Financial moves for a growing family

Long version

If you’re adding a child to your family, it’s an exciting time, and you have much to anticipate. Of course, this new addition will bring many changes in your life, so you’ll want to be prepared — especially in terms of your finances.

What financial moves should you make as you welcome your new child? Here are a few to consider:

  • Estimate expenses — and create a new budget. You will likely have several new expenses associated with a new child, ranging from relatively minor purchases — car seat, stroller, crib, etc. — to potentially much larger costs, such as a vehicle with more space or even a new home. You’ll need to estimate what you can afford for these initial expenses and then work in to your budget the everyday additional costs — food, clothing, uncovered medical expenses and so on.
  • Look at options to support taking time off work. Depending on where you live and where you work, you might have some sources of support if you take time off from work after the arrival of your child. These options may include paid time off — such as sick leave and vacation time — paid family leave, short-term disability insurance, and some benefits from the Family Medical and Leave Act.
  • Determine how child care will be provided. Child care can be expensive and, in some areas, hard to find. Well before the arrival of your child, start looking for child care, so you can explore your options and start factoring in the costs to your cash flow and monthly budget. During your search, look at offerings from local community centers, religious institutions and nonprofit organizations, some of which may offer low-cost child care programs.
  • Contribute to your emergency fund. It’s generally a good idea to keep up to six months’ worth of living expenses in a liquid, low-risk account to pay for unexpected costs — and with a growing family, these costs may well increase as your child grows older.
  • Look at your tax situation. You may want to consult with a tax professional to determine whether you qualify for credits or deductions, such as the dependent care credit, the federal child tax credit, and adoption-related credits (if you adopted a child). Also, you may want to update your Form W-4 to add a dependent — a move that may lower your tax withholding and increase your take-home pay.
  • Start your education planning. It’s never too soon to think about paying for costs associated with your child’s education. You might want to consider a 529 education savings plan, which offers tax benefits and can be used for college and many vocational programs, as well as some K-12 costs. A financial advisor can help you explore all available education savings options.
  • Check your insurance. You’ll need to add your child to your existing health insurance, but if you don’t have insurance, see whether you qualify for Medicaid or the Children’s Health Insurance Program (CHIP), or look for a marketplace plan at healthcare.gov. You might also need to purchase additional life insurance coverage. And with a growing family to support, you might want to add disability coverage to protect your income against short- or long-term disabilities.

Bringing a new child into your life is certainly a joyous occasion — and by being financially prepared, you can make the whole experience even more enjoyable.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Number of words: 550

Short version (radio/print/online)

PSA: Financial moves for a growing family

TBA: May 5, 2025

If you’re adding a child to your family, it’s an exciting time, but you’ll want to be prepared — especially in terms of your finances. So, consider these moves:

First, estimate what new expenses you’ll incur and plug these figures in to your budget. And look at what support you might get, such as paid family leave, for taking time off work.

As early as possible, look around for a child care provider. Child care can be expensive, but you might find low-cost options from local community centers, religious organizations and nonprofits.

You may want to build an emergency fund to cover six months of living expenses, with the money kept in a liquid, low-risk account.

And contact your tax professional to learn about the dependent care credit and the federal child tax credit.

Also, think about education planning. Among other options, consider a tax-advantaged 529 education savings plan.

You’ll want to add your new child to your health insurance plan or obtain a new plan. You might also need to add to your life insurance and get disability coverage.

Bringing a new child into your life is joyful — and by being financially prepared, you can make the whole experience even more rewarding.
    
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