Four steps to take before having a baby

1. Check mom's health insurance. 

Few people can afford to pay the cost of a hospital delivery out-of-pocket. Some lower-cost insurance plans don't cover maternity costs, so make sure yours does. If it doesn’t, find out what co-payments or deductibles you'll be responsible for, so you don't get surprised when the bills come due, and start saving. Also make sure your insurance is honored at the doctors and medical facilities that you plan to use.

• See also: Health insurance

2. Budget for medical costs.

Find out any medical costs you might need to pay out-of-pocket. This varies a lot by plan, but examples can include genetic counseling, parenting classes, and in-vitro fertilization. If you have a flexible spending account at work, you might be able to use that for some of these medical needs.

• See also: Flexible spending accounts

3. Figure out your baby budget and the cost of childcare

Spending for a baby is a bit open-ended. Some costs just are what they are without too much range in price (formula, diapers). Other things can range from hand-me-down to high-end luxuries. Before you spend, come up with a budget and stick with it. Make sure to budget for the cost of childcare, which can be a bit expense. Try to buy the essentials in bulk, if you can, which will save you on cost.  If you need help, use this baby cost calculator to help price out essentials:

• Baby cost calculator: www.babycenter.com/baby-cost-calculator

• See also: Budgeting

4. Estimate the cost of childcare versus one parent leaving full-time work.

If one parent will stop working, figure out the real impact of that. If both plan to keep working, figure out whether it's worth it. Many parents are surprised to find out that by the time you cover the costs of childcare, working expenses like commuting and taxes paid on the additional income, your take-home pay isn't worth the time away from your child. Create a list that accounts for every cost in both the "working" and "not-working" scenarios. Use a tax-prep software or website to see how your tax bill might change if your income decreases.

• See also: Childcare costs, Taxes

Five steps to take after having a baby

1. Get life insurance.

Now that you have someone depending in you, you need to have good life insurance. Check with different providers to see what coverage is best you're your situation and to compare prices.

• See also: Life insurance

2. Network with other parents.

Get tapped into local moms and dads. If you live in a city, there's probably a social networking group either in-person on online. If not, consider starting one. This kind of network can be an excellent resource that ends up saving you a lot of money. It can help you with:

• Advice on what to buy
  It's easy to drop thousands of dollars on baby-related products you don't need. 90% of what you see in the store isn't necessary and you'll save a lot of money by sticking to the essentials. Talk with other parents about what you need to have.

• A source of used goods
  Join a parents' group and you will be able to borrow things or get used goods—cribs, car seats, clothes. Most baby gear and clothing gets used for only a couple months before it's outgrown, so this can save a lot of money.

• Free babysitting
  You're going to want this kind of help. This can be a free way of doing it—find or start a group that trades off babysitting days among parents.

3. Add your child to your health insurance.

Typically the child is covered by the mother's plan automatically, but you need to enroll them shortly after birth. Be sure to have that paperwork ready to go so you don't end up without health insurance for your child at a time that there's a bunch of check-ups and other stuff going on.

• See also: Health insurance

4. Learn your tax breaks.

Learn the tax breaks that come with your new addition. Some of them might let you change the withholding in your paychecks, so you have more money in your checking account each month instead of just getting it back as a refund in April next year. Here are some examples:

• Dependency exemptionAt the top of your federal income tax return, you list out all the dependents in your household, which includes kids. Adding one lets you subtract more than $3,500 from your taxable income. If you paid any Alternative Minimum Tax (AMT) last year, you may not get to claim a benefit. You can talk to a tax professional if you have questions about benefits.

• • IRS: www.irs.gov
• Section 529 College Savings Plan
  Early contributions to a college savings plan are important because they have more time to sit and grow. They also may give you tax credits. Ask your family and relatives to help you contribute. If you're not sure about how to start saving for college, see:
  • Saving for College: www.savingforcollege.com
• Child and dependent care creditThis credit allows working parents to reduce their tax bill by up to $1,125, based on costs paid for childcare while you are working or seeking work. This can factor into your plans for employment and what kind of care provider you use. Go to the IRS website for more information.

• Adoption credit
  If adopting, be sure to read up on this large credit that helps reduce the cost of the process. Plenty of information is available at:
  
  • IRS tax topics: www.irs.gov/taxtopics/tc607.html

• See also: Taxes

5. Get your child a social security number.

This is one of the most important steps when having a baby, and the fastest and easiest way to do this is when you get your child’s birth certificate and are usually asked if you want to have a Social Security number issued. Check the Social Security Administration website for more information:

• Social Security Administration: ssa.gov/pubs/10023.html

Other things to think about

If keeping costs down is high on your priority list, always look to your budgeting and spending to see if there are ways to trim costs and plan ahead for big expenses. Here are a few ideas:

• Ask family and friends for help.

Childcare expenses can be overwhelming if you  haven't planned ahead. You want to budget for it, if you're going to plan on having it. But, also consider asking your friends and family if they will watch your child in exchange for something. That can be a good way to cut costs.

• See also: Budgeting 

• Budget for a kid-friendly car. 

This may not be necessary, but having a kid may require more car space. At a minimum, you need a back seat for car seats. Look for cars with four doors that are used, have space for carrying things, are cheap to buy and operate, and are fuel-efficient.

• See also: Buying a car

Links we like

Here are a few online resources you may find useful:

• Social Security Administration: ssa.gov/pubs/10023.html
• IRS tax topics: www.irs.gov/taxtopics/tc607.html
• Baby cost calculator: www.babycenter.com/baby-cost-calculator
• Saving for College: www.savingforcollege.com