One of the biggest financial commitments that you can make in life is having a baby and then raising that child to adulthood. It costs a lot to raise a child. The USDA thinks that it costs about $235,000 to raise a child from birth to age 18, and that doesn’t even include college.

Even if you’re pretty sure you can raise your child for less than that amount, you should still plan ahead. As you prepare to have a baby, you need to think about what’s coming up next, and how you can improve your finances.

What New Expenses Will Come?

Now is a good time to think about what new expenses are likely to come with your child. Some of the financial considerations you might have include:

  • Do you need a bigger living space?
  • Is a different car a necessity?
  • Purchase of diapers (cloth or disposable), clothes, food, and other needed baby items.
  • Loss of income if you go from a two-income household to a one-income household.
  • Child care, if you both decide to work.

Additionally, you will need to consider how you feel about paying for college. Do you expect your child to foot most of the cost, or will you help out? If you think that you will contribute at least some money to the higher education effort, it might make sense to open a 529 on behalf of your child right now. That way, you can start saving for college. Even if you start with only $100 a month, it can make a big difference over the course of 18 years.

What About Estate Planning?

With a growing family comes growing responsibilities. You need to make sure that you and your life partner both have adequate life insurance so that if you pass on, your child has financial resources. It’s possible to buy term life insurance relatively cheaply, and you can get it for a term that covers the time your child is growing up. If you think that you will have more children, consider a 30 or 40 year term life policy. If you are relatively young, you should be able to get that type of policy for a low price.

But it doesn’t stop there. You also need to consider other aspects of your child’s future. Do you have a will? You will need to have a guardian for your child, in the event that you and your partner both pass on. In some cases, it makes sense to include a trust in your planning efforts. Even if you don’t decide to go with a trust, though, you should make out a will to ensure that your wishes for your child will be followed.

Having a baby is a big commitment, and a big step. You need to re-arrange your financial life to reflect the changes that the child brings, and ensure that you are doing your best to provide a good start. And, even though it’s unpleasant to think about, you also need to prepare your finances in such a way that your child is provided for if the unthinkable should happen to you.