When I wrote a post recently about 530A accounts, one of the commenters asked:
“Do you have a blog post that serves as a financial to-do list for WCIers the year they have a baby? As someone hoping to have their first child soon, it would be helpful to see everything in one place.”
The answer was no; no, I didn't. And since I don't like typing the same stuff into the internet over and over again when I can just post a link, I figured I'd better write a post. Here you new parents go. And for those who just got suckered in by the provocative headline, sorry about that. Hope you still find something useful in this list.
#1 Take a Deep Breath
First of all, you don't NEED to do ANY of this to be a successful parent. If you can get through the first year with the kid still alive and the parental relationship intact, you did pretty darn well. If you're worrying about this stuff already, your kids are going to be so far ahead of their peers it isn't even funny. You don't have to start a 529 five years before they're born and then change the beneficiary from yourself to your kid. College doesn't cost THAT much.
#2 Build Up a Baby Fund (Feather the Nest)
It is a good idea to save up a few bucks to cover those baby expenses. Car seats, strollers, diapers, baby clothes, baby food, baby backpacks, and high chairs are all way more expensive than you might expect. We're not even talking about hitting your out-of-pocket max for the delivery. And now an emergency fund has an additional mouth to feed if you lose your job. Beef it up! (No, you don't NEED a minivan for one or even two kids.)
More information here:
How Our Plan to Start a Family Affects Our Quest for Financial Independence
Being a First-Time Mom and a New Attending Surgeon: It Can Be Done
#3 Utilize a Registry
My daughter cleaned up at her wedding as far as wedding gifts go. Part of that comes from the fact that it was the union of two large families and they both had lots of friends. But part of it was that they were savvy about how they used a registry. Well, guess when else a registry gets used? That's right, with that first baby (especially in association with a baby shower if your culture is into that sort of thing). Use an online registry that can work with multiple stores and be thoughtful about what goes on there.
#4 Establish a Parental Leave Plan
As soon as pregnancy is established, it's time to figure out how to pay for some time off for one or both parents. Check with your employer(s) about parental leave policies. How long are they? Are they paid or unpaid? If unpaid, you'd better start saving up for it. Maybe pause your retirement account contributions and additional student loan or mortgage payments for a few months until you're sure you have enough to get through. Cash is king. You can always turn around in a few months and put it in the retirement accounts or send it to lenders. All you lose is a few months of interest or opportunity cost. How much time does Mom want off? How much support does she need? How much time should Dad take off? Make a plan that works for everyone in the family.
#5 Plan What You're Going to Take Out of Your Life
Guess what? Babies are time-consuming. The first one dramatically changes your life. The second forces you to move from a zone defense to a man-to-man defense. If you thought that was bad, wait until you have to go from man-to-man back to zone when baby #3 comes. The bottom line is that something has to give. Figure out what it is going to be in advance. Will you work less? One of you? Both of you? Will you save less for retirement so you can spend more on childcare? Which of your hobbies will you give up to allow time to parent? How will vacations change? Plan it out.
#6 Revise Your Withholdings
If you qualify for any sort of Child Tax Credit (it starts phasing out at $200,000 [$400,000 Married Filing Jointly]), you may want to revise your withholdings at work. And you can do it as soon as you're in the year in which the baby will be born. If you think the Child Tax Credit phaseout is unfair, wait until you find out about the Child and Dependent Care Credit phaseout ($75,000/$150,000). I guess it's another good reason to get that family started while in residency.
# 7 Update Your Budget
Babies aren't free. Even once you feather the nest and pay for the birth, your ongoing expenses will be higher, especially if there is a nanny or full-time childcare. Update the budget. Just like when you initially established a budget, it's going to take a few months to get it right, and there will be a little negotiation as your new values and priorities are codified in your spending plan.
More information here:
How Much Does It Cost to Raise a Child in the US?
With Our Expanding Family, We’ve Had to Break Our Financial Plan – Twice
#8 Get (or Update) Your Will
The most important part of a will is who it designates to take care of your minor children if you die. You may want to designate the same person to manage your financial assets on their behalf, but many prefer a “separation of powers.” At any rate, if you don't express your wishes in a will—even a simple “I love you” style will made online—you're leaving it up to the state. Hope they get it right. If your estate plan is more complicated with trusts and such, you'll need to make sure that all gets updated, too.
#9 Update Beneficiaries
Your retirement accounts, annuities, and life insurance policies all have beneficiaries. The primary one is probably your spouse. If you established them before having children, you may not have a secondary beneficiary, or it may be someone you love less than your child. Probably best to update those, too, just like you should update them if you get divorced, get married, or your spouse dies.
#10 Increase Insurance
Speaking of insurance, you may need to purchase or increase the amount of term life or disability insurance you have. Best to run some numbers to see.
More information here:
6 Reasons Not to Buy Life Insurance for Your Children
People Aren’t Buying Disability Insurance, But They Should
#11 Add Child to Health Insurance
Better put that new kid on your health insurance policy, too. Or if you're still in school, look into Medicaid or CHIP. This is a particularly big deal if you're still on your parents' insurance. Your parents' policy covers the insured's children (you) until they're 26, but it doesn't cover the insured's grandchildren. So, your delivery might be paid for by your parents' insurance, and the child's stay in the hospital probably is, too. But if you have to come back to the hospital later that night with a neonatal fever (or more likely “parental concern”), that admission isn't going to be covered.
#12 Freeze Child's Credit
Terrible people exist in this world who would take advantage of babies and new parents by establishing credit cards using the baby's name and Social Security number. It's probably best to freeze their credit for a couple of decades. Don't worry about their credit score. You can fix that in a few months just by adding them to your oldest credit card once they move out. Just ask my daughter, who had an 800+ credit score without ever borrowing any money.
#13 Use Dependent Care FSA
Check if your employer offers a Dependent Care Flexible Spending Account or FSA. If so, take advantage. The 2026 contribution limit for these is $7,500 MFJ (and half that MFS). Note that this is significantly higher than the $5,000 allowed in 2025. The FSA will at least let you pay for childcare with pre-tax dollars, and maybe the employee will throw some money in, too. Keep in mind that FSAs are mostly “use-lose” funds, and Dependent Care FSAs, unlike Healthcare FSAs, don't allow ANY rollover at the end of the year. (It's $680 in 2026 for Healthcare FSAs.) Use it or lose it, and don't put more in there than you KNOW you will use.
#14 Start a 530A Baby Bonus Account
530As, sometimes referred to by right-leaning folks as Trump Accounts, offer a free $1,000 for any child born between 2025-2028. You can learn more and open one at trumpaccounts.gov. The money can't be taken out for 18 years, and then it becomes a traditional IRA. While $1,000 beats a kick in the teeth, the real benefit here for WCIers is that parents, employers, and others can contribute up to $5,000 per year for 18 years. If you put that $90,000 in there and let it ride until age 65 while earning 10% a year on it, your kid will retire with more than $20 million. It's wild what compound interest will do over seven decades. You can make it mostly tax-free if your child does a few Roth conversions early in their 20s while in a low tax bracket (but financially independent of you, so kiddie tax rules don't apply).
#15 Make Your Kid a Millionaire
Is $20 million not enough? You can put as much as you want into a low-cost variable annuity as soon as they're born and invest it aggressively. Gift tax limits apply, but if you don't have an estate tax problem, that just means you have to file an informational gift tax return, IRS Form 709, for gifts larger than $19,000 [2026 — visit our annual numbers page to get the most up-to-date figures]. That isn't that big of a deal. Imagine you put $13,000 in there on the day they were born. What will that be worth after 65 years at 10% per year? It'd be $6.4 million. Even if you adjust that return down 3% for inflation, it still adds up to just over a million in today's dollars. All for the low, low price of $13,000 today. That's the time value of money.
#16 Pay for Your Kid's College
The same principle applies to college savings. More time is a good thing. 529 account earnings come out tax-free if spent on legitimate private K-12 (except for state income tax in New York) or college expenses. If you put $19,000 into a 529 for the kid just as soon as you get a Social Security number for them (let's make that task #16 1/2, but it's usually done when you apply for the kid's birth certificate and just takes a few weeks to receive) and earn 10% on it for 18 years, it'll add up to $106,000.
That'll completely pay for four years at an inexpensive school. At least for now. Maybe not in 18 years. But it's a heck of a good start. And both parents can open a 529 if they want. So can the grandparents. And you can all do the “five-year superfund” thing and put $95,000 each into a 529. With two parents, four grandparents, and a mere $570,000 in contributions, your kid can start college with $3.2 million in savings. You can probably still pay for college at Wellesley plus medical school at USC in 18 years for that.
More information here:
3 Reasons Why You Can Take More Risk with a 529
Despite Our Student Loan Debt, Here’s How We’re Filling Our Kids’ 529s
#17 Pay for Your Kid's House
Truthfully, young people will more likely to need a lot of help with a down payment on a first house than they will with college. The best account for that and other “20s fund” needs is a Uniform Transfer to Minors Account (UTMA). If you put $200,000 in there at birth (don't forget your 709), and earn 7% real (after-inflation) on it for 30 years, it'll add up to a down payment of $1.5 million in today's dollars in 30 years. Keep in mind that after the first few thousand in income each year, any additional income is taxed at YOUR income tax rate, not your child's. This is the kiddie tax, and it's the reason that many WCIers try not to get much more than $100,000 in a UTMA and invest it as tax-efficiently as they can. But putting $200,000 in there now only blows $200,000 in the estate tax exemption limit rather than $3.5 million (nominal) if you give the money to them in 30 years.
#18 Hire Your Child as a Model for Your Business
If your child has earned income, it can go into a Roth IRA and never be taxed. Not taxed when they earn it (because it's less than the single standard deduction). Not taxed when they contribute to it. Not taxed when they withdraw it. It'd be triple tax-free, like an HSA. If they work for your sole proprietorship, they don't even have to pay payroll taxes on that money.
What can a newborn do to earn money? How about being a child model for your practice website? Certainly, $50 an hour is a reasonable rate. Some might argue $100. And of course, they have to be paid for those hours while they're traveling to and from the place where the pictures are going to be taken, right? Pigs get fat, but hogs get slaughtered. Keep it reasonable and document well with W-4s, W-2s, W-3s, I-9s, and timecards.
Feeling poor after reading #s 13-18? Yeah, me too. Our household income when our first was born was $40,000 per year, and our net worth was less than $10,000. Most new parents obviously can't afford to put anything away for their kid's daycare, retirement, college, or future house. That's OK. You can always help later. The relevant principle here is that you can help others best from a position of strength. You don't want your parent to go broke paying for your medical school and then move in with you when they retire as soon as you finish residency. Don't do that to your kids. Your student loans and your retirement are the priorities; once those are taken care of or on track to be taken care of, you can start saving anything for your child's future.
What do you think? Which of these did you do in the first year of your child's life? (None? Me either. Actually, we probably did 1, 6, and 7. But that was it.) What else should a new parent be doing?