Parenting

8 Financial Tips I Wish I Knew As A First-Time Parent

March 20, 2025

From Budgeting For Baby To Saving For The Future – What I Wish I Had Known Sooner

Becoming a parent is one of life’s greatest joys—but it’s also one of the biggest financial wake-up calls. From hospital bills and diapers to childcare and college savings, the costs add up fast. When I first became a parent, I thought I had a decent handle on my finances, but I quickly realized there were so many things I didn’t know. (This is a sponsored post in association with Responsival).

If you’re a new or expecting parent, consider this your financial cheat sheet—the tips I wish I had known sooner to make life a little easier and a lot less stressful. From budgeting for baby expenses to taking advantage of tax breaks and planning for the future, these lessons can help you stay ahead financially while giving your child the best possible start in life. Let’s dive in!

1. Budget Baby Expenses Before Your Bundle Arrives

When I found out I was going to be a parent, I knew things would change—but I didn’t fully grasp how much those tiny socks and onesies would add up.

One of the best things you can do before your little one arrives is to create a realistic baby budget. Plan for all the expected costs you can think of: hospital and doctor bills, diapers, wipes, formula (if you plan to use it), and big-ticket items like your stroller and crib.

Budgeting ahead of time won’t eliminate all financial stress, but it will definitely help you feel more prepared when the expenses start rolling in. And trust me, they will roll in fast.

Instead of splurging on brand-new everything, look into second-hand options. Many items—like clothes, toys that can be cleaned, and some of your bigger-ticket items—are barely used before babies outgrow them. Check with other moms in your circle or buy/sell/trade groups for some of the things you need. It could save you lots of money.

2. Pad Your Emergency Fund Now

If there’s one thing I wish I had done sooner, it’s setting aside extra cash for the unexpected. Babies come with a lot of surprises—some adorable, like their first giggle, and some… not so much, like an unplanned doctor visit or a last-minute need for a different brand of formula that actually agrees with their tiny stomach.

You should have an emergency fund set aside to have some money stashed away for any surprise costs that don’t fit into your budget. A standard emergency fund should have between 3-6 months’ worth of essential expenses set aside in an account separate from your daily checking account. With a baby in the mix, you might want to give your emergency fund a little bit of extra padding.

If you don’t have an emergency fund set up yet, even a few hundred dollars set aside can make a huge difference. If saving a big lump sum feels overwhelming, try automating a small weekly transfer into a dedicated savings account—$10, $20, whatever you can afford.

3. Understand Your Health Insurance & Maternal/Paternal Leave Benefits

One of the biggest financial shocks for new parents is medical expenses. Even with health insurance, you’ll likely face out-of-pocket costs for things like prenatal care, labor and delivery, and newborn checkups.

Before your little one arrives, start by reviewing your plan’s deductible, co-pays, and out-of-pocket maximums so there are no surprises when the hospital bill arrives. If your employer offers an HSA (Health Savings Account) or FSA (Flexible Spending Account), take advantage of it—these accounts let you set aside pre-tax dollars for medical expenses, which can save you a lot in the long run.

Some employers offer paid leave, but many don’t—or they may require you to use vacation time first. Understanding your company’s leave policy (and whether you qualify for unpaid leave under FMLA) helps you financially prepare for those first weeks at home. If your leave is unpaid, plan ahead by saving extra to cover lost income.

A little research upfront can save you a lot of stress (and money) down the road. So before the baby comes, take some time to dig into your insurance details and leave options—it’ll be one less thing to worry about when you’re sleep-deprived and knee-deep in diaper changes.

4. Plan Early For Childcare Costs

If there’s one expense that really caught me off guard as a new parent, it was the cost of childcare.

Depending on where you live, full-time daycare can range from $800 to $2,500 per month—per child. A nanny? Even more. And if you’re considering an in-home daycare or a part-time option, availability can be competitive, and waitlists can be months (or even years) long. That’s why the best time to start planning for childcare isn’t after your baby is born—it’s during pregnancy.

Here are a few things I wish I’d known sooner:

Research early – Some daycare centers have waitlists that are longer than a pregnancy. Get on those lists as soon as possible.
Compare all options – Daycare centers, in-home daycares, nannies, au pairs, and even childcare co-ops all have different costs and pros/cons. Running the numbers ahead of time can help you make the best choice.
Factor in backup care – Even if you have a plan, kids get sick, daycares close for holidays, and unexpected situations pop up. Having a budget for occasional babysitting or family help can be a lifesaver.
Check if your employer offers any benefits – Some companies offer Dependent Care FSAs, which let you set aside pre-tax dollars for childcare expenses. Others may offer childcare stipends or discounts—always worth checking.

One of the biggest debates parents face is whether one partner should stay home to avoid daycare costs. While this can make financial sense in some situations, it’s important to consider the long-term impact—taking time off work can affect career growth, retirement savings, and financial security down the line.

5. Start Saving For College (Or Their Future) ASAP

When you’re knee-deep in diapers and late-night feedings, saving for college might feel like something you can put off. After all, your baby won’t need tuition money for another 18 years, right? But, the reality is: the earlier you start, the less you’ll have to save over time.

One of the best ways to prepare for your child’s future is by setting up a 529 College Savings Plan or a UGMA (Uniform Gifts to Minors Act) account—both great options, depending on your goals.

A 529 plan lets you invest money that grows tax-free and can be used for college, trade school, apprenticeships, and even K-12 tuition. Plus, family members can contribute, making it a great alternative to yet another pile of baby clothes. The earlier you start, the more time your money has to grow. The downside? 529 funds must be used for education—otherwise, you’ll face penalties for non-qualifying withdrawals.

A UGMA account is another great way to save for your child’s future, with fewer restrictions than a 529. Instead of being limited to education expenses, UGMA funds can be used for anything that benefits your child, such as a first car, housing, or even starting a business. The money is held in their name, and once they turn 18 or 21 (depending on your state), they gain full control over the account. UGMA accounts are a good option if you want to give your child a financial head start without locking the funds into education-only use.

6. Estate Planning Is Essential

Having a child means you’re now responsible for their future, even in situations you don’t want to think about. Without a solid estate plan, your loved ones could be left scrambling to make legal and financial decisions at an already difficult time.

A will outlines how you want your assets distributed and who should care for your child. If you don’t have one, state laws dictate what happens to your money, property, and belongings—which might not align with your wishes.

Naming a legal guardian for your child is the most important step when creating a will. If something happens to both parents and you don’t have a guardian legally named in a will, the courts will decide who raises your child. That process can be messy, time-consuming, and may not align with your wishes. Choosing a guardian now ensures that your child is raised by someone you trust.

No one wants to think about worst-case scenarios, but estate planning is about protecting your child and making things easier for your family. It ensures that they are cared for by the right people, that financial assets are handled responsibly, and that your wishes are honored.

7. Take Advantage Of Tax Breaks

Between diapers, childcare, and doctor visits, every dollar counts—and taking advantage of all the tax benefits you can helps you keep more of your hard-earned money.

When tax season comes around, check the IRS website to understand what tax credits and deductions you may be eligible to use.

8. Invest In Your Future Too

It’s easy to put all your money toward your child’s needs, but your financial stability is just as important. A strong financial foundation means you won’t have to rely on them later in life, and you’ll be able to offer them more opportunities along the way.

One of the biggest mistakes new parents make is cutting back on retirement savings to cover immediate costs if they don’t have to. While it’s tempting to divert money toward baby expenses or a college fund, remember: there are loans for college, but there are no loans for retirement. Keep your own financial goals in mind, and come up with a plan to get yourself there.

Whether you’re preparing for your first baby or adjusting to life with a growing family, every smart financial move you make today will pay off down the road. Start small—set up that emergency fund, research tax breaks, save a little for your child’s future, and don’t forget to invest in your own future too. Parenthood is unpredictable, but having a solid financial plan in place can make all the difference.

This is a sponsored post in association with Responsival