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Military Finances 101: A Financial Survival Guide for New Parents Thumbnail

Military Finances 101: A Financial Survival Guide for New Parents

Managing Your Finances

Becoming a parent is one of life’s most exciting and rewarding experiences. However, along with the joy comes a new financial reality. From medical bills and diapers to childcare and education, the cost of raising a child can feel overwhelming. 

Even so, with a little planning and smart money management, you can prepare yourself for the financial challenges of parenthood while still enjoying the journey. Here, we have prepared a financial survival guide for new parents.

Assess Your Financial Situation

Before your baby arrives, take a step back and evaluate your current financial situation. Understanding where you stand will help you plan for the expenses ahead. 

Start by tracking your income and expenses to get a clear picture of your cash flow. Ensure you have an emergency fund saved that can cover at least three to six months’ worth of expenses, as unexpected costs will likely arise.

If you have outstanding debt, consider a repayment strategy that balances paying the debt down while still allowing room for savings.

Create a Realistic Baby Budget

Before the baby comes, consider the cost of medical care, including prenatal visits, delivery, and pediatric appointments. Check your health insurance policy to understand what’s covered and what you will need to pay out of pocket. Tricare should cover most of this.

Next, budget for baby essentials, such as diapers, formula, clothing, and nursery furniture. These costs can add up quickly, so look for ways to save, such as buying secondhand baby gear, borrowing from friends and family, or using baby registry services to help cover major expenses. 

If you need childcare, research your options early, as day care costs can be a significant portion of your budget. The actual cost will depend on where you live and the type of care you choose, but according to The Pew Research Center, the median annual cost of childcare for one child ranges from $5,357 to $17,171.1 Many parents are surprised by long waitlists and these high fees, so planning ahead can make a big difference.

Save for the Future

As a new parent, it’s time to think beyond immediate expenses and start building long-term financial security. If you haven’t already, prioritize strengthening your emergency fund. Babies are nothing if not unpredictable, so having a financial cushion will help you feel confident in both your daily expenses and your long-term savings.

Consider opening a 529 plan or another investment account if you want to start saving for your child’s education; 529 plans offer tax advantages and other incentives to make saving for education expenses easier.2

The earlier you start saving for your child’s future, the more time your money has to grow. However, do not neglect your future in the process! Continue contributing to your retirement fund, as your financial security will ultimately benefit your family in the long run.

Make the Most of Employee Benefits

Many employers offer benefits that can ease the financial burden of having a child.

  • Make sure you understand your Tricare benefits and get your baby signed up as soon as possible.
  • Take advantage of DoD provided paid parental leave, take advantage of it to guarantee financial stability during the first few months.
  • Consider the new Dependent Care Flexible Spending Accounts (FSAs), which allow you to use pre-tax dollars for childcare expenses, saving you money in the long run.

Cut Costs Where You Can

With a new baby at home, it’s easy to let expenses spiral out of control. However, small adjustments can help you stay on track. Reduce unnecessary spending by cooking at home instead of dining out, limiting non-essential subscriptions, and buying baby clothes and gear secondhand.

Plan for the Unexpected

As a parent, protecting your child’s future should be a top priority. If you don’t already have life insurance, now is the time to get a policy that ensures your family will be financially secure if anything happens to you (don't forget to get a policy that doesn't have a war clause).

Updating your will and estate plan is another important step after having a baby. Assigning guardianship for your child and designating beneficiaries on your financial accounts can prevent legal complications down the road.

While these are not pleasant subjects to think about, having such plans in place will provide you with peace of mind.

Having a baby is an incredible, life-changing experience but also a significant financial commitment. By taking the time to assess your finances, create a budget, save for the future, and plan for the unexpected, you can navigate this new chapter with confidence.

Military Finances are Different

As a military member you have access to some benefits that civilians may not have. Tricare is one example. Depending on your marital status, having a child may actually increase your compensation. These are just a couple of ways your finances are unique. That's why we think Active and Retired military members should work with someone who understands them. If you'd like to find out how we work with people just like you, use the button below to schedule a free, initial consultation.

If you found this article useful, you might like the following blog posts:

Military Finances 101: How to Cancel Subscriptions You Didn't Even Know You Had


Military Finances 101: Start Your Financial Plan


Military Finances 101: Watch Out For These Latest Information-Stealing Scams





  1. https://www.pewresearch.org/short-reads/2024/10/25/5-facts-about-child-care-costs-in-the-us/
  2. https://www.irs.gov/newsroom/529-plans-questions-and-answers

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