Birthing classes may teach valuable labor techniques, and family readiness volunteers can help if your spouse is deployed during delivery. But financial and military experts caution against overlooking one crucial aspect of welcoming a new child into the family: money.
“As a parent of three, I have found that there can never be enough financial planning in advance,” said JD Riddle, chief operating officer of a registered investment advisor company on the West Coast. “Nailing down your financial plans as soon as you can will make life that much easier, as decisions made pre-baby may well be better thought-out than one made at 3 a.m. during the middle of an up-all-nighter.”
Approximately 100,000 babies are born into American military families each year, translating into a whole lot of baby-related money decisions. Can you reuse that crib and car seat? Should you spring for a fancy swing? What about starting an emergency or college fund?
“Having a baby is a challenging proposition that comes with many expenses, often unforeseen,” Riddle said. “Preparing a solid budget and working hard to set aside some savings is critical in ensuring financial peace during a time of change.”
Concepts like “financial peace” were not on Air Force wife Paola Orellana’s mind when she became pregnant with her first. She simply concentrated on the obvious: tiny clothes, her changing body, baby furniture and toys.
“We weren’t financially prepared for anything!” she laughed.
By the time her second baby arrived almost three years later, she and her husband, Master Sgt. Mario Orellana, had learned their lesson. They couldn’t buy whatever they wanted, whenever they wanted, nor could they afford to ignore their children’s financial futures.
“Looking back now, we were never taught finances by our families,” Orellana said. “I wish we had been saving for a lot longer.”
That’s a refrain Riddle hears often. Still, he pointed out it’s never too late to begin sound financial habits, no matter what trimester you’re in — or even if your kid is already potty-trained.
The most important step, Riddle advised, is to create a zero-based budget. That’s where every single dollar is planned for in advance because you know exactly where it’s going. Start by adding up all your monthly income, then list every bill underneath and subtract. Aim to set aside 10% for savings. When a baby is on the way, include things like diapers, formula, furniture or any other infant expenses, either one-time or recurring. Whatever is left over is your “fun” money. Once that money is gone, you stop spending, full stop.
That’s what the Orellanas started doing with their second child. Each month, they add a set amount to a fund with their son’s or daughter’s name. Alongside half of Mario’s GI Bill money, they can use those funds for college, Orellana explained.
“I want them to be debt-free and financially conscious,” she said. “I want to teach them what we weren’t taught and guard them from some of our struggles.”
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Riddle recommends a few other tips: shopping secondhand, exchanging childcare with friends, and rewarding yourself for goals met, like choosing a fun nursery paint color after successfully creating a budget. Setting yourself up for financial success with a baby might be hard, he warned, but it is always worth it.
“You may need to sacrifice somewhere or downsize a car (which sounds contrary, since you are growing your family) in order to free some funds in your monthly plan,” Riddle said. “But having financial peace will mean so much more than a roomy car or excessive dining-out budget.”
Expecting? Here are military-specific resources:
- TRICARE not only pays for basics like labor, delivery, circumcision, immunizations and newborn care, but also for breast pumps, breastfeeding supplies and education — even for adoptive mothers who plan to nurse.
- Certain military support organizations, like the Navy-Marine Corps Relief Society, offer free baby budgeting workshops.
- Familiarize yourself with all the resources of your base’s Military Family Readiness center. Centers often offer money resources like financial education, new parent support programs and more.
- Take advantage of everything military charities have to offer new military parents: baby carriers, showers, breast pumps and even free or reduced-cost doulas!
- Save on attorney fees by preparing your will — including care plans for your child(ren) — at your base’s legal assistance office.
For more financial readiness tips, download our complimentary 2021 Military Money Guide.
