10 Tips for Millennials About to Become New Parents

Beth Misak |

By Paul Hynes, CFP®
May 2021

The Millennial generation—those born between 1981 and 1996—are now ages 25–40.1 We previously focused on the fact that they were getting married, setting up new households, and impacting economic growth. Now we’ll turn to the next major step in many Millennials’ lives—having a baby

Becoming a parent for the first time is life-changing. As with many big things in life, preparation is key. Making the necessary financial arrangements before the baby arrives will help minimize stress down the road. And, it can allow you to spend more time on the most important things, such as loving and caring for your newborn.

Here are some important financial tips to help you adapt to your new responsibilities. Some of these you’ll want to take care of before the baby arrives. Others might be able to wait. Either way, don’t underestimate how little time and energy you’ll have to do anything else other than care for your new bundle of joy.

Before baby arrives:

  1. Get Insurance—Both Life and Disability. Purchase term life insurance and long-term disability insurance. The insurance is needed to help replace lost income due to death or disability. It’s not fun to think about, but it can happen. A good rule of thumb is to buy life insurance benefits about equal to ten times annual income. If that seems too much, buy as much as you can afford. For disability, get as much as you can, usually up to 60% of annual income. And, if both spouses work, both should be insured. Term life insurance should be affordable for young, healthy people.
  2. Create a Will. A will is a legal document prepared by an attorney. It records your last wishes in writing, including appointing guardians for minor children. If you don’t leave a will, then the court will decide the matters regarding your assets and your children. The court’s decisions may not be in line with your wishes.
  3. Create or Update Your Other Estate Planning Documents. In addition to a will, you may want to ask an attorney whether it makes sense to have a living trust in place. A properly funded trust can help avoid the costly and time-consuming court proceeding called probate. Even if it doesn’t make sense to have a trust, an attorney will likely recommend that you have a Power of Attorney and a Healthcare Directive. These will allow one spouse to make important decisions if the other spouse is for any reason unable to do so.
  4. Create a Household Budget. Having a child can be expensive. Take a look at your budget and ask, “Do we have enough income to afford the extra expenses?” Or, “Do we have enough in savings?” If not, try to beef up your savings. Avoid running up credit card balances. Think of your card as a “payment” card, and not as a “credit” card. Pay off the full balance each month to avoid high interest costs.
  5. Automate Your Bill Paying. When you’re busy and tired from managing life with a baby, sometimes things can slip through the cracks. If an important bill payment deadline is missed, it can cause financial havoc. So, automate every possible bill payment so you can stay on top of your finances amidst the chaos and exhaustion.
  6. Shop for Childcare. It’s not too early to start thinking about childcare options. Start shopping around. Visit some daycare centers and get a feel for the environment. Ask about waiting lists and enrollment. You don’t want to be a few weeks away from returning to work and find out that the options you want are full. That could lead to additional expenses and problems.

After baby arrives:

  1. Add your new child to your health insurance plan
  2. Take advantage of income tax breaks
  3. Start saving for college
  4. Keep saving for your own retirement

We’ll cover more about these post-birth needs in a future article.

Having a child is rewarding in so many ways. It also brings new responsibilities. It necessitates planning ahead for both the expected and the unexpected. It can sometimes be overwhelming. You will be well-served by talking with an attorney, CPA, and financial planner. And, feel free to talk with us. We’re here to help. Finally, Happy Mother’s Day to all mothers!


1Defining Generations: Where Millennials End and Generation Z Begins. Pew Research Center.