A Nine-Month Plan for Getting Your Family's Finances in Order

Nick Dewar

If you're an expectant parent, you have probably learned enough medical terminology to pass for a fledgling ob-gyn, grasping complexities like alfa-fetoprotein levels and epidural anesthesiology. But studies indicate that you should be paying as much attention to the jargon of financial well-being -- arcane phrases like "Section 529 tax-advantaged college savings," for example, and "spousal IRAs."

According to recent figures from the U.S. Department of Agriculture (USDA) in Washington, DC, a baby born now will cost a middle-class family $170,460 to raise through age 17. The figure climbs to $249,180 -- about $15,000 a year -- if a family's annual income is above $65,800. And that doesn't even include college expenses, now averaging $26,070 a year at private schools and $11,976 at public ones. Covering the costs will inevitably be a stretch, since a recent Consumer Finance Survey by the Federal Reserve indicates that nearly two-thirds of households with young children are saving no money at all.

Those zero-digit savings begin to collide with the expanding cost of childrearing when a baby is about 6 months old, says Ruth Hayden, a St. Paul, MN-based financial consultant and author of For Richer, Not Poorer: The Money Book for Couples. "Just when the baby is getting so cute and personable, a couple starts to fight over money issues," she says.

To head off trouble, she and a team of other money experts (with 26 children and 18 grandchildren between them) helped Child assemble a nine-month plan for nurturing your nest egg as your pregnancy progresses. The payoff? Research shows that, given the same income, people who commit to a financial plan save twice as much money as those who just wing it.

The warm, fuzzy upside: The more financial decisions you work out ahead of time, the more fun you'll have with your new baby.