Starting a Family? Here's How to Be Prepared Financially

Pregnant woman and husband sitting together with baby shoes

Regardless of your family situation, it's critical to start preparing financially as soon as possible. If you already have one (or more) kids on the way, don't panic! These tips can be useful at any step of the family-raising process.

Slash Debt

In many cases, debt is unavoidable. If you're working to pay off student loans, a full repayment may not be in the timeline before starting a family. However, if you're fighting credit card or a hefty car loan, it may be worth buckling down and doing everything possible to pay it off. Once you've started a family, there simply won't be an opportunity to turn around and pay down debt. The more you can square away before your finances become more complicated, the better. If you don't manage to pay off credit card debt specifically, it's likely to continue growing. And with more and more costs ahead, starting a family is unlikely to help you pay it off any time soon.

Plan for Unexpected Costs

If you're expecting your first child, you may have already started a spreadsheet or a list to track all the ways you expect them to cost money. However, there's dozens of expenses that aren't easy to anticipate, and they can add up quickly. According to NerdWallet, the cost of raising a baby from infancy to age 1 costs over $20,000. It's a trying time financially for new parents, and it gets easier with practice. However, the focus should be on building memories along with sticking to the budget. Wherever you can cut costs is enough for the first year of your baby's life.

As they Grow

In addition to things like child care, school, and food, some family expenses tend to pop up unexpectedly over and over. Doing your best to put these expenses into the budget will pay off, even though they can be hard to track.

New Clothes

Growing kids, right?! It can certainly seem like they need new clothes every six months. But there are ways to cut costs in the clothing department while still keeping the children in clothes that fit just fine. Look into lightly-worn secondhand clothes from anywhere from Goodwill to Garage Sales. Your options may vary locally, but the Gulf Coast is plentiful if you're lucky enough to be in the area.


Every family parents differently, and it's up to you to decide how to handle potential allowance for your children as they get older. At a few dollars a week, it's unlikely to break your budget. However, establishing an allowance can be a great opportunity to sit down with your children and discuss finances, especially since it will let you look over your own with fresh eyes.

Taxes (the Good Part)

It's not all bad news! In addition to all the ways starting a family will make your life happier, Uncle Sam is happy to credit you a few thousand dollars a year. There are three main tax credits for families with children trying to make ends meet.

  1. The Child Tax Credit: The Child Tax Credit reduces your taxable income by up to $2000, which is enough to cut your annual bill by at least a few hundred dollars.
  2. The Child and Dependent Care Tax Credit: This credit is specifically for child care, allowing you to deduct the amount you spend and reducing your tax bill (or increasing your refund) accordingly.
  3. The Earned Income Tax Credit: This credit is specifically for lower-income families, but you can receive the benefits if your joint filing amount is less than $46,884 and you have one child (for Tax Year 2019).