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Messy Kids

New Parents: Avoiding Financial Messes May Prove Much Easier Than Other Clean-ups Ahead

Photo of author, Chelsea Clegg, CFP®.
Chelsea Clegg, CFP®
Financial Strategist

Congratulations! Your family recently grew by two little feet. Now what?

My family recently expanded from three to four members (plus two fur babies). When you’re expecting, there is no shortage of advice. I’m pretty sure I even received parenting advice from people who have never even had children -- it was interesting.

However, the best piece of advice I received was to not take anyone’s advice…and, the more I thought about it, the more it made sense to me. More often than not, your instincts far outweigh internet research. Essentially, no one knows your baby quite like you do.

You’re probably thinking, “Wait…she just told me the best advice was to not take any advice and now she’s giving advice?” You would be correct! But I’m not here to tell you to sleep when the baby sleeps (which may not happen for a little while and that’s normal!). I can’t tell you how many times I heard that, even with having two kids at home. I jokingly counter with, “So I should do laundry when the baby does laundry?” I digress. Instead, this blog will focus on financial advice; and trust me, everyone needs that.

Below are four key areas to consider now that your family has grown. They will help you avoid financial blindspots, or as the mom in me likes to say, financial messes:

(1) Health, Vision and Dental Insurance

  • Did you contact your insurance company to ensure your little one has been added? The birth of a child is a "qualifying life event," meaning you have 30 days from birth to add him/her to your policy. If you do not add the child during the special enrollment time, you may have to wait until your employer’s next open enrollment period.
  • Note that some employers or unions bundle health, vision, and dental insurance; so while the baby generally doesn’t need vision or dental insurance yet, it may be a good idea to have him/her added so you know your coverage is complete.

(2) Life Insurance

  • Have you reviewed your life insurance to ensure the coverage amounts meet your current and future needs? Having a child means increased costs, whether it be food and clothing, daycare, private elementary or secondary schooling, and even college. Should one spouse pass away unexpectedly, are you able to replace the spouse’s income and still accomplish your family's financial goals?

(3) Estate Documents and Beneficiaries

  • Have you updated your estate documents and beneficiaries to reflect your new child? Your wills should also dictate who will take care of the child should both parents pass away unexpectedly. Further, you want to ensure assets are titled appropriately. Minors can’t be the registered owner on an account; but you can ensure a guardian is named and that person will monitor the assets until the child is of legal age to receive them (generally 18 or 21 years old but varies with each state).

(4) Dependent Care Flexible Spending Account (DCFSA)

  • If you’re a working parent and your child is under 13 years old and enrolled in daycare, after-school care, or summer camp, you may want to consider contributing to a Dependent Care Flexible Spending Account (DCFSA) if offered by your employer. Unfortunately, if a DCFSA is not offered by your employer, there is no other way to contribute to one.
  • For many, daycare expenses can range from $500-1000/month per child. Even though the DCFSA contribution limit doesn’t change with having multiple children, it’s still worth considering as its tax benefit may outweigh the child tax credit.
  • Withdrawals for eligible expenses are sheltered from payroll taxes and reduce your taxable income. For 2023, the limit is $5000 for married/filing jointly and single filers, and $2500 for those married/filing separately.


So if your children are anything like mine, in the time it took you to read this blog, someone has colored on the wall with a non-washable black crayon (true story) or is now covered in an unidentifiable substance (also true). Take care of those messes, but then spend a little time cleaning up your financial blindspots. Believe me, the extra cleaning today will save you much bigger messes later. And that’s my final piece of advice.

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