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How to Financially Prepare for Your Second (or Third, or Fourth) Child

The common saying that “everything’s easier with a second child” is true — to a point. Sure, you’re confident about your diaper changing skills, you understand how to set up feeding and sleep schedules and you know when a fever just calls for fluids and rest versus a visit to the ER.

But when it comes to money, life can get more complicated as your family grows. If you’re planning for more children, here’s what you should know.

Reduce Your Debt

Eliminating debt is important at any stage of life, but when you’re expecting more children, it becomes even more critical. After all, kids are expensive. 

Sit down with your partner to talk about what you owe, and how you’re going to pay down existing debt, as well as avoid future debt. Look at your household budget to see if there are places where you can trim expenses, redirecting some of that money to debt repayments.

Have a Chat with HR

Both you and your partner will want to know what benefits are available to you as you welcome your new child into the world. Checking in with your HR department is especially important if you’ve changed jobs, as your benefits might not be the same as they were at your previous workplace. You’ll probably want to ask how the new additions to your family will affect your health insurance. Be sure, too, to confirm both the paid and unpaid family leave benefits offered by your employer so you can get ready to spend quality time with your growing family.

Get Your House in Order

Go digging through the attic to look for those essential items you need to get your home ready for your new addition. You might already have a crib, car seat and stroller, all items that translate into big-time savings when you hand them down from your first child to his or her new siblings. You might also have infant clothes, a breast pump and bottles. Make a list of any items you need to update or replace so you can budget for them accordingly.

You might also want to research special discounts and programs that reduce the costs of regular needs like formula and diapers.

Evaluate Your Life Insurance Coverage

It’s not just your health coverage you need to check when you’re expecting new children. Take a look at your current life insurance plan. You want to be sure all of your loved ones will be covered if you are unable to care for them, and any time your family grows, you should evaluate your life insurance coverage and determine if it meets your expanding family’s needs.

Consider Long-term Costs

Right now, your home or your car may work just fine for your family, but with more children entering the picture soon, it might be time to think about upgrades. Your children (and you) will need more space to live and thrive, so even if you think you’ll be okay in the short-term, plan out any long-term costs such as a new home or new car. That way, when the time comes, you’ll be able to manage the costs of additional monthly payments.

Other “upgrades” might include child care. Can your current child care situation expand to cover all of your kids, and what will that cost? Would moving closer to family help reduce expenses? It’s important to evaluate your options, and think about what’s best for you and your family.

Expand Your Family’s College Savings Plan

Consider asking family members to contribute for holidays and birthdays so your child will have a leg up on savings when it comes time for college.

Make a Time Budget

Your time is valuable. Doctor’s appointments, social and educational commitments increase with each child, so plan ahead to help avoid unnecessary stress between you and your spouse. Will either of you need to ask for more flexibility at work? Will one of you need to change your work situation, or stop working altogether? These are big questions that may be hard to answer, but talking openly with your spouse can help you plan ahead and ease into a transition.

Planning for a new baby can be thrilling, but it’s also a challenge. Anticipate and ward off some of the potential stress by planning ahead and getting your finances in order before your new little one arrives.