Search
line drawing document and pencil

File a claim

Need to file an insurance claim? We’ll make the process as supportive, simple and swift as possible.
Illustration of person sitting at laptop

Need advice?

The best financial guidance should focus on your personal goals and dreams. And that takes a personal connection.
Illustration of stairs and arrow pointing upward

Contact support

Can’t find what you’re looking for? Need to discuss a complex question? Let us know—we’re happy to help.
Use the search bar above to find information throughout our website. Or choose a topic you want to learn more about.
Insights & guidance
Financial planning

A 7-point financial checklist for new parents

Young Asian father with baby grocery shopping for fresh vegetables in supermarket
Young Asian father with cute little daughter grocery shopping for fresh organic vegetables in supermarket
d3sign/Getty Images

The cost of raising a child to age 18 is rising: The United States Department of Agriculture, which has charted this number since 1960, estimates parents will spend approximately $284,570 on food, shelter, and other essentials. What’s more, this estimate can escalate beyond the government average, based on your individual education, child care and health care choices.

“So much of preparing for parenthood is joyful—and there’s a lot of uncharted territory, no matter how much you plan. But the great part is that there’s a framework of best practices for taking care of the more practical aspects of having a child,” says Clint Jasperson, wealth advisor at Thrivent.

By planning carefully and following these seven steps, you can take much of the guesswork, sticker shock, and drama out of parenthood and enjoy this exciting new stage of life.

1. Determine your first-year baby expenses.

Whether you are having your own child or adopting, you’ll need to consider these key one-time baby expenses. Though amounts will vary depending on your situation, thinking through the categories below can get you heading in the right direction.

Account for prenatal care, including doctor visits and procedures.

Even with health insurance, you’ll still need to keep track of prenatal medical costs. Charges for visits to your obstetrician, laboratory testing and certain procedures are considered either routine or diagnostic. Your insurance company will usually pick up the total cost of routine maternity visits and tests. However, if you need a diagnostic procedure for any reason, your out-of-pocket contribution depends on your insurance company’s classifications and your deductible.

Estimate your out-of-pocket hospitalization and delivery amounts, and postpartum health care.

The average out-of-pocket cost of giving birth in a hospital can range from $1,000 to $2,500, depending upon where you live. Postpartum health care, including checkups, tests and counseling as needed, is another substantial expense costing about $3,100 for the first year.

Research adoption costs.

Depending on whether you’re adopting a child from foster care, or arranging an international adoption, you can spend as much as $48,000 out-of-pocket. Be sure to talk with your accountant about your potential eligibility for the IRS’s Adoption Tax Credit1.

Determine if you’ll need temporary care at home.

During the first months of caring for your baby at home, you may consider hiring a “night nurse” so you can get some rest. In a typical eight- to 12-week scenario, this can cost $200 to $250 per night.

Calculate essential first-time purchases.

This baby cost calculator can help you zero in on first-year expenses. Major costs the calculator accounts for include:

  • The nursery (est. $1,665): A crib, bedding, bassinet and other furnishings
  • Kiddie transport (est. $1,485): Car seat(s), strollers, backpacks and diaper bags
  • Feeding ($134 to $591): Eating utensils, high chair and other equipment, if breastfeeding
    gold line
So much of preparing for parenthood is joyful—and there’s a lot of uncharted territory, no matter how much you plan.
Clint Jasperson, Thrivent wealth advisor

2. Create the right mix of life, health and disability insurance.

Plan for your new family’s continued well-being in case you experience a chronic illness or debilitating injury, or if you’re no longer there to provide for them. Protecting your expanding family means choosing the mix of insurance plans that best suits your anticipated needs for at least the next 18 to 21 years. You should:

Update your health insurance coverage.

You usually have up to 30 days following a birth or adoption to add your child to your healthcare plan at work. Then be sure to revisit your coverage during the next open enrollment season. Be sure you know your deductible, your share of the coinsurance, and your out-of-pocket maximum, and dial these numbers up and down as needed. You can also consider opening a pre-tax health savings plan (HSA) or a flexible spending account (FSA) to cover qualified medical expenses without tapping into your emergency fund.

Consider getting a life insurance policy.

“The reason why you buy life insurance isn't necessarily to make sure that your family is comfortable in the event of your death. Rather, it reflects the responsibility that we have to provide for the people we care about, which is an important part of stewardship” says Jasperson.

If your employer-sponsored life insurance isn’t enough to ensure that your children will have what you want them to in your absence, a term policy can be a cost-effective solution, or you may want to explore your options with a whole life policy—but how much coverage is enough? This life insurance calculator can get you ready for a chat with your financial professional on that topic. Also, be sure to discuss the several advantages of getting a juvenile policy for your child now. Doing so can lock in lower premiums well into the future, while also guarding against future health issues which could make them uninsurable.

“Insuring your children perpetuates the concept of stewardship. You’re giving them a tool they’ll eventually manage on their own when they become young adults and begin to role model stewardship to their family” says Jasperson.

Look into adding disability insurance.

An employer’s short- and long-term disability policies differ in their total coverage. Short-term disability typically covers a little less than six months of an employee’s annual income; long-term disability will usually cover you for the duration of the disability or to retirement, depending on the circumstance. By securing additional short-term coverage, you may get up to somewhere between 70% and 80% of your income replaced. And don’t forget that the essential childcare and home management services that a stay-at-home parent provides would be costly to replace, so cover them too.

gold line

3. Revise your household budget.

Before you plan any additional spending, assess your current financial profile. You can use this personal cashflow worksheet to determine your current household income and expenses, including debt.

Identify potential changes in your household income and expenses.

If either you or your spouse is considering taking an unpaid job hiatus to care for the baby, or you’re receiving a portion of your income in short-term disability payments, factor that in: It may be time to cut back on some non-essential expenses—everything from your soap-of-the-month club subscription to the lake-house rental that may not be so practical anyway.

Build or revisit your emergency fund.

It’s more important than ever to prepare for an unexpected financial downturn. And it’s equally as important to prepare for the worst, while not neglecting other financial obligations, such as paying down debt, buying life insurance, and getting your employer’s 401(k) match. You can spread your emergency funds among interest-bearing checking or money market accounts, certificates of deposit, among other relatively conservative, liquid investments.

Be sure to consider the level of risk in the careers of either or both you and your spouse. “How volatile is your field of work?” says Jasperson. “If you’re working for a tech startup, for example, versus the federal government, you should evaluate how much you need in an emergency fund differently.”

Discuss future child care costs (e.g., a nanny or pre-school).

Childcare annual costs can range from $5,000 to more than $24,000. With this in mind, some families may have one parent stay home to save money.

Once you figure out your household budget, you can protect yourself from unexpected circumstances and feel more secure about the future.

gold line

4. Plan now for college expenses.

How much will you support your child’s higher education? That depends on your family’s values and traditions. For some, providing a college education is a must. Others may have a different take on this level of support.

“Maybe the goal isn't to try to save for all $300,000 a college education, but rather to provide enough flexibility so that you can provide some support, regardless of what that path looks like,” says Jasperson. Regardless of how much you are willing or able to commit, here’s what to consider:

Establish pre-college and college-education expectations.

With only 18 years to go, there’s no time like today to get started on a college savings plan. But how much will your child need? Use this college savings calculator to get started on answering that six-digit question, then consider talking with your financial professional about savings and investment options. As you assess your situation, you may want to:

Research these education-related investment and savings options.

  • 5292 and Coverdell plans. These tax-advantaged accounts let you pay for qualified college, K-12 or apprenticeship expenses.
  • A UTMA (Uniform Transfers to Minors Act) or UGTA (Uniform Gifts to Minors Account) is a custodial account that lets you transfer investments to your child tax-free.
  • Whole life insurance. This may seem out of place on this list at first. But should you pass away, this coverage offers the security of tax-free education funds.

Account for contributions from grandparents, scholarships and other sources.

Every bit helps. For example, a $500 annual gift from a grandparent for 17 years, growing at 4% to 6% compounded annually, can give your child $19,751.07 toward school expenses.

College savings plans cannot and should not shortchange your retirement plan.

“Logically, you should save for retirement first,” says Jasperson. “But it’s about more than the ‘pencil math’. Deciding how much you plan to provide for your children's education versus your future self in retirement is a trade-off that involves heart math, all in the context of your responsibilities as a steward.” Contributions to your 401(k) or IRA can ensure your entire family’s wellbeing for years to come.

gold line
Deciding how much you plan to provide for your children's education versus your future self in retirement is a trade-off that involves heart math, all in the context of your responsibilities as a steward.
Clint Jasperson, Thrivent wealth advisor

5. Consider potential tax benefits.

Recent allowances for parents in the CARES and SECURE Acts can have a positive impact on your tax profile. Talk with your accountant and financial advisor to find out more, and be sure to:

Take advantage of CARES and SECURE Act tax-code provisions, as well as ongoing deductions.

Claim new-child tax credits and deductions. For example, a provision of the SECURE ACT lets parents withdraw up to $5,000 from retirement accounts, penalty-free, within a year of birth or adoption for qualified expenses. Also, if you meet certain criteria, the Child and Dependent Care Credit can cover 20% to 35% of eligible expenses, depending on your income.

Update your withholding amounts.

You’ll need to adjust the number of dependents you’re now claiming on the IRS Form W-4 since you’ve become eligible for child-related tax credits.

Look into an FSA through your workplace.

Opt for a flexible spending account (FSA) through your workplace, which lets you set aside up to $5,000 per year tax-free for qualified child care expenses. Another alternative is the Dependent Care FSA (DCFSA), which cover eligible child care expenses through your tax-deductible contributions.

Review IRS Publication 503 – Child and Dependent Health Care Expenses for more information. While Thrivent financial professionals cannot provide tax advice, they can partner with you and your tax attorney on tax-efficient financial strategies.

gold line

6. Update, organize and share your legal and financial documents.

In the flurry of preparation for a new addition to the family, it’s easy to lose track of your most important papers. Here’s what you can do:

Create and update these essential documents:

Powers of attorney. 

This designation allows a designated family member or friend, or your attorney to make decisions and take actions on your behalf, should you become incapable to do so.

Health care proxy. 

Determine who will act on your behalf if you become unable to communicate your wishes.

Beneficiary designations. 

Designate heirs for accounts not covered in a will such as your IRA.

Trust documentation. 

Your attorney can help you determine if setting up a trust for your child makes sense for your particular familial and financial circumstances. 

Keep these papers in a safety deposit box, safe, or other secure location, and make copies to have on hand in case of an emergency. Consider giving access to these documents to a relative or trusted family friend, in case you’re not available for any reason.

gold line

7. Build a professional team.

Expecting your first child is a joyous experience that can also be nerve-wracking—but it doesn't have to be. When you give yourself the time you need to plan and involve the right people, you’ll be able to stay calm and enjoy what is for many one of life’s most important milestones.

Connect with a Thrivent financial advisor  to learn more about getting in great financial shape when expecting a child.

Share
Get more insights like this in your inbox
You have been successfully subscribed to our newsletter.
An error has occurred, please try again.
1Topic No 602 Child and Dependent Care Credit” Topic No. 602 Child and Dependent Care Credit | Internal Revenue Service (irs.gov) .

2Offered through a brokerage arrangement with Thrivent Investment Management Inc. 529 college savings plans are not guaranteed or insured by the FDIC and may lose value. Consider the investment objectives, risks, charges, and expenses associated before investing. Read the issuers official statement carefully for additional information before investing. Investigate possible state tax benefits that may be available based on the state sponsor of the plan, the residency of the account owner, and the account beneficiary.  Consult with a tax professional analyze all tax implications prior to investing.

Refer to the Thrivent Investment Management Inc. Form CRS Relationship Summary for more information about us; our relationships and services; fees, costs, conflicts, and standard of conduct; disciplinary history; and additional information. Refer to the Thrivent Investment Management Inc. Regulation Best Interest Disclosure document for information on fees, products, services, potential conflicts of interest, and additional information. Both are available upon request from your financial advisor or professional and on thrivent.com/disclosures.
4.15.7