5 Financial Tasks to Tackle Before Your Baby Turns 1

The first year of a child’s life can be a busy one for new parents. And in the throes of sleepless nights and countless diaper changes, it can be difficult to stay on track of all the financial to-dos that come with a new addition to the family. 

But you don’t have to get it all done while you’re on family leave. It can be helpful to break down priorities step-by-step, experts say. Set a goal to tackle these tasks in the first year.

“My recommendation to new parents would be to focus on the low-hanging fruit,” says Katy Song, a certified financial planner and CEO of Katy Song Financial Planning. Make a list and work through the tasks one by one—and definitely loop in your partner for support. There’s no reason to do it all alone.

Not sure where to start? Here are five financial to-dos that parents should focus on getting sorted before their baby turns one. 

1. Update Your Healthcare Coverage 

Having a baby counts as a “qualifying life event.” In order to make changes to your health insurance outside of the typical enrollment period, you’ll need to add your new baby to your policy within 30 to 60 days of their birth. 

“There's a lot of fogginess in the first couple of weeks,” says Jeff McGovern, lead financial planner at Haven Wealth Planning. He advises new parents to set a calendar reminder shortly after the baby arrives, so the deadline doesn’t quietly pass you by.

There are some key considerations to make when changing plans, including identifying what co-pays, deductibles, or co-insurance for different plan options look like.  

New parents can also use this as an opportunity to re-evaluate their medical plans, depending on employer availability. They may want to consider increasing contributions to a healthcare FSA, McGovern suggests, to help cover some of the medical expenses that come with having a baby. 

An alternative would be to switch to a high-deductible health plan, which unlocks HSA eligibility. While you can use money in an HSA to pay for current qualified medical expenses, you also can rollover the money and invest it for future costs. With an FSA, you have to spend the money you set aside within the same year. 

2. Plan for the Real Cost of Childcare

Beyond housing costs, childcare is often a family’s biggest expense, says Song. Depending on where you live, it can run anywhere from $1,500 to $5,000 a month. The average parent spends 20% or more of their annual income on child care, with 31% dipping into their savings to cover the cost, according to the 2026 Cost of Care Report from Care.com.  

Cost and options for child care vary, with in-home daycare usually being the most affordable. A full-time nanny is typically the most expensive, and a nanny share falls somewhere in the middle. 

Song encourages parents to be realistic about what type of child care actually fits their budget, rather than trying to make something work that they can’t afford. “If you really want your child to have a nanny but you can't afford one, maybe [you] look at a nanny share, or a smaller daycare,” she recommends.

While you’re updating your health insurance, you may also be able to start contributing to a dependent care FSA (depending on employer rules and availability), which allows you to pay for child care with pre-tax dollars. Like a healthcare FSA, money in a dependent care FSA must be spent within the year it’s deposited, so make sure not to over contribute.

3. Handle Your Estate Planning

Once your baby arrives, it’s important to make sure that they will have financial and legal security if something were to happen to you. At minimum, you should have a will that names a guardian. Without one, a court will decide who cares for your baby.  

But Song argues that a will alone isn’t enough. Minors can’t legally inherit assets, so she also recommends you set up a trust to spell out how assets are managed on your child’s behalf. 

“Never put minor children as a direct beneficiary,” she says. Any life insurance policy or retirement account beneficiary designation should point to the trust instead.

4. Get Term Life Insurance

Speaking of life insurance, after the birth of your first child is a great time to get a term policy. It’s important to have a back-up plan in a worse-case scenario situation, which is where life insurance comes in.

While it can feel overwhelming to navigate all the different life insurance options, most families only need a term policy that covers them for 20 to 30 years. These are generally less expensive than whole life policies and still provide plenty of coverage and peace of mind.

5. Open an Education Savings Account

It might seem hard for new parents to imagine, but it’s never too early to start saving for college.

Both McGovern and Song recommend parents open a 529 account. These accounts offer families tax-free growth on money they earmark for educational expenses. And you don’t just have to use them to pay for college. Thanks to recent changes, money in a 529 can also be used for elementary and high school expenses.

Song and McGovern recommend opening a Trump Account, too, your child qualifies for the $1,000 in seed money. It’s easy to set up both a 529 and a 530A account via the Babylist Early Investor platform. 

While you can have both 529 and 530A accounts for your kids, Song and McGovern recommend prioritizing deposits into your child’s 529 because it offers more tax benefits than a Trump Account, since withdrawals are taxed as income. 

New parents can face many competing financial priorities, but they shouldn’t feel like they need to balance all these expenses completely on their own. With a Babylist Early Investor account, you can easily share access to your child’s 529 and 530A accounts with friends and family so they can help contribute to your child’s future success.

The bottom line

There’s a lot to keep track of in a year full of firsts, and that includes many money-related tasks. McGovern advises new parents to try and block out external noise and stay focused on what works best for their individual circumstances. 

“Make sure that you’re making great choices that align with your goals, not just somebody else’s goals,” he says. “You’re going to know what lets you sleep at night more than anybody else.”