Financially Preparing for a Baby

Tax and Child-Care Savings

The government gives you a small credit for taking on the hefty responsibilities of parenthood: You'll get an additional exemption and new child tax credit worth approximately $1,300 per year for a middle-income family. Parents who use day care get an additional $480 in savings, but an employer-sponsored flexible spending account can save you a lot more. Check with your human resources department to find out if this is an option.

Finally, if you and your partner both plan to keep working, start researching your child-care options now. After you've run the numbers, you may even find that it makes financial sense for one parent to stay home.

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