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The 2023 financial checklist for new parents

Eleven financial moves that new parents should check off when welcoming a new baby. A simple checklist for new parents or soon-to-be parents.

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Becoming a parent is the most life-changing event that many will experience. You are suddenly not only responsible for yourself, but also another person who depends on you for everything.

When getting ready to embark on this exciting (and, perhaps, scary) new adventure, preparation is key. Both before the baby arrives and in the weeks after, it’s especially helpful to be ready for the financial changes to come. It’s estimated that total child-rearing expenses from birth to age 17 for a middle-income American family is now $310,605. Although the range of expenses across families is wide, the truth is that adding a little one to the family is quite expensive.

To help new parents prepare for and navigate these changes, we created a checklist of financial to-dos for 2023. Whether you are expecting or are currently adjusting to your new life as a parent, consider this checklist as a starting point for adapting to your new financial reality.

Making the necessary financial arrangements now will minimize stress down the road and allow you to spend the most time loving and caring for your newborn.

In this article:

1. Add your child to your health insurance plan

It’s not unreasonable to think that your health insurance provider might contact you, or better yet, automatically add your newborn to your health plan. After all, the provider should be aware that you had a baby. It doesn’t work that way. Fortunately, however, having a baby is what’s known as a qualifying life event, which allows for an enrollment period during which you can make changes to your health policy or enroll in a new one altogether.

Most plans typically require that your child is added within 30 or 60 days post-delivery. If done in that time frame, your child should be covered retroactively — meaning anything that would typically be covered under that policy that occurs between birth and enrollment would be covered.

2. Adjust your HSA contributions

Health savings accounts, or HSAs, are an often underappreciated pre-tax benefit that lets you pay for qualified medical expenses with pre-tax dollars for a variety of current and future healthcare expenses for you and your family. Most importantly, any money you contribute and don’t use in a given year will roll over to the next year.

If you are a member of a qualifying employer-sponsored health plan, HSA contributions — which have an annual limit of $7,750 for families in 2020 — can be taken out of each paycheck. Most people, however, don’t actually max these out, but you should consider it, especially with the increased health and wellness expenses that come with a newborn. The money in your HSA account can be used for a wide variety of qualified health-related products and treatments, including doctor’s fees, infant formula, breast pumps, and even baby sunscreen.

3. Buy term life insurance

When many new parents learn they should buy life insurance, it’s common to question whether or not it’s really worth it. After all, we all plan to be around for many years. If you’re at a point in your life where a spouse, child, or other family member relies on you financially, then the answer is simple: It definitely is.

Like other forms of insurance, in exchange for a monthly premium, life insurance is designed to financially protect you and your family in the event of your death. What many people don’t realize is how affordable life insurance — specifically, term life insurance — can be.

For young and healthy adults, term life policies can cost less than many music or video streaming services per month, providing the financial protection your family needs in case you are no longer there. Because the amount of recommended coverage varies by many factors, an online life insurance calculator can help you determine the appropriate coverage for your family, get a life insurance quote, and purchase a policy accordingly.

4. Update your tax forms to claim child tax breaks

In 2023, the Child Tax Credit will be $2,000 per child (after briefly being expanded during the pandemic), providing a terrific opportunity for parents to save money. The income limit above which the tax credit begins to phase out is $75,000 for individuals and $150,000 for joint filers, making the tax credit applicable to many families. Unlike a deduction that lowers your taxable income, a tax credit is a dollar-for-dollar reduction of your tax liability. To find out more, speak with your tax planning professional.

5. Create a will & name beneficiaries on your accounts

In the event of your untimely death, it is critical to have arrangements in place for your children. A will provides a plan for the division of your assets and can also designate a legal guardian for your kids. Most people name their children or surviving spouse as the beneficiaries of their accounts, ensuring that any assets or money they have is given to them. You may also choose a separate guardian of the estate, who will manage the accounts and assets until your children reach legal age.

A notarized will can help avoid lengthy legal battles contesting who owns your assets and help define how your children will be cared for. You can change your will and beneficiaries at any time, which you may wish to do if you have additional children in the future. While filling out the necessary forms and working with an attorney, it is also helpful to talk to your parents and kids’ potential guardians about your wishes so it will be easier to execute the will if necessary.

Note that eligible Haven Term policyholders are eligible for no-cost will services from the experts at Trust & Will, thanks to the Haven Life Plus bonus rider. Trust & Will lets you make a will quickly and easily online in minutes, a service that normally would cost up to $699.

6. Consider long-term disability insurance

While life insurance is meant to provide a financial safety net in the event of your death, disability income insurance offers coverage in the event that you become sick or injured and cannot work. If you are too sick or injured to work, disability insurance will pay you a benefit that is a percentage of your income for the time period specified in your policy, so it is worth taking into consideration your current income, current expenses, and current savings when choosing a policy.

Disability insurance can be short-term or long-term, and you may be able to obtain coverage either through your employer or a private provider. When considering coverage, remember that your living expenses will increase with your newborn. (Learn more about Haven Disability, a disability insurance offering from Haven Life.)

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7. Create a household budget

With a new child comes new expenses. Baby clothes, diapers, more food, and other childcare expenses can add up quickly, in addition to all the prenatal and postnatal medical expenses. Some expenses, like diapers and new toys, are recurring, while others such as a stroller or car seat might be a one-time investment.

It will be helpful to understand what “upfront costs” may be a temporary hit to your wallet and what recurring costs will influence your budget in the long term. Online budgeting apps can help make this exercise as painless as possible.

8. Build an emergency fund

Unemployment is stressful, but especially so when your family is growing. That’s why it is helpful to have an emergency fund that will cover 6-12 months of living expenses in the event of a layoff or change in employment. An emergency fund provides a comfortable cushion for a new parent while searching for a new job, and should be calculated based on the new family budget. An emergency fund is especially important if your family is reliant on a single family member’s income.

9. Consider participating in a dependent care FSA

Similar to an HSA, a dependent care flexible spending account is a pre-tax account that’s sponsored by an employer. Contributions are automatically deducted from your paycheck, and the funds can be used for qualifying child care expenses. The maximum contribution in 2023 is $5,000 for families.

Because these accounts are funded with pre-tax dollars, using them effectively lowers the cost of eligible child care expenses and also helps reduce your total taxable income. Sounds like a win-win. However, unlike HSAs, FSAs are use-it-or-lose-it accounts, which means that the funds you contribute don’t roll over to the next year if they are not used. Because of this, it’s extremely important to carefully budget for the amount of qualifying child care expenses you actually have.

10. Save for your own retirement

With so many things to remember about your child, it is easy to forget about yourself. However, just like they tell you on a plane, you need to put on your mask first and then proceed to help others. Consider taking advantage of any employer-matching 401(k) contributions, which is “free money,” and set up an automatic withdrawal of your retirement contributions to eliminate the mental hurdle of saving each month.

Prioritizing your own retirement now will help you prepare for the future and reduces the possibility that your child will need to support you later in life.

11. Start saving for your child’s college tuition

The average tuition and fees for private four-year institutions were $39,400 for the 2022-2023 school year, according to The College Board. Even when adjusting for inflation, that’s more than double what it was 30 years ago. Despite this, only 13% of millennial parents place college savings as one of their top child-related financial priorities — perhaps because the expense seems so far off. While it might not feel like an immediate priority, the sooner you start saving for school, the more options your child will have.

A common way to invest for kids’ education is through a 529 plan — a state-sponsored investment program that offers tax advantages. When you take money out to pay for qualified educational expenses, those withdrawals are federal income tax-free. These plans have historically been used to pay for college-related expenses; however, now they can also be used for qualified expenses earlier in your child’s life, such as private K-12 education.

There are numerous 529 plans to choose from and the specific tax incentives vary by state, so be sure to research the best option for you. Be aware, however, all investments, including those into a 529 plan, are subject to risk and loss of principal, so work with your financial advisor to determine what’s best in your situation.

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About Shannah Compton Game

Read more by Shannah Compton Game

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit:

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