Bringing a baby into the world can be both exciting and expensive. According to the U.S. Department of Agriculture, the cost to raise a child from birth to age 17 is around $233,000, and that figure doesn’t include college. In Massachusetts, which was ranked the second-best state to raise a family by WalletHub, families pay some of the highest costs for childcare, housing and healthcare. 

But, a parent’s financial responsibilities go beyond just paying for day care, food and diapers. To make the transition into parenthood easier, you’ll want to budget for upcoming child-related expenses and make sure you have the right financial documents in place. Here’s a quick checklist to get you started. 

1. Start saving for college. Many 4-year colleges and universities in Massachusetts cost over $20,000 a year for tuition, fees and room and board. That means in 17 years a family might end up paying $200,000 or more for their child’s total college costs. The best way to plan ahead for college expenses is to open a 529 plan when your child is born, or even earlier.

Funds in a 529 plan grow tax-deferred and can be withdrawn tax-free to pay for qualified education expenses. Massachusetts residents may also be eligible for a state income tax deduction for their contributions and an initial $50 seed contribution when they invest in MEFA’s U. Fund.

2. Plan for maternity/paternity leave. The federal Family and Medical Leave Act (FMLA) allows parents to take up to 12 weeks of unpaid time off work for birth, adoption or placement of a foster child. But, beginning in January 2021, Massachusetts residents may be eligible for up to 12 weeks of paid time off under the Paid Family and Medical Leave (PFML) law. If you or your spouse will be taking any unpaid leave it’s important to budget accordingly.

3. Add your child to your health insurance. Parents are responsible for adding a newborn or newly adopted child to their health insurance policy. Don’t worry if you missed the open enrollment period. Having a baby and adopting a child are both considered “qualifying life events,” which means you can enroll in or change health coverage for up to 60 days afterward.

4. Shop for term life insurance. Term life insurance is an inexpensive way to protect your child financially in the event of your death. You can choose a term length (typically 10, 20 or 30 years) and an amount that is based on long your child will need financial support. The primary goal of term life insurance is income replacement. Term life insurance can be purchased through an insurance agent or online broker, or you can compare quotes yourself online. 

5. Write or update your will. As a parent, your will should include how you wish to divide up your assets and who you designate as a guardian for your child if you die. An attorney who specializes in family law can help you create a will, or you can create a will for free online or using an app like Fabric.

6. Claim tax benefits. As a parent, you may be eligible for certain tax credits for parents, such as the Child Tax Credit, the Child and Dependent Care Tax Credit and the Adoption Tax Credit. To claim a child as your dependent on your tax returns you will need the child’s Social Security Number. You can request a Social Security card for your baby at the hospital when you apply for a birth certificate or by filing Form SS-5 with the Social Security Administration. 


7. Adjust your W-4 withholding. When you become a parent, you may be required to fill out a new W4 at work. Since having a baby can potentially lower your tax bill, you may want to adjust your withholding.

8. Update beneficiaries. It’s easy to update the beneficiaries on your financial accounts by completing a change of beneficiary form for each account. With a life insurance policy, your spouse or partner is generally named as the primary beneficiary and your child is named as a contingent beneficiary.

However, if you and your spouse die before your child reaches legal age, you may want to consider assigning a custodian for your children or naming a living trust as the beneficiary of your life insurance policy. Children cannot receive a life insurance payout while they are still a minor.

9. Set up an emergency fund. Consider putting away half a year’s salary in a high-yield savings account in case of emergency. Make sure your emergency fund has enough money to cover your expenses during unemployment. When calculating your expenses, be sure to include the day-to-day costs of having a child. If you’re living on a single income, save at least six months’ worth of expenses.

10. Budget for new expenditures. One-time expenses during a baby’s first year can really start to add up. Many parents will spend over $1,000 on a crib, car seat and stroller alone. And don’t forget to include hospital costs in your budget. According to data from FAIR Health, the average hospital bill for a birth in Massachusetts ranges from $7,949.91 to $10,349.98 with insurance and range from $14,618.17 to $18,461.72 without insurance.