10 Financial Moves to Consider after having a child

When your first child (or children) arrive, it can be both exciting and stressful. Trying to balance responsible financial decisions while learning how to be a parent can feel overwhelming. Below are some important steps to consider during your child’s first year, listed by importance.

Apply for a Social Security number (SSN) for your child

This step establishes your child’s citizenship and allows you to open accounts in their name, add them to health, dental, and other benefits. It’s typically handled at the hospital when you apply for a birth certificate. Expect to receive the SSN card within 8–10 weeks.

Obtain a birth certificate

Usually handled by the hospital, but it can also be requested through your state’s Department of Health and Human Services. This document is necessary to obtain your child’s SSN.

Adjust your estate plan to include guardianship and update any wills

Once you’re settled at home, consider updating your estate plan. If something were to happen to both parents, a child cannot directly inherit assets until adulthood. Appointing a conservator (or setting up a trust, depending on your state) ensures your child is cared for according to your wishes. An estate planning attorney can help structure this properly.

Ensure your child has health insurance

The birth of a child triggers a special enrollment period that lets you add them to your health plan and, if applicable, open a Dependent Care FSA (see #9). Be aware that moving from single or couple coverage to a family plan will typically increase your premium.

Depending on your income, you may also qualify for state-sponsored health insurance for your child, which could reduce monthly costs.

Open a 529 plan

A 529 plan is a tax-advantaged way to save for college and other education costs. The earlier you start, the more time contributions have to grow tax-deferred.

• Contributions may be deductible on your state taxes (if your state offers this benefit).

• Investment options typically include a lineup of mutual funds, and withdrawals for qualified education expenses are tax-free.

• There are no income limits for participation.

• Up to $35,000 of unused funds can be rolled into a Roth IRA for your child (if the account has been open at least 15 years).

Because it’s difficult to know exactly how much to save when your child is a newborn, this Roth rollover option offers flexibility if you “overfund” the account.

Review short- and long-term cash flow for maternity leave and beyond

During maternity leave, you may receive short-term disability pay, partial pay, or no pay, depending on your employer’s policies. At the same time, expenses typically rise. Setting aside extra cash in advance can help smooth this transition.

Re-evaluate your employer benefits

Your special enrollment period is a good time to revisit health insurance options (for both spouses, if applicable), adjust 401(k) contributions, and review other employer benefits, since your household cash flow will likely change.

Adjust paycheck withholding

Having a child often lowers your tax liability because of the Child Tax Credit ($2,200 per child in 2025). Review and update your W-4 to avoid large refunds and instead improve month-to-month cash flow.

Consider a Dependent Care FSA

If you plan to use daycare, a Dependent Care FSA lets you set aside up to $5,000 per year pre-tax to cover eligible expenses. This benefit can save significantly, especially since daycare costs vary widely depending on the type (center-based vs. in-home) and your location.

Unlike dependent FSAs, you may also contribute to an HSA simultaneously if eligible.

Sign up for Dolly Parton’s Imagination Library

This free program mails one book per month to your child until age five. It’s a simple way to build a home library and save on book costs.

Balancing financial management as a new family with the day to day tasks of raising a child can be overwhelming.  I help new parents make smart decisions on these topics above through advice only planning.  Learn more by booking a complimentary call.