It’s expensive to have a family in this day and age, but it shouldn’t feel impossible. Learn how to prepare your budget and manage your finances with these tips and tricks from financial advisor Beth Moody.

GET A HANDLE ON PRE-BABY EXPENSES
Before you even touch your budget, figure out what will change with your income after you have your baby. Then write it out. “It just makes it real. Expenses are hard to grasp,” Moody explains. “For example, how does the cost of daycare fit in?” Practice living for a few months with your new budget—the one that includes the new baby-related expenses like daycare. It’s important to have a baseline financial plan to begin with so you can adjust your spending accordingly.

START AN EMERGENCY FUND
Create a financial “cushion” with money specifically set aside in case of job loss or other emergencies. “The majority (56 percent) of U.S. adults [c]ouldn’t pay for an emergency expense of $1,000 or more… from their savings account,” Bankrate’s 2024 Annual Emergency Savings Report states. Most Americans are not financially prepared and rely on credit cards and loans to pay for unexpected costs. The best way to circumvent this is by planning ahead and saving money for “in case
of emergency.”

How much is enough? “You should include 3 to 6 months of expenses in your emergency fund,” Moody shares. Start building your savings so you can feel comfortable about the expenses that come with adding another member to your family.

REVIEW INCOME AND EXPENSES REGULARLY
For some, reviewing your budget might mean sitting down to go through income and expenses annually, but for others, it could be monthly or quarterly. Decide what works best for you as a couple and intentionally talk through your spending consistently. Be prepared to make changes to your budget accordingly.

USE YOUR VILLAGE
You don’t know what you don’t know, so don’t hesitate to ask fellow parents and mentors for advice. Asking questions like, “Do I really need this?” can save you a lot of money and stress. Plus, those around you will be happy to share what they’ve learned so you don’t have to make the same mistakes!

Swap kid-sitting responsibilities with another couple so you don’t have to pay a babysitter every time you need to leave the house. Pool resources and pay for a joint babysitter with other families when you’re going out as a group. There’s a reason the quote “It takes a village to raise a child” is famous—use your village to help you!

MANAGE DISRUPTIONS IN YOUR FINANCES
Give yourself grace; you will make mistakes. The key is knowing where your money is going! If you keep overspending in one area, be flexible. It’s okay to change the plan when you mess up. Budgeting looks different for everyone: Find a system that works for you, whether that is an app, a spreadsheet, or something else. As Moody puts it, “The best budgeting plan is what you’ll stick to.”

SPEND MONEY ON WHAT MATTERS TO YOU
Be thoughtful with your spending and how that aligns with your values. If you value certain quality brands, shop for them at secondhand consignments, on Facebook marketplace, and buy their products when they’re on sale. “Don’t buy things you won’t reuse,” Moody advises. “It’s a mistake to get all of the baby products that are advertised when you’re only going to use a fraction of them.” Moody shares that for her, a bottle warmer was a waste of money because she never used it. Don’t just buy everything people online claim is “essential.” Take the time to think through what matters most to you and then find ways to fit your desired preferences into your budget.

HOW TO PRIORITIZE SAVING
Save for the emergency fund first, but also prioritize credit card debt and start saving for retirement early. “Avoid credit card debt” is one of Moody’s biggest recommendations for financial success.

Do not wait until everything is “completely paid off” before you save for retirement. Creating a retirement baseline early on is crucial. Save for education once each of these is in what you deem a good, stable place.

Consider a 529 Plan
Look into investing in a 529 College Savings Plan: You can put money into it over time as your children age and your money will grow tax deferred. Qualified education expenses are tax free, and in some instances, you can get a state income tax deduction. That said, it might be worth it to start investing in a 529 plan when your kids are little, even if it’s just a handful of dollars each month.

Start Small
Begin with setting aside $25 a month to get into the habit of saving and investing. You’ve got to start somewhere. Don’t get discouraged—it’s easy to compare yourself with others. Look into creating an emergency fund for the kids so when they ask for money to go to a cheer competition, football camp, or  simply to buy books at the book fair, it won’t knock your budget (or your mood) out of wack.

Check Your Insurance
Review you and your spouse’s life and disability insurance, including protection to cover a loss of income. One of the biggest mistakes you can make, Moody claims, is not having a plan. Make sure both parents have an updated state document or will, as well as a life insurance policy.

Other Tips
Get a trusted advisor, whether that is a financial consultant or an accountant. Don’t get advice on TikTok and accept it without looking into it first. Be careful. Trust but verify. When you need help, get it.