Your New Baby Financial Checklist: 6 Things to Do Before Your Baby Arrives

Stacie Dobbe is a senior advanced planning attorney with Northwestern Mutual.

As you prepare for the arrival of your baby, things like a new car seat, cute baby outfits and the perfect paint job for the nursery are clearly important—and fun to pick out. But there are other equally important tasks that may not be at the top of an expectant parent’s mind—or the kind of things that will wind up on a baby shower registry.

In between picking out paint colors and folding new baby clothes, it’s a good idea to complete a new baby financial checklist. That way, when your baby arrives, you’ll have one less thing keeping you up at night.

Update your budget

Why it’s important: A new baby comes with expenses that you likely haven’t had to factor in before. You’ll need to plan for recurring costs, like diapers and child care. You’ll want to check your budget or complete your first one. A budget can make it easier to stick to the necessities while also leaving room for fun expenses, like that mom-and-baby yoga class you’ve had your eye on.

What to keep in mind: If you’re part of a two-income household and you or your partner plans to cut back on work hours, your revamped budget will need to account for the decrease in take-home pay. To prepare yourself, consider doing a test run of your reduced income before your baby arrives. If possible, put the second income into an emergency fund to give your savings a boost.

If one parent stays at home, your financial advisor can be a great resource to work through how to afford being a stay-at-home mom or dad. Your advisor can also help you keep your eye on the long game, making sure that you don’t sacrifice future goals, like planning for retirement income.

Evaluate your health insurance

Why it’s important: As an expectant parent, you already know the importance of health insurance for both prenatal care and hospital delivery costs. And once your baby arrives, they will need coverage for doctor visits and any other health concerns that may arise.

What to keep in mind: Review your health insurance and compare it with your partner’s to determine which is best for your growing family. When comparing insurance, run some numbers on deductibles, co-pays and out-of-pocket maximums to see if there’s a significant difference between your plan and your partner’s plan. If you really like a particular doctor, make sure they're in the insurance network.

If you and your partner currently have separate health insurance, sometimes it can make financial sense to switch the whole family to one.

Normally, you’re able to make changes to your health insurance plan and coverage only during open enrollment. But having a baby counts as a qualifying life event, so you can make changes outside the enrollment period when your baby is born. You typically have 30 to 60 days to name your baby on your health insurance coverage after the birth, so check with your insurance company to ensure you don’t miss the deadline.

Get life insurance

Why it’s important: If you think newborns are expensive, just wait until you get a look at the grocery bill for a teen. Kids bring with them a never-ending litany of expenses—from club sports and summer camp to (gulp!) college costs. If you were to pass away, having life insurance can help make sure your family has the right financial support.

What to keep in mind: While there are different types of life insurance, the two most basic types are permanent and term. In a nutshell, permanent life insurance never expires (so long as premiums are paid) and will accumulate a cash value over the course of your lifetime, while term insurance covers you for a finite period of time. Because the two types tend to serve different roles in a financial plan, many new parents choose a mix that includes a small permanent policy and a larger amount of term insurance.

If you aren’t sure how much life insurance you’ll need, this calculator is a good place to start. Then talk with your Northwestern Mutual financial advisor to find the best options for you and your family.

Your advisor might suggest considering life insurance on your baby (and other children). At first this may surprise you—after all, your baby won’t have dependents or significant income to replace if they were to pass away. But there are benefits that could make a lot of sense, like protecting their future insurability and the potential to build cash value.

Review your estate plan, including your will

Why it’s important: You might think that wills and estate plans are meant only for people who have vast amounts of resources. But they should be much more common. If a devastating tragedy were to occur, estate planning can ensure your wishes are clear for custody of your child and management of money you pass to them. Without one, a court will make all those decisions.

An important part of an estate plan is a will. You can designate guardians for your child and help ensure their financial and emotional well-being in the event of your untimely death. Review your will with your attorney and discuss how you might need to update it.

What to keep in mind: As a new parent, it’s important to name a guardian to take care of your child should you pass away. You can also name the beneficiaries of your estate and write in conditions to ensure your assets are used the way you intend. Both a will and trust are crucial elements of estate planning. As part of your estate plan, you can name who becomes your child’s guardian, where your child lives and who manages the assets you leave for them.

Apply for a Social Security number

Why it’s important: While it’s voluntary to get your newborn a Social Security number, they’ll need one for you to begin their financial life, including:

• Naming them as the beneficiary of an education savings plan like a 529
• Opening a custodial account, such as a Uniform Gifts to Minors Act (UGMA) or custodial Roth IRA
• Claiming the newborn on your taxes as a dependent—which can reduce your taxes

What to keep in mind: You can apply for a Social Security number for your baby as soon as they’re born. You’ll likely be asked if you want one at the hospital when you provide information for your baby’s birth certificate, and that’s the easiest way to take care of it. If you don’t receive the paperwork at that time, you can request a number online. Or you can visit your local Social Security office.

Consider setting up a 529 account

Why it’s important: A tax-advantaged plan like a 529 education savings plan can be a smart way to save for college. It is unique because it can be used to cover college costs as well as any qualified education expense, including K-12 school costs. An education savings plan grows tax-deferred and has a $2,000 yearly contribution limit that is subject to certain restrictions.

What to keep in mind: Higher education is costly, so the earlier you start saving, the longer the funds will have time to grow. And while it’s impossible to predict where—or even if—your new bundle of joy will attend college, a 529 account is still worth creating. It may be more flexible than you think. For example, if your child doesn’t end up attending college, you can make another person the beneficiary of the funds. And thanks to the SECURE Act 2.0, qualified “leftover” 529 account funds can be transferred to a Roth IRA without incurring any taxes or penalties.

Adding a child to your family is an important step that comes with many moving pieces. The good news is you don’t have to prepare alone. Your Northwestern Mutual financial advisor can talk you through a solid plan to help support your growing family.

Their expertise will help you plan for the baby’s arrival and the years to come. They can help you navigate the complexities of growing and protecting your wealth, so you can focus on what really matters—welcoming your new addition.