5 ways to build a strong financial foundation for your growing family.

Welcoming a new baby is one of life’s biggest milestones, and it comes with big changes — not just to your daily routine, but also to your finances. Setting yourself up for success in year one can help set the tone for how you’ll manage money as a family over time.

Here are five tips to help you manage the first year of your baby’s life and lay the groundwork for a more secure financial future for your family.

1. Anticipate year-one expenses.

Your baby’s first year comes with both one-time and recurring costs. Big up-front purchases may include a crib, stroller, car seat or nursery furniture, while monthly expenses like diapers and formula can add up quickly. To stay on budget, separate one-time investments from ongoing costs and plan for both.

To save money when setting up your nursery, buy gently used items when possible or borrow from friends and register for essentials instead of extras. You can also scout promotions with big-box retailers and diaper or formula subscription services. Just don’t forget to make sure any used items meet current safety standards, especially for car seats.

2. Take advantage of child-related tax breaks.

For many families, childcare is the single biggest new expense. Some families get help from relatives or nanny-share with other families to help reduce costs. Your employer may offer childcare benefits, and the federal government provides different tax breaks to help.

In addition to the Child Tax Credit opens in a new window, your family may qualify for the Child and Dependent Care Credit opens in a new window, depending on how you are filing your taxes. The Child and Dependent Care Credit allows some taxpayers to deduct up to $3,000 in eligible pre-K childcare costs for one qualifying dependent and up to $6,000 in costs for two or more, depending on your income.

3. Use HSAs and FSAs wisely.

Health savings accounts (HSAs) and flexible spending accounts (FSAs) are tax-advantaged accounts created by the federal government to help families save on healthcare and childcare costs. HSAs are available if you’re enrolled in a qualifying high-deductible health plan, while FSAs are offered only through employers.

Health savings accounts (HSAs):

• Available only if you’re enrolled in a high-deductible health plan (HDHP)
• You can use funds tax-free for qualified medical expenses for yourself, your spouse and dependents, including children
• Covers pediatric visits, prescriptions, vaccines, dental and vision care, and more
• Contributions, growth and withdrawals (for eligible expenses) are all tax-free
• Unused funds roll over each year and can even be saved for future healthcare needs

Dependent care flexible spending accounts (FSAs):

• Offered through employers to cover childcare costs (daycare, preschool, before/after-school programs, day camps)
• Let you set aside up to $5,000 per year pre-tax for qualified expenses
• Use it or lose it: Funds generally must be spent during the plan year
• Cannot be used for healthcare — only dependent care

Bottom line: HSAs are great for managing your child’s healthcare expenses now and in the future, while FSAs are designed to help working parents offset the high cost of childcare.

4. Build a strong financial foundation.

There’s a saying in parenting that the days are long but the years are short. As your family grows, it’s important to think beyond the day-to-day and set yourself up for long-term stability.

Start by strengthening your safety net: Aim for an emergency fund covering three to six months of expenses, and review your health and life insurance to ensure your family is protected. Next, consider opening a savings account for your child or investing in a 529 plan for your child’s education, and remember that small, steady contributions can really add up over time.

Finally, schedule regular financial check-ins. Kids’ needs evolve quickly, from childcare to activities to braces, and reviewing your budget every few months helps you stay flexible and make adjustments as life changes. With a strong foundation in place, you’ll be better prepared for both expected and unexpected expenses.

5. Stay flexible.

Babies’ needs change quickly, and so will your budget. Build flexibility into your plan by reviewing expenses regularly and adjusting as life evolves, and remember that experts are always on hand to help. A little adaptability goes a long way toward reducing stress.

The first year with a new baby is full of incredible first moments, and with thoughtful planning and flexibility, you can focus on what matters most: enjoying your family and protecting your financial future.