A Financial Love Letter to New and Expecting Moms

Motherhood is a beautiful journey filled with joy, adventure, and endless possibilities. However, motherhood also brings new responsibilities and financial considerations that often feel overwhelming. As a type-A lawyer, I thought I had done all the research, read the books, and had fully prepared for the arrival of my little one. Boy, was I wrong. Motherhood, from the very beginning, brings up so many things that you simply cannot control, but financial planning is not one of these things. You can, and should be in control of your finances to confidently embrace the joys and challenges that come with being a new mom. In this blog post, we provide general guidance and practical tips to help new and expecting moms navigate the financial aspects of this incredible phase in their lives.

Regardless of your background, profession, or industry, this love letter is dedicated to all the moms who are embarking on this transformative journey. Whether you are a working mom, a stay-at-home mom, or an entrepreneur, the information shared here is designed to empower you with the knowledge and tools to make informed financial decisions that will positively impact your family’s future.

Throughout this post, we will cover a range of topics, including budgeting for baby expenses, understanding parental leave and benefits, life insurance, estate planning, and investing in your child’s future. We believe that by addressing these areas, you can provide a solid foundation for your family’s well-being and enable you to embrace the financial aspects of motherhood with confidence and peace of mind.

Let’s dive in.

Why is Financial Planning for New and Expecting Moms Important?

Financial planning for new and expecting moms is of utmost importance. Even before your child arrives, the financial responsibilities become evident. From medical bills and baby expenses to college tuition, you need a plan to succeed. All of this can be so overwhelming, particularly as you’re maneuvering uncharted territory in most areas of your life. With that in mind, we’ve created a list of areas to consider and practical tips you can implement to confidently start your motherhood journey:

1. Manage Baby Expenses:

One of my greatest aspirations is to provide my child a better life than the one I had. Sadly, like many parents who grew up with limited resources, I associated having a “better” childhood with having shinier or more material possessions. So, after social media inundated me with advertising for all the best and newest baby gadgets, I felt I had to have them all. I quickly and easily rationalized my ridiculous baby spending by telling myself it was the best, the safest, the easiest to use, etc. . . . And after all, hadn’t I worked so hard all my life so that I could do just this, provide the best for my child? I sure thought so, and so I continued to spend.

I also started noticing others, particularly women of color, engaging in this same pattern. Because part of my journey to reach FIRE is being intentional with my spending, it was time to crunch some numbers to figure out if I was going about this all wrong. It didn’t take long for me to realize that I was not overspending on the best baby products to meet the needs of my child, but to meet my own scarcity mindset needs. I equated being a good mother with being able to purchase the best (and often the most expensive) for my child.

Though I have so much room left to grow in this regard, I have made it a practice to ask myself a series of questions before spending on baby items:

From medical costs to baby gear, diapers, and childcare, the expenses associated with raising a child can be significant and you must ensure that your spending habits align with your values and the values you want to instill in your children.

Practical Tips:

Create a Baby Budget Spreadsheet dedicated to track your baby-related expenses. Include categories like medical costs, nursery setup, baby gear, and ongoing monthly expenses. This helps you visualize and manage your spending, ensuring you stay within your budget.
Find promotions/coupons. Enroll in rewards programs at your local stores. For example, Target Circle allows you to scan items on your phone while shopping to search for coupons/gift card rewards and more. You can also time your big-ticket purchases (crib, car seats, strollers) with promotional events like Amazon’s Prime Day or Black Friday.
Researching Government Assistance Programs available to new and expecting moms. Programs like WIC (Women, Infants, and Children) and SNAP (Supplemental Nutrition Assistance Program) can provide financial support for food and healthcare if eligible.

2. Maximizing Parental Leave Benefits:

Preparing for the arrival of your child requires an understanding of your rights and benefits if you or your partner are employed. Having this understanding helps you make the most of available resources, such as paid leave, parental benefits, and employer-sponsored programs, ensuring you can focus on the joy of motherhood without unnecessary financial strain.

Practical Tips:

Explore your and/or your partner’s parental leave policies. Review the policies on your own and then schedule a meeting with an HR representative to go over any questions you may have. Make sure you understand the duration of leave, whether it is paid or unpaid, and any additional benefits available. This knowledge allows you to plan your finances and make informed decisions about your time off work.
Review your health insurance policy to understand the coverage for prenatal care, delivery, and postnatal care. Be aware of any deductibles, copayments, or limitations. You should also call your insurance to inquire about any additional benefits available. For example, many insurances will provide expecting moms a new breast pump of your choosing which can otherwise cost you hundreds of dollars.
Research different childcare options in your area and estimate the associated costs. Consider options like daycare centers, nannies, or family-based care. You should also ask your employer if they have any resources for parents, some companies provide child care budgets, free educational courses, or children learning services.

3. Life Insurance & Estate Planning:

My sense of responsibility heightened the second my child was born. Suddenly, I became hyperaware of my own mortality and knew that I had to prepare for unforeseen circumstances. The best way to do this is to ensure you have adequate life insurance coverage and that you’ve handled estate planning. Estate planning refers to the process of legally organizing and specifying how your assets and affairs should be managed and distributed after your death or in case of incapacity.

Many women of color assume that we do not need to worry about having a will if we don’t have many assets, but estate planning includes so much more than asset distribution. For example, estate planning typically involves creating documents instructing who will become guardian of your children in the event of your death and the level of medical intervention you would like to receive in case of an emergency.

Practical Tips:

Ask your employer if they have any benefits, like legal insurance, to cover the cost of estate planning. If they do not, find a reasonably priced attorney and get this done as soon as possible after the birth of your child.
Ask your employer if they provide any life insurance benefits. If so, familiarize yourself with these benefits and eligibility requirements. Otherwise, consider seeking guidance from a financial advisor who specializes in family finances who can counsel you on the right life insurance for you.
Familiarize yourself with tax benefits and credits available for new parents. Examples include the Child Tax Credit, Dependent Care FSA (Flexible Spending Account), and the Earned Income Tax Credit. Understanding and utilizing these benefits can help reduce your tax liability.

4. Investing in Your Child’s Future:

First and foremost, it is important to understand that you have no obligation to pay for your child’s education, car, wedding, or home. Choosing to do these things requires planning and intentionality. As you’ve likely heard in movies and planes, you must put your mask on first before helping others–and this includes your children. Before you can begin thinking about financially investing for your children, you need to make sure that you’re investing for your retirement.

While your children will likely have access to student loans if they need them, no such loans are available to finance your retirement. Additionally, it will make little difference in the long term if you invest enough to cover your child’s college education only to end up financially relying on them. By starting early and making informed investment choices you can have a significant impact on the quality of your children’s lives whether you chose to financially assist them as adults.

Practical Tips:

Get your financial affairs in order. Check out our first post to learn on how to get started.
After you have a handle on your finances and you have a plan for your retirement, research and consider options like 529 savings plans, which offer tax advantages for college savings.
Invest in your own and your child’s financial literacy. This is particularly important if you do not come from a family who openly talks and teaches about money. You can start off by listening to podcasts, reading books, or watching YouTube videos.

Financial planning plays a vital role in ensuring the well-being of your family.

By proactively managing your finances, you can create a stable foundation, reduce stress, and confidently embrace the joys and challenges that come with being a new mom.

As you embark on the beautiful journey of motherhood, remember that you’re not alone. Reach out to experts, join supportive communities, and ask for help when needed. By building a supportive network and staying informed, you can confidently navigate the financial complexities of motherhood.

Above all, give yourself grace. If you’ve found yourself here, I am confident that you will continue to learn and will give your children the best inheritance; knowledge and guidance that can transform their lives.