Financial Decisions You Need to Make While You’re Pregnant

Congratulations! You’re pregnant. There’s so much to think about and plan for over the next nine months – and almost none of it is free, or even cheap.

Finances are rarely the first thing we think about when we discover we’re expecting a baby, unless they’re already stretched, in which case they may be our biggest concern. But whether you’re financially comfortable or not, preparing financially for a new baby means making a few important, and immediate, decisions.

Financing the Pregnancy and Birth

Depending on where in the world you live, being pregnant and giving birth can be a major expense. According to Forbes, the average cost of giving birth in the USA without health insurance is $18,865 (less for a straightforward birth, rising to $26,280 if a caesarean is needed).

How much of these costs you’ll need to plan for will depend on your health insurance plan, of course, but average out-of-pocket costs are $2,854. These costs are for the birth alone, so you’ll need to factor in pre-natal care and post-natal hospital expenses for both mother and baby.

As with almost anything, it’s wise to plan ahead if you’re hoping to have a family someday, and choose a suitable insurance policy, but sometimes life happens and that’s just not possible. If your pregnancy was unexpected then you’ll need to immediately check what you’re covered for under your current health insurance. Important questions to ask include:

• What exactly is covered in terms of prenatal care and the birth itself?
• Does my plan cover a hospital (and possible NICU) stay?
• What’s covered in terms of specific plans I may have (such as a home birth, midwife and doula costs, or a planned caesarean)?
• Are supplementary costs related to pregnancy and post-partum recovery (such as complementary or mental heath services) covered?
• What are my deductibles and co-pays for each service?

It may be a little late to be finding out about this if you’re already pregnant, but the sooner you know what you’re working with the better you can plan to meet any out-of-pocket costs and make decisions about the pregnancy and birth that make sense financially as well as medically and personally.

Financing the Baby Phase

Baby equipment is expensive, but depending on your circumstances, that can be a drop in the ocean compared to the potential loss of earnings involved in having a baby. The USA is still unusual among Western countries in that there’s no legally enforced maternity pay, so the inevitable break from employment required by one or both parents can have a big financial impact.

The first thing to do is find out what provisions your employer makes in terms of maternity, paternity and parental leave and pay. Again, if this is a planned pregnancy you’ve likely already checked this, and maybe even chosen an employer with good benefits. If it’s unplanned, you may never have even considered it, so it’s time to start asking questions.

Many (but not all) employees will be covered by the Family and Medical Leave Act (FMLA), but this does not provide any pay during your maternity leave. It simply means that your employer has to keep your job (or an equivalent position) open for you and offer a continuation of group health insurance coverage during your unpaid leave, for up to 12 weeks. Paternity leave (or parental leave that can be taken by either parent) is rarer than maternity leave, but some employers do offer it.

Self-employed? Then you really need to plan ahead for your maternity leave, especially if you’re a freelancer as opposed to a business owner. The FMLA doesn’t apply to freelancers and contractors, although it may be worth checking out if there are any local state programs that can help.

The big advantage here of course is that many freelancers work from home and can get back to work shortly after the baby is born, but don’t under-estimate the physical and practical impact of birth and parenting. It’s best to assume you’ll only be able to manage a greatly reduced workload in the weeks (and maybe months) following the birth.

Financing the Pre-school Phase

One of the highest costs for many families with pre-school children is childcare. While this will be an ongoing expense for most working parents for quite some time, it will be most significant during the pre-school phase. Childcare costs in the USA can be the single biggest expense for working parents, amounting to more than their mortgage or rent payment in some areas.

According to one report, 59% of parents surveyed said they were planning to spend more than $18,000 per child on child care in 2023, and 67% reported spending 20% or more of their annual household income on it, indicating there is now an unaffordable childcare crisis. (The U.S. Department of Health and Human Services considers childcare ‘affordable’ when it costs families no more than 7% of household income.)

Planning for childcare costs is therefore vital from the moment you find out you’re expecting, if not before. Look into:

• Any employer specific benefits or subsidized childcare facilities at both parents’ workplaces
• Any tax benefits that may apply to you such as the Child Care and Dependent Tax Credit and the Child Tax credit
• The possibility of setting up a Dependent Care Account to fund childcare (which will also offer tax relief)
• State or local benefits for families needing childcare (often reserved for low-income families)
• Any military childcare benefits if either parent is in the military
• The possibility of flexible working and/or remote working for either or both parents, that may reduce the need for full-time childcare

Lastly, don’t be shy about approaching family members who may be able to help, either on a regular basis, or to provide emergency cover when childcare arrangements fall through. (As you’d expect any paid emergency cover will usually come with an even higher cost than regular childcare).

Financing the Future

Once you’ve thought about the (relatively) short-term issue of financing the pregnancy and early years, it’s time to think long-term. Raising a family is expensive. Childcare costs may drop when your child starts full-time school (assuming they’re in the public school system) but by that point you should probably already be thinking about college expenses.

Financing the future as a family means you need to think about:

• Completely revamping your long-term family budget (a few expenses may actually drop – such as going out partying – but others will sky-rocket)
• Getting life insurance in place if you don’t have it already
• Creating or updating your Wills and making a plan for your children should anything happen to you
• Setting up a college fund
• Deciding what big expenses in your child’s life you’re prepared to fund as they get older (will you pay for things like study abroad programs or their first car?)
• Planning for those expenses

Need help working through all the new things you need to thing about? Consider consulting a specialist financial planner. They’ll be able to alert you to issues you may not even have considered as yet, and put a solid plan in place for your future.

Frequently Asked Questions