Family Finances — Children


The addition of a child in your life undoubtedly brings change—your sleeping patterns and your finances will feel the difference. As the cost of everything from car seats to college continue to rise, being a new parents often feel overwhelmed and financially challenged. But having a plan—and some flexibility—can get new parents started on the right foot.

Checklist for expectant or new parents

  • Check your insurance and family leave policy at work. Check with your employer about time off for maternity leave, including adoption. Make sure your health plan covers your needs and try to set aside funds for medical bills that won’t be covered by your health insurance.
  • Budget for baby. Make a list of current expenses, as well as anticipated first-year expenses, including diapers, nursery furnishings, food or formula, clothing, childcare, childproofing supplies, toys, and gifts. This will help prioritize spending, as well as determine a spending plan for after the baby is born
  • Keep track of spending. Tracking receipts will help control where, when and how you spend money. The awareness that comes with tracking expenses often makes staying within financial limits easier. Also save receipts for items like clothing and toys that may need to be returned.
  • Expect the unexpected. You can’t always budget for everything. Unanticipated expenses will arise with young children, such as extra trips to the doctor or last-minute childcare. Make sure you have some savings set aside for these unexpected expenses.
  • Buy used, carefully. Shopping at garage sales and accepting hand-me-downs are great ways to save on baby clothes and toys. But be sure to check out strollers, toys, and equipment with the Consumer Product Safety Commission ( or 800-638-2772) to make sure the model is still safe and secure.
  • Prepare for ongoing child care costs. Parents can expect to spend as much as ten to 20 percent of their income on child care. If you work for a company that offers a flexible-spending benefit, you can stash part of your pre-tax salary in a day-care account. If not, you can claim the child-care credit on your tax return, reducing your taxable income.

Teaching your children about money—start early

Parents are the greatest role models around for kids when it comes to money. Helping them to set goals and priorities at a young age can help set them up for a better financial future.

  • Consider giving an allowance. Giving your kids an allowance can be a good money-management tool to help you teach your kids financial skills at an early age. Some families make the allowance contingent on doing small chores, so children understand that work generates money.
  • Shop smart. Prepare your shopping list with your kids in advance and talk to them about the difference between “needs” and “wants” on the list, prioritizing the needs first. Determine how much you're able to spend in advance and stick to that amount. When you go shopping, try to look around for the best price and the best quality. Let your children help you check items off the list and make sure they understands that every spending decision is a choice.
  • Take your children to the bank to start a savings account. Have them save some of the money they receive as gifts or earn through an allowance.

Resources for Parents and Families

Money as You Grow offers 20 essential, age-appropriate financial lessons with corresponding activities that kids need to know as they grow. Written in down-to-earth language for children and their families, this resource helps to equip kids with the knowledge they need to live fiscally fit lives.

Money As You Grow

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