to cover survivor income needs and ensure you are adequately covered based on your current financial situation and financial goals.

Adjust your Tax Withholdings
Now that you have just added another dependent to your tax situation, you will want work with your tax professional to confirm you are withholding the proper exemptions on your paycheck.

Claim all your Credits
Take advantage of all of the tax breaks available to families with children.  The child tax credit, adoption credit and childcare credit are some of the common credits now available to you.  All of these credits have special qualification rules so work with your tax professional to understand which ones, if any, apply to you.

Start a College Fund
Talk with your spouse about what your goal is for your child’s education.  Do you want to be able to pay for private K-12 schools, or save for their college costs, or both?  Now determine the potential cost of school and how much money you can realistically save toward their education goal. If you can’t maximize your own retirement savings and put away money for college, it’s more important to save for retirement, as loans and scholarships can help pay for higher education.  Consider opening up an education fund (Coverdell, 529, etc) and have family members contribute to these plans if you cannot.  Birthdays and holidays are a good time to re-direct any monetary gifts into your child’s education fund.  Work with a financial planner for more information of these types of accounts.

Get Estate Documents in Place
Work with an estate planning attorney to get the proper documents in place to name a guardian for your children and protect them in the event of your death.  You don’t want guardianship issues to be settled in court if anything happens to you.  Naming a guardian to care for your children after your gone is a very difficult choice, but once you know who you want to care for your children in the event of your death, you must get the proper documents in place.  Don’t procrastinate any longer, get your estate documents in place and protect your loved ones.

Teach your Children about Money
Include your kids in the family’s financial discussions as soon as they are old enough to understand, typically when they start school.  For younger kids, between 1-5 years old you can set up 3 piggy banks for their money; one for saving, one for charity and one for spending.  For kids ages 6 and up, you can begin to give them an allowance and treat it like a paycheck.  Every two weeks pay them their allowance and perhaps offer “bonuses” (more allowance money) for any additional chores they do around the house.  Then take them to the bank and open a savings account for them and encourage them to start saving 10-20% of their money. You can also decide to match any money they save on their own, just like an employer would match your 401k contribution.  This is a great way to show them how to strike a balance between saving and spending. Remember, a little financial education can go a long way to help shape them into financially savvy adults later in life.
USDA, Expenditures on Children by Families, 2010
U.S. Census Bureau. (2008, February). Maternity leave and employment patterns of first time mothers: 1961-2003. Retrieved April 15,2010. from
Data provided by Child Care Resource and Referral agencies in 2009/2010.
This post was contributed by Brittney Castro, CERTIFIED FINANCIAL PLANNERTM  professional and creator of  Brittney Castro, CFP® helps create a financial road map for a woman’s different goals in life.  She also educates clients on different options, enabling them to make smart decisions.  She has a passion for educating individuals on financial topics and speaks for various groups and organizations. Brittney Castro is available for speaking engagements, radio and telephone interviews, and other media appearances. Connect with Brittney at Brittney Castro is not affiliated with Rose Kesten Pondel, The Family Fomation Law Center or Kesten Law. Brittney A. Castro is a registered representative with and securities offered through LPL Financial, Member FINRA/SIPC.   California Insurance License #0F33895.