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Tips from Commerce moms on preparing financially for kids.

Few life changes will impact a household’s finances as much as adding a new bundle of joy to the family. Fortunately, there are lots of steps you can take to be financially prepared for a new baby — and other parents are often a wonderful source of information.

This Mother’s Day, we talked to a handful of Commerce Bank team members about how they prepared for the arrivals of their own children. They shared valuable insights about the steps they took, surprises that happened along the way, and how their approach to household finances has changed.

The team members we spoke with included:

  • Lacy Haden-Peaches, a senior DEI program manager in Kansas City with two young girls aged 4 and 2
  • Evan Monroe, a branch manager in Peoria, Ill., with a 1-year-old daughter
  • Valerie Proctor, a risk analyst in Kansas City with a 3-year-old son and a daughter on the way
  • Taylor Rooney, a senior marketing specialist in Kansas City with two young boys aged 3 and 1

The conversations we had with them are shared below; some responses were edited for clarity.

What are some of the financial steps you took to prepare for the birth of your child(ren)?

ROONEY: I feel like I could write a novel on this topic. The first thing I did was to look at my health insurance options to make sure I was on the best plan for us. I chose the option with a low deductible and a higher monthly premium. My husband and I also started saving money to be ready for the hospital bills that we knew were coming.

PROCTOR: We’re working on eliminating debt to make sure we’re in a good place when our daughter is born. We set up a high-yield savings account for her, just like we did for my son. I have an auto-withdrawal from my paycheck that goes straight into her account, and any time she gets a cash gift, we match half of it and deposit everything into her account. We’ll use this for sports, or summer camps, or for theater — whatever the kids end up being into.

I keep an eye out for great sales or coupons for diapers, so I’m always buying them at a discount. I’ve started buying them even before my daughter is born. I also buy different sizes and types, so I have what I need as she grows. The good thing is diapers are more exchangeable at stores than you might think; you can often exchange a box for the next size up if you need to.

HADEN-PEACHES: Family planning looks different for the LGBTQIA+ community. In our case, we had to be more intentional about our finances because we knew we would need medical intervention in some capacity and fertility treatments. One of our first steps was looking at health insurance coverage to understand what it would and wouldn’t cover. We’ve learned that some organizations’ insurance cover things like fertility treatments, but it can also be hard to get a good idea of what everything will cost. We saved for about two years before beginning the process, and it was a long process — you never know how things will go.

MONROE: It worked out in our favor that our daughter was born right after tax time. We were able to set aside our tax refund to help cover the time my wife took off from her part-time job.

Were there any surprises along the way? Any costs you didn’t anticipate?

HADEN-PEACHES: Our fertility treatments took a lot of time. They put us in quite a bit of debt because we had some issues and had to continue trying until we got pregnant. Fortunately, for our second child, we had already covered some of the upfront costs, so we were able to plan differently for that pregnancy.

Day care was a surprise. I knew it was going to be expensive, but once you have two kids in day care, it’s crazy. And it can be hard to get into day care, so you almost have to put your name on the waiting list as soon as you find out you’re pregnant. Otherwise, you might have to go to a more expensive day care because the one you wanted didn’t have an opening.

PROCTOR: I didn’t realize my son would have his own hospital bill after the delivery. I knew I would have one for me; his was a bit of a surprise.

ROONEY: Day care is just outrageous. It can be more than a mortgage for some people. Luckily the costs go down somewhat when your child reaches age 3 or 4, but it’s quite expensive — in our area, it’s $240 to $340 per week for licensed day care for one child.

Also, when our first child was born, we were a little surprised by all the extra fees and costs and doctor’s appointments you often have. Between copays and lab work and extra precautionary stuff, it adds up. We felt like we were in a good spot financially, but there were extra costs that surprised us.

MONROE: We wished that when we filled out our registry, we had asked for things the baby would need a little way down the road. She was a big baby and was only wearing newborn sizes for a few weeks, and a lot of what we had from our registry was newborn-size. We were lucky and got many much-needed items from our registry, but we wished we had asked for some larger clothes.

Are you starting to save for college or other long-term expenses?

MONROE: We’re trying to work on ourselves first. We’re a young couple with student loans, house payments, car payments, etc. Our goal is to get ourselves financially secure so that when needs arise, we have money for them.

ROONEY: For now, we’re starting out small. We have savings accounts, one for each child, and we put birthday and Christmas money in there. Once the kids get into kindergarten and our day care costs come down, we’ll have more flexibility to save for college.

HADEN-PEACHES: We have a college savings plan for our children. My wife and I have a lot of student loan debt, so a lot of our focus goes into imagining a world where our kids, should they choose to pursue a college degree, won’t have to pay out of pocket for it. We’re both blessed to have careers where we could make that investment, but we’ve also asked families to set aside part of what they would normally spend on birthday gifts and put it into their college funds.

PROCTOR: We aren’t saving for college yet, but we will.

What changes have you made to your budget and spending habits since the arrival of your child(ren)?

MONROE: We’re much more conscious about where we spend our money. For groceries, we used to just go to one grocery store because it was more convenient. Now we’re more conscious of prices of different items at different stores, whether it’s groceries or diapers or whatever. I’m more willing to make trips to different places to save. I no longer pay for the convenience of only going to one store.

It’s expensive to start a family, so we’re trying to be aggressive about paying down principals, whether it’s on our house or our cars, in order to have more financial flexibility in the future.

ROONEY: Now that we have kids, finances are on my mind every single day. The kids love mac and cheese and chicken nuggets, but I want them to eat more healthy goods, and that results in a high grocery bill for a family with two boys. Your budget revolves around what you want to do best for your kids.

Our budget is totally different than it was three years ago, before our first was born. Day care is at the forefront of my mind most of the time. We want to take our kids out to experience new things, but we still have this day care cost we have to budget for. We have to take that into account to have a better grasp on how much we can do to celebrate the boys or take them out to do things.

HADEN-PEACHES: Everything has changed. I’m responsible for keeping other people alive! Everything I do, and all financial decisions I make, are for my children. For example, we want a new vehicle for our family, but we’re waiting until one kid gets out of day care so we can reallocate that budget. I often hesitate to buy things for myself because I want to buy things for the kids instead. I have to remind myself it’s okay for me to spend money on myself sometimes, because my mental health is important.

PROCTOR: I worry about the unexpected, so I’m hoarding money for whatever may come. We don’t go out as much as we used to, even aside from the pandemic. And I’m always more likely to spend money for my kids than on myself. I won’t even spend $20 on myself, but I will do it easily for them.

Any recommendations for other parents?

HADEN-PEACHES: We’ve been using cloth diapers. It’s a big expense up front, but in the long term it’s very cost-effective. We paid for cloth diapers for our first child, and our second child is in them now. We only use disposable diapers when we’re traveling. That turned out to be a very good decision that we made.

PROCTOR: When my son was born, one of my cousins threw a baby shower with a twist. It included a diaper raffle — anyone who brought diapers or baby wipes had a chance to win a prize. We ended up with more than 1,200 diapers and 1,000 wipes. We barely had to buy any before my son didn’t need them anymore. That was awesome.

For clothes, I always look for consignment sales, where parents sell things they don’t need any more. I hit every consignment sale I can and usually just pay $1 or $2 for clothing items. I usually find them on Facebook and go to one every few months or so.

MONROE: We’re talking about when we want to have our next child, so as a preliminary process, we’re going through everything we need for the next baby and figuring out what we already have in storage and what we would need to buy. The plan is to buy things for the next baby as we go, so we can buy things in bulk or when they’re on sale.

As you can see, there’s a lot to consider financially when your family grows. And there are many different ways to manage your money. What’s important is that you find the approach that works best for you. Develop a budget and stay disciplined with it — but recognize that it’s okay to adjust it occasionally to fit your changing needs. Also, don’t forget about your own retirement. Even setting a little aside each month will help you in the long run, and the more years you save, the better off you’ll be. Taking care of your family means taking care of yourself as well.

Most importantly, getting your finances squared away allows you more time to spend with your growing family — and of course, to a mom, that time is the most precious asset of all.

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