10 Financial Moves To Make When You Have A Baby

Johnson Rhett

So you just had a baby? Congratulations! The birth of a child brings joy, but also introduces all kinds of new decisions to consider. Daycare or stay-at-home parent? Which pediatrician to use? How will your daily routine change?

One of the biggest changes is financial. A child changes your priorities, increases expenses (worth it!), and long-term planning becomes more important than ever.

 

So, what are the things you should consider doing first?

 

Here are 10 financial moves to make when you have a baby:

 

1. Get Your Child’s Social Security Number 

You’ll need your child’s SSN to open accounts, complete tax forms, and lots of other important financial tasks. Most hospitals help you apply automatically - just confirm the paperwork is completed.

 

2. Update Your Health Insurance 

Most insurers give you 30 or 60 days to add your new child to your policy. Coverage is usually retroactive to the date of birth, but only if you enroll within that window. You do not want to miss this "qualifying event” window because then you might be stuck paying all of those expensive hospital delivery bills out of pocket.

 

3. Review Your Hospital Bill 

Labor and delivery can be expensive, especially if you have a High Deductible Health Plan (HDHP) or a large out-of-pocket maximum. But, good news, the sticker price isn't always final. Make sure you’re getting the best price possible by doing the following:

  • Audit the Charges - Before you pay anything, ensure the bill is 100% correct. Ask for an itemized bill with every service broken down. Medical costs are often lumped together in general categories, making them hard to figure out. Seeing the line items helps you verify that the charges are legit.
  • "Pay-in-Full" Strategy - Once you know the bill is accurate, ask for a pay-in-full discount. Many hospitals will offer a discount ( typically 10–20% ) if you settle the entire bill immediately rather than paying it off over time. This often yields big savings! 

4. Create or Update Your Estate Documents 

Getting your estate documents in order isn’t very exciting, but it’s a must. Here are a few things to consider:

  • Designate a legal guardian. Without a will, a court decides who raises your child if something happens to you.
  • Name a trustee to manage money left for your child. This prevents a minor from receiving a large inheritance outright at age of majority (typically age 18, or age 21 in MS).
  • Set up a power of attorney (POA). This allows someone to handle your finances if you’re incapacitated.
  • Create Healthcare directives. These documents help ensure that your medical wishes are followed.

5. Look into Flexible Spending Accounts (FSAs) 

FSAs allow you to pay certain expenses with pre-tax dollars, which can lower your overall tax bill. Two types to consider are:

  • Healthcare FSA: Pre-tax account that you can use for healthcare expenses, such as pediatrician visits and prescriptions.
  • Dependent Care FSA: If you’re going back to work, this allows you to pay for childcare with pre-tax dollars, which can create tax savings.

If you know these expenses are coming, using pre-tax dollars is an easy way to reduce your tax bill.

 

6. Update Your Life Insurance Coverage 

When you have a child, your financial responsibilities increase. Make sure your life insurance would cover the costs of raising your child, including childcare, education, daily expenses, etc. The 1x or 2x salary term life insurance provided through your employer may not cut it anymore.

 

7. Build or Increase Your Emergency Fund 

A newborn can bring surprise expenses such as medical visits, childcare changes, or time away from work. Make sure your emergency fund is up to par to cover these types of things.

  • Not sure how much your emergency fund should be? HERE is an in-depth blog to help you determine the right amount.

8. Revisit your budget 

Maybe wait to do this a few months in, not right at the beginning when you’re just trying to keep your head above water. Expenses evolve as your child grows. New costs can include: childcare, health insurance premiums, college savings, diapers, and much more.

 

9. 529 Accounts 

Education is expensive and seemingly only getting more expensive. If you want to begin saving for your child’s future education (K-12 or college), opening and funding a 529 account can give your child a financial headstart.

Contributions grow tax-free when used for qualified education expenses, making it a powerful long-term savings tool.

 

10. Consider Trump (Government “Seed”) Accounts

 

You’ve probably heard of these accounts by now but might not know the details.

 

Here’s the gist:

  • These accounts are a hybrid between an UTMA and an IRA.
  • Children born between 01/01/2025 - 12/31/2028 are eligible for $1,000 of government “seed money” deposited into an investment account in their name. The idea is to give kids a financial headstart and allow the money to compound over time.
  • Think of it like a free 401k match for your child, the $1,000 is “free money” and you should likely take the steps to take advantage of this.
  • Details are still being worked out, but you can now sign up for these accounts HERE.

TLDR?
New Baby Financial Checklist

 

  1. Get your child’s Social Security number
  2. Add baby to health insurance
  3. Review hospital bills
  4. Update will and guardianship
  5. Review FSAs
  6. Review life insurance
  7. Build emergency fund
  8. Adjust budget
  9. Consider 529 account
  10. Consider Trump seed account

 

Having a baby is one of the greatest joys in life. They also bring about a new set of financial responsibilities. Keep these steps in mind to stay on top of your money. We’re here to help if you want guidance on how to put any of these ideas into practice.

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Johnson is a fee-only, fiduciary financial advisor with Asset Dedication LLC, DBA Branning Wealth Management. He provides hands-on, practical financial advice for millennials and young families. He is a board member of the Financial Planning Association of Mississippi.

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