Having a baby: a money checklist

Resources · Life and money · 5 min read Building

Key points

• The biggest money change is often lower income during leave, not baby gear.
• Work out your leave pay early and plan for any gap.
• Many baby costs can be spread out, borrowed or bought second-hand.
• Update insurance, beneficiaries and important paperwork once the baby arrives.

Start your baby money checklist with income, not shopping

Most people start a baby money checklist with the shopping. Cots, prams, nappies. Those things add up, sure. But for a lot of families the bigger change is quieter: income drops while one or both of you take time off.

Parental leave rules differ a lot from place to place. Some countries pay leave through the government. Others lean mostly on employers, or on regional rules, and the amounts, eligibility and time frames vary widely between places like the US, UK, Canada and Australia.

So find out early. These are the questions to get answered:

• How much leave you can take, and how much of it is paid.
• Who pays it, and when payments start.
• Whether pay is full, partial or a flat amount.
• Whether you need to apply in advance, and by when.

Work out the gap

Once you know your leave pay, the shortfall is easy to see.

Example. Say one parent normally brings home $2,400 a month. During leave, they’ll receive half that, $1,200 a month, for three months.

The gap is $1,200 a month × 3 months = $3,600.

If you have six months before the leave starts, saving $600 a month would cover that gap. The same maths works in any currency.

Longer leave, or leave that turns unpaid after a certain point? Run the numbers for each stage separately. Don’t lump them together and guess.

The checklist

Before the birth

• [ ] Check your leave entitlements at work and from the government.
• [ ] Build a budget for life with a baby. Put in the lower income and the new costs.
• [ ] Set aside a buffer for the leave gap if you can.
• [ ] Check your health cover. Find out what pregnancy, birth and newborn care will cost you, and what’s covered. In countries with private health insurance, waiting periods may apply.
• [ ] Look at your debt repayments. Can you keep them up on the lower income? If not, free debt help is available and confidential.
• [ ] Decide what you really need to buy. More on this below.

After the birth

• [ ] Register the birth. You’ll usually need it for everything else.
• [ ] Apply for any family payments or tax benefits. Many countries offer child-related payments or tax credits. Some have to be claimed within a set time.
• [ ] Add the baby to your health cover if needed.
• [ ] Review life insurance. With someone depending on you, plenty of parents take a second look at how much cover they have.
• [ ] Write or update a will. Naming a guardian for your child is one of the main reasons parents do this.
• [ ] Update beneficiaries on retirement and insurance accounts.

Later in the first year

• [ ] Plan for childcare costs if you’re both going back to work. They can be large, and waiting lists can be long.
• [ ] Rebuild your budget once you’re back at work and know your real costs.
• [ ] Think about saving for the future. Some countries have tax-advantaged accounts for children’s education. Rules vary widely.

Spending less on baby gear

Babies need less than the marketing suggests. At least at first.

Clothes and some equipment get outgrown fast, so second-hand makes a lot of sense there. Friends and family often have things sitting in a cupboard they’d happily lend you. And plenty of items turn out to be unnecessary once you know your baby and your routine, so it pays to wait and see. Before the birth, write a short list of essentials and stick to it.

Safety is the exception. Car seats and sleep products have safety standards that differ by country. Many people buy these new, or check carefully that second-hand ones meet current standards and haven’t been damaged.

Talk about money as a couple

A new baby changes how money flows through your house. If one of you earns less for a while, talk about how you’ll share money during that stretch. Do it before the baby comes, not at 3am. Talking about money with a partner has ideas for getting started.

Some couples pool everything. Others keep a mix of shared and personal money. What matters is that you both feel the arrangement is fair.

Common questions

How much should you save before having a baby?

That depends on your leave pay and your costs. A good starting point is the gap between your normal income and your leave pay, then save toward it. In the example above, a $1,200 monthly gap over three months came to $3,600.

What paperwork do you need after having a baby?

The usual steps are registering the birth and applying for any family payments or tax benefits. After that, add the baby to your health cover and update your insurance, will and beneficiaries. The details vary by country.

Do you need to buy everything new for a baby?

No. Lots of people buy second-hand, borrow, or wait and see what they actually need. Car seats and sleep products have safety standards, though, so many people buy those new or check them carefully.

Try it

Use the budget calculator to plan your months on leave. Then try the savings goal calculator to see how long your leave buffer will take to build.

General information only, not financial advice. Your situation is your own.