How to financially prepare for a new baby

If you’re reading this, this might mean that there will be a new addition to your family, and congratulations are in order! We’re covering the financial ins and outs of having a baby, from before they’re born to when they arrive, to financial adjustments once you all get settled in your new routine.


Pre-baby expenses

There’s a lot to think about while you financially prepare for a baby, and one of those things is the hospital delivery bill. Hospitals have a list that shows prices for services called a “chargemaster.” The prices on that chargemaster are the rates that will appear on your bill before your insurance steps in. After the insurance steps in and negotiates new rates based on your plan, you’ll see new rates on your bill known as the “allowed cost.” Generally, hospital costs vary from state to state. 


Hospital delivery

Whether you have your baby vaginally or through a C-Section can also impact the cost. A C-Section is more expensive because the expense of an operating room needs to be accounted for along with other general surgery costs. 



According to the U.S. Department of Health and Human Services, if you choose to become a new parent by adopting, the cost can be anywhere between $20,000 and $45,000. The benefit is that an agency is a full-service option which means the expenses are built-in. This includes the legal fees, the medical costs, and the home visit, which is a huge plus. However, make sure you get written documentation of all fees to fully understand what is covered and included. If you’re looking for a more cost-effective option, independent adoption may be best. Independent adoption is where the expecting mother and adopting person(s) find each other organically, eliminating the lofty agency fees altogether. 



The cost of in vitro fertilization (IVF) can be broken down into the procedure itself, including egg retrieval, fertilization, and transferring the fertilized egg, and the medication taken afterward. The average cost of the overall process and medication is around $18,000. In addition, some people want to get genetic testing to ensure that the embryo is healthy, which can range between $1,500 to $3,000. 



Surrogacy costs that do not include the IVF process can range from $60,000 to $125,000, which can be broken down into agency fees and variable expenses. Legal services, medical expenses, and surrogate compensation are three of the most expensive variable costs in surrogacy.


Parental leave

Under the Family and Medical Leave Act (FMLA), certain employees can receive twelve weeks of unpaid maternity or paternity leave. Some companies offer paid leave, however, if your company does not, it may offer short-term disability insurance, and pregnancy is considered a pre-existing condition. Typically, short-term disability insurance does not start until about two weeks after a new parent gives birth, and you don’t receive your entire paycheck. Still, it’s better than not receiving any compensation during your maternal or paternal time away. So talk to your employer about your options as soon as you can. That will give you more time to figure out how much money you will need to supplement your income until you go back to work if you decide to do so.


3 financial tools to help you automatically save before baby arrives

It may sound far away, but it’s a great idea to begin saving for your child’s college tuition before they are born as well. There’s a lot of automated tools that can be used to help you save automatically. There is also the 529 plan which is a tax-advantaged savings plan designed to help pay for education.


Paycheck Auto-Save

Automate your baby savings goals by automatically saving up to 10% of your paycheck direct deposit (up to $1,000 a month) while earning 3.00% APY*.


Card Auto-Save

Save a little for your baby every time you spend with your One card. Every purchase is rounded up to the next dollar then automatically transferred from your Spend Pocket into your Auto-Save Pocket. In addition, you’ll earn unlimited 3.00 APY* on your One card round ups.



Arrival expenses

Everyone’s childcare cost differs depending on how many people in the household are working and where you live. Your childcare costs can also vary based on your child’s age, the length of time you need childcare and the type of care you’re looking for. In 2020, the average cost of childcare for one child was $612 a week for a nanny, $340 a week for a daycare center, and $300 a week for a family care center. Since the COVID-19 pandemic, those costs and the need for childcare have continually increased.

While the expenses differ depending on location, all babies need food, clothing, and diapers. Babies are constantly growing, which means creating a monthly budget may be the best idea. The general consensus is that new parents should estimate to spend around $50 a month on clothing for the first year, but naturally, you can change that number depending on your finances and desires. 

Before babies eat solid food, they will get most of their calories from formula and/or milk. The average budget for food is estimated at around $75 a month, depending on brand and dietary needs. 

Diapers vary in cost depending on the brand and the amount you buy, but the average amount you should plan for in your budget for diapers is around $75.


2 financial tools to help you plan for baby’s expenses


Scheduled Transfers

Automate your baby budget by creating a schedule of how much money automatically transfers between two Pockets or between a Pocket and a linked bank account. Scheduled Transfers can be set to recur daily, weekly, every other week, monthly, last day of the month, or triggered by a qualifying paycheck direct deposit.


Shared Pockets

Share Pockets are a great tool to pool money with people (or your partner) in your life. Anyone who joins the Shared Pocket will be able to manage the funds in the Pocket. Create and share Pockets to budget, spend or save together!

Pro TipInvite your friends and family to One and you’ll both earn a $50 bonus!



After everyone is settled

Becoming a new parent means that you also need to add your baby to your health insurance and any financial planning documents. One of the first steps you should take is adjusting your beneficiaries through all of your insurance policies. First, consider starting with your health insurance policy. This is important to do because your child can be covered directly under your employer’s insurance.

New parents should also consider updating their trusts, wills, and beneficiary designations. Some may argue that this is premature; after all, your baby is still a baby, right? However, it would help if you were cautious because failing to update these policies can unintentionally disinherit your child from receiving your assets in the future. Imagine working hard every day to provide a living for your child only to realize that you never took the time to make them a beneficiary? It sounds scary, but it often happens.

To further hedge against this, new parents should add their child to all bank accounts under a payable on death form (POD). The same can be done for investment accounts through a transfer of death from (TOD). Doing so will allow assets to pass on without the cost, delay, or lack of privacy, which typically occurs when undergoing the probate process. 

Taking this route can be cheaper than opening up a trust, but a financial planner or advisor can help guide you through this process. Not completing a beneficiary form can also send your retirement accounts directly through your estate. Your child could be subject to federal estate tax, which means they will lose out on many tax benefits. It can also result in your child having to pay up to one-sixth of your estate’s value in taxes. 

Aside from beneficiary forms, new parents can also add more coverage to their insurance policy altogether. If you’re a new parent, take a moment to consider purchasing term insurance which can be used to support your child until they’re old enough to live on their own. Term insurance benefits can get paid directly to your child when you pass away. Depending on your employer, you may also be able to add additional life insurance without having to conduct any medical exams for your child.  


2 financial tools to help cover ongoing child expenses


Early Paycheck

Automatically get paid up to two days earlier when you add your paycheck direct deposit to your One account.**


Fee-Free Credit Line

Qualifying paycheck customers can access a fee-free line of credit at One. Easily borrow money to cover bills between paychecks or pay for a baby expense over time. There is no interest when repaid within the month you borrow. If you need to carry a balance, you’ll only pay 1% interest a month, 12% APR⁑ .


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