So, you’re about to be a family of three. Congratulations! You’ve taken the parenting classes, painted the baby’s room and set up everything right down to the personally inscribed baby books.

In other words, you’re ready for baby. But are you ready for the financial tsunami that’s about to occur?

Rest easy, soon-to-be parents. We've got you covered with the questions and discussions you and your spouse need to have before baby comes bouncing into this world.

Set Priorities

The most important thing that each of you can do prior to baby’s arrival is to establish priorities about your finances. Your entire life is about to change – how and when you sleep, how and when you eat, and how and when you spend your money. If you and your partner are on the same page about the priorities for your money, the discussions about money after baby will be much easier.

For instance,

  • Do you need to continue your expensive cable subscription?
  • Do you want to continue shopping at the higher-end department stores for clothes?
  • Do you want to continue your season tickets for a local sports team?

You must prioritize your spending because, now that you’re starting a family, your needs and wants will soon be vastly different than they ever were before.

Refigure Your Budget

If you’ve never done so, sit down with your spouse and hammer out a realistic family budget. Ask your friends with children how much they spend each month on baby-related items and try to find that money in your monthly budget. Facing these questions ahead of time will help you and your partner make wiser financial decisions in the future.

Accept Your New Budget and Lifestyle

Another key for both of you is accepting that your spending will change. Before baby, you and your spouse probably indulged in your fair share of discretionary spending – eating out, going to the movies, maybe even traveling on a whim. Unless you’re living in an upper tax bracket, those days are likely over – at least for a while. Your money is about to be consumed by formula, diapers, baby clothes and toys, a college fund, and many other demands. It’s important to not only know that but to accept it.

Save, Save, Save

Next, start saving. If neither you nor your wife has ever been a saver, you might want to consider starting a retirement fund. The demands on your money are about to increase exponentially and if you don’t get disciplined now to save, it will be much harder once you have a child. Everywhere you look you will see adorable items for your child that you won’t want to pass up. You will want to enroll your child in all kinds of Mommy & Me classes that are not cheap. In other words, you will find ways to spend whatever money you have. If you build into your budget a savings plan for your family now, you will reap the rewards later in life.

Discuss Insurance Options

Another conversation you and your spouse need to have is about insurance – health and life.

  • Whose health insurance is better for your family?
  • Who has the lowest co-pays?
  • Does your insurance cover dental for children or vision?

These are just a few of the questions that you’ll want to answer ahead of time. Look, people have children all the time, so it’s probably a good idea for each of you – if you both work – to meet with your human resources contact and discuss these questions.

As for life insurance, maybe you've never even thought about it. It’s not something many young people consider. But now that you’re about to become Mommy and Daddy, you should investigate. If anything happens to you or your spouse, you want to know that your family will be taken care of.

Be Prepared

Lastly, you must prepare for the unexpected. When you were just two, you may have had more of a cushion to deal with a costly car repair or if an appliance stops working in your home. But now, there will be fewer dollars to go around. Before baby comes, try to give yourself a little nest egg in case unforeseen problems arise. There may be hospital bills that are more than you anticipate or things that your child needs early in his life that you weren’t budgeting for. If you’ve got quick cash in the bank, you can handle those crises and still be ahead of the game.

One thing I remember my grandfather telling me is, “If you wait to have kids until you have enough money, you will never have kids.” He was absolutely right. But you can and you should prepare financially for the event and all that comes after it as best you can. If you and your wife discuss these topics honestly and openly before your child arrives, you’ll be better prepared to handle the financial dilemmas that will inevitably occur.