Lynda Moore wants you to talk about money before your baby comes, but be prepared to change as your life changes, creating enough financial flexibility to give yourself choices

We’re having a baby!  For some families, this has the ring of joy and excitement to it.  For others, it might not. The stress of not only caring for a baby but also the financial aspect of it can be overwhelming and daunting.

When you start thinking about having a baby, money is probably not the first thing that comes to mind. There are conversations about whether the time feels right, what your family might look like and all the excitement that comes with imagining a little person joining your life. Then there’s the waiting before it becomes a reality and the baby bump appears.  We can never plan for the exact moment when this is going to happen, babies and mother nature have their own agenda.

Then, somewhere along the way, in between morning sickness and mood swings, you start looking at prams, cots and car seats and suddenly realise that tiny humans can come with surprisingly large price tags.

Planning financially for a baby is important, but it is about much more than working out how much to save for baby clothes and nappies. Having a child can change the way your household works, the way you earn, the way you spend and even the way you think and feel about money.

That is why the best time to start planning is before the baby arrives.  Make the most of that time between finding out and bringing your little bundle home.

Start with your current financial picture

Before getting caught up in lists of baby essentials, take a step back and look at your finances as they are now. What does life currently cost? How much income comes into the household each month, and how much of it is already committed to your mortgage or rent, debt repayments, insurance, food and other regular expenses?

The next step is to think about what may change when the baby arrives.

For some families, one parent may take parental leave and experience a temporary reduction in income. Others may decide to work fewer hours, take a longer break from work or eventually face significant childcare costs when they return. Even if your income stays the same, your spending is likely to look different.  There is no right or wrong here, you need to do what is right for your family and align it as much as you can with your values.  Just because your friends are determined to have one parent be the ‘stay at home’ one, doesn’t mean that’s what you need to do as well.

One useful exercise is to try living on your expected future income before the baby arrives. If you currently have two incomes but expect to rely mainly on one for the first year for example,  see what that would feel like. This can be a helpful reality check and may highlight areas where you need to adjust.

If you can manage to live on the lower income, you can save the difference while you still have both incomes coming in. That money can then become a financial buffer for the period after your baby arrives.

Talk about money before the baby comes

This is particularly important for couples. Babies bring enormous joy, but they can also bring exhaustion, stress and a completely new level of responsibility. Money disagreements are often not caused by the numbers themselves. More often, they come from different expectations about who will do what and how things will be managed.

Before the baby arrives, it is worth having some honest conversations about parental leave, how long one parent might take away from work and what returning to work could look like. You may also want to discuss how household expenses will be managed, whether you will combine your finances or keep some things separate and what happens if one of you wants to stay home longer than originally planned.

These conversations are not always easy, particularly if you and your partner have different attitudes towards money. However, it is much easier to discuss expectations before you are both exhausted and caring for a newborn.

There is no single right way to manage your money as a family. The important thing is that you understand each other’s expectations and make decisions together.

Build a financial buffer

Babies are not particularly predictable, and neither is life.

You may have a perfectly planned budget, but circumstances can change quickly. You may need more time away from work than expected, face unexpected expenses or find that your childcare arrangements cost more than you originally anticipated.

Having some money set aside can provide breathing room during a time when there are already plenty of other things to think about. You do not need to save enough to cover every possible situation before having a baby, as that is probably impossible. Instead, focus on building a buffer that gives you some flexibility.

Start with what you can afford. Even a relatively small amount saved regularly can add up and make a real difference when you need it.

Don't let the baby industry decide what you need

The baby industry is very good at convincing new parents that they need a lot of things. When you are preparing for your first baby, it can be difficult to know what is genuinely essential and what is simply clever marketing.

Social media can add to the pressure. It is easy to see beautifully designed nurseries, expensive prams and every possible gadget and feel that you need to provide the same things for your child.

But babies do not care whether everything matches.  They are happy to burb and slurp over hand me downs as much as they over the high-end designer gear.

They also grow quickly; their needs change and many baby items are only used for a relatively short period of time. Talk to friends and family who have recently had children and ask them what they used the most. You may find that some things are worth spending money on, while others can be bought second-hand, borrowed or accepted as hand-me-downs.

This is not about depriving yourself or your baby. If there is something you genuinely value and can comfortably afford, there is nothing wrong with buying it. The key is making intentional decisions rather than spending because you feel that being a good parent means having everything on the list.

Think beyond the first year

The biggest financial impact of having a baby is often not the initial cost of preparing for their arrival. It is the longer-term changes that come afterwards.

Your income and spending priorities may change. Childcare may become a significant expense. You may eventually want a larger home or a different car. You may also start thinking more seriously about life insurance, wills and how your family would be financially protected if something happened to you.

Having a baby can change your relationship with money and risk. Things that once felt manageable may suddenly feel more important when another person depends on you. This can be a good opportunity to review your overall financial position and make sure your plans reflect the life you are building, rather than the life you had before children.

Give yourself permission to adjust

One of the biggest mistakes people make with financial planning is assuming that once they have created a plan, they must follow it exactly.

You do not.

Life changes and having a baby is a major life change. You may return to work earlier or later than expected. Childcare may cost more than you planned for, or your priorities may change completely.

That does not mean your original plan failed. It simply means the circumstances changed.

The best financial plans are flexible enough to adapt as life evolves. Planning for a baby is not about having every dollar perfectly allocated or predicting exactly what the future will look like.

It is about understanding where you are now, thinking about what may change and creating enough financial flexibility to give yourself choices.

Because preparing financially for a baby is not about buying the pram, the cot or the nappies.

It is about preparing your money and you for a completely new chapter of life.

*Lynda Moore is a Money Mentalist coach and New Zealand’s only certified New Money Story® mentor. Lynda helps you understand why you do the things you do with your money, when we all know we should spend less than we earn. You can contact her here.