A 9-step checklist to help protect your family financially when preparing for a new addition.
Certainly, there’s no shortage of preparations to be made when you’re getting ready for a new addition to your family. You shop for adorable clothes, decorate a dreamy nursery and count down the days to your baby’s arrival. But a new baby is a good reason to take a closer look at your finances as well.
Like many new parents, Erin and Aaron Wachter of Elizabethtown, Pennsylvania, have their hands full. But, when their daughter Evelyn was born two and a half years ago, they decided it was also time to create a financial plan.
The Wachters, who are expecting their second baby, have been Thrivent clients for almost two years. And already they’ve ticked some big tasks off their financial to-do list with the help of Natalie Kratzer, a Thrivent financial advisor in Hummelstown, Pennsylvania. “I knew [Thrivent] had a really good reputation—both nationally and locally—and we wanted a more personalized experience,” says Erin. “They’re well trusted and family-oriented.” She adds that having an advisor walk them through a comprehensive financial plan has been invaluable for her and her husband.
Thrivent’s financial expertise can help new parents everywhere. Here’s a nine-step action plan to help you prepare for your growing family.
1. Take stock of where your finances are at now
“Understanding your position right now and what it’s going to look like in the short term is critical,” says Renato Mazziero, Thrivent’s vice president of Experience and Innovation.
As you start thinking about your family’s financial plan, it’s important to take the time to assess your money as it is today. You can tackle this analysis on your own or enlist the help of a financial advisor. Some key questions: What’s your family’s existing income? Your debt? Your list of expenses? What protections do you already have in place for your family?
Then think ahead to what will be changing with the birth of your baby. Do you have the information and resources needed to take the next steps, or do you need some help?
2. Review and optimize your health insurance
Greg Durivage, a Thrivent financial associate in Maumee, Ohio, notes that preparing for medical expenses throughout a child’s life is key. "Know your health insurance coverage by knowing what your deductible is, what your share of the coinsurance is, and what your out-of-pocket maximum is,” he says.
Durivage readily admits that it’s hard to estimate those future costs accurately. “I always recommend preparing for the worst case,” he says, referencing the out-of-pocket maximum set by your insurer. It helps to evaluate your coverage options during open enrollment season.
Fortunately, there are ways to reduce your costs upfront. You typically can see major savings by using in-network providers, whenever possible. And take advantage of a
3. Prepare for the unexpected
Aaron Wachter says that his family’s employer-sponsored life insurance didn’t offer
What’s the best type of coverage for you? “As a general rule of thumb,” says Durivage, “
The size of your premium depends on a number of factors, like age, health and term length. But Durivage notes that monthly premiums usually land between $10 and $100.
4. Overhaul your budget
With a new baby on the way, there are plenty of
It’s imperative that you understand the income your family will see after the baby is born, says Kratzer. Do your employers offer paid maternity or paternity leave? What income will you see from short-term disability payments? Will you take paid time off or use unpaid FLMA leave? Will one of you switch to part-time work or leave the workforce as your family grows? The sooner you know the answer to that last question, the better you can plan financially for that transition.
Kratzer advises new parents to look closely at childcare costs, which range from $5,000 to $24,000 each year, according to the Economic Policy Institute.1 “For some parents,” she says, “it means asking the question: ‘Is it worth it for both of us to work?’” Durivage encourages families to consider a Dependent Care FSA (DCFSA), which lets you cover eligible childcare expenses with tax-deductible contributions.
Both financial advisors emphasize the importance of continuing to allocate savings to long-term goals. “Usually, the primary focus for new parents should be creating a proper balance between having a solid financial foundation and saving for future goals,” says Durivage.
5. Fill the insurance gaps
According to the CDC, one in four American adults lives with a disability.2 So it’s essential that you ensure that you are properly covered with
Make sure you’re covered for both short-term and long-term disability, says Kratzer, and evaluate your existing coverage and available options carefully. It’s vital to understand three key numbers—the percentage of income that will be replaced, the elimination period (the waiting period before payments start coming in) and the benefit period (how long those payments will last).
For new parents, Kratzer typically suggests a five-year benefit period for long-term disability income insurance coverage as a starting point. Expect to pay roughly 1% to 3% of your annual salary in annual premiums. And don’t forget coverage for stay-at-home parents. From childcare to cleaning to cooking, they provide essential services to your family that would be costly to replace. Kratzer points out that Thrivent is currently one of only a few insurers that offers disability income insurance for that group.
6. Build up an emergency fund
Money in the bank can keep you afloat when you face an unanticipated expense or job loss. Mazziero notes that the standard rule of thumb is saving four to six months' worth of expenses in an
Mazziero offers a warning to expectant parents eager to fill that emergency fund: “I don’t necessarily think you need to pre-fund it.” He’s seen people put so much emphasis on establishing an emergency fund that they lose track of other financial priorities—paying down debt, buying life insurance, getting their employer’s 401(k) match and more. “Those things should happen in tandem,” he says. “If you just don't have an emergency fund, work toward it, and make sure you prioritize it.”
7. Work with a financial advisor to build your blueprint
Organizing the
Erin and Aaron Wachter have an advisory relationship* with Kratzer. They say she has helped them nail down short- and long-term goals, think through timeframes and prioritize—an ongoing process as their lives and goals continue to evolve. And Erin says an added bonus she discovered along the way: “Setting aside time to talk with our financial professional on a regular basis. That was really helpful because, in everyday life, it’s just hard to find the time.”
8. Consider estate documents
If you don’t have a will, you’re in good company. “People always say they’re going to do it tomorrow,” says Kratzer. There’s no better time than now in her estimation.
But think beyond just a will. She suggests now also may be the time to consider a
Kratzer recognizes that the internet offers plenty of free or inexpensive legal documents but warns that you may get what you pay for. Depending on the complexity of your situation, you may want to use an attorney.
9. Think ahead to college savings
The cost of higher education is on the rise. If you’re planning to
Once your baby is born and receives a Social Security number, you can open a college savings account in that child’s name. If you’re confident you’ll use the funds for qualified educational expenses, Durivage suggests clients consider a 529 plan* or

Without a doubt, those nine months leading up to the birth of your baby are filled with countless things to do. But, a few simple steps can have a profound impact on your finances and safeguard your family’s future.