Extension financial expert shares keys to planning for a new baby
Aug. 7, 2026
By Rebekah Hall
University of Arkansas Division of Agriculture
Fast Facts
- Make financial plan, live within your income, build emergency fund
- Prioritize good health; factor in cost of health insurance
- Plan for emergencies by establishing a guardian for child
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LITTLE ROCK — For first-time parents anticipating the arrival of their new baby, an extension financial expert says it is crucial to be proactive about the financial changes that come with starting a family.
“Personal finances are an important part of the foundation for well-being and security,” said Laura Hendrix, extension professor of personal finance and consumer economics for the University of Arkansas Division of Agriculture. “Major life changes, such as the birth of a child, impact household resources and life plans. Being proactive can help for a smooth, successful transition during a major life change and help to maintain financial security.”
The first step couples should take is to create a financial plan, which Hendrix said is the best way to ensure that income and other resources are used to attain life goals.
“Each plan will be unique based on income, expenses, family situations, hopes, dreams and goals,” Hendrix said.
Hendrix offered four key financial planning practices for expectant parents:
- Live within your income. New babies come with new expenses, like diapers and childcare, Hendrix said. If expenses exceed income, look for ways to cut expenses or increase income. “If you don’t live within your income, additional expenses, taking time away from work, or contributing to a college fund for a child will not be possible,” Hendrix said. “Borrowing is not a long-term solution to budget shortfalls and can result in additional debt and stress.”
- Make good health a priority. Looking beyond the costs of prenatal care and delivery, parents also need to plan for future doctor’s office visits and other health care costs for their children. “Medical costs can have a big impact on the household budget,” Hendrix said. “Health insurance is an important component of the financial plan and quality of life.” Visit the ARKids First website to learn more about free and low-cost health insurance plans for children in qualifying families.
- Build an emergency savings fund as a safety net. With a new member of the family, parents must be prepared for unexpected emergencies. If starting from zero, set a goal to save at least $500, Hendrix said. She recommends eventually saving enough money to cover at least two months of living expenses.
- Save and invest for the future. It may seem like a long way off when you’re looking at a newborn, Hendrix said, but 18 years goes fast. “After your retirement savings are secure, you may consider other goals like saving for your child’s college or career training,” she said. “Look toward maintaining your financial security for the rest of your life.”
Anticipate baby-related expenses
Hendrix said that when planning for a new family member, it’s important to anticipate expenses such as diapers, formula, baby food and childcare.
“Expectant parents might want to check several resources and make lists of baby needs,” Hendrix said. “Some items will be one-time purchases, like a crib, and some will be weekly or monthly. Childcare, diapers and formula are some of the largest ongoing expenses.”
Hendrix said these needs will vary based on an individual family’s situation.
“Someone who is staying home with their child will have fewer childcare expenses than someone who is returning to a worksite,” Hendrix said. “Cloth diapers can be less expensive than disposable diapers but require more time to maintain.”
Parents should carefully consider their unique situation to determine what is best for their child, themselves and the household budget. Hendrix said parents may also want to look to the future and consider the following subjects:
- Housing: “Ask yourself, ‘will our current housing meet the needs of my growing family?’” Hendrix said. “If not, should we be working toward or saving for a different home?”
- School: Consider whether there are good childcare, preschool and school options near your home or worksite. “Will your child go to private school, or is there a good public school available?” Hendrix said. “What is the cost estimate for fees, tuition and supplies?”
- Extracurricular: Looking further down the road, parents should consider whether they want their child to participate in extracurricular activities. “These can be lessons like gymnastics, dance, music and art or sports like soccer, swimming, cheer and softball, for example,” Hendrix said. “What is available near you, and how much will this cost? Consider low or no-cost options, such as 4-H programs or Boys & Girls Clubs.”
- College and career: College and career training will depend on your child’s future interests as a teen and young adult. “Cost estimates will need to consider increases over the next 12 years or so,” Hendrix said. “Arkansas has a wealth of options and many programs that families can incorporate into their plan for completing education or training.”
In planning for a baby, Hendrix said it can also be helpful to inquire about the availability of a Dependent Care Flexible Spending Account with one’s employer. These can be used to pay for eligible dependent care expenses, including before and after-school care, babysitting, nanny care, daycare, preschool and summer day camp.
“The amount you put in the account is pre-tax,” Hendrix said. “Payroll taxes are not taken on the amount you put into the DCFSA, so you can end up with a larger take-home amount.
Visit the DCFSA website for more details about contributions, disbursements and reimbursements.
Legal plans for emergencies
Hendrix said becoming a parent adds an extra level of concern to estate planning.
“What will happen to your child if something happens to you?” Hendrix said. “Even though it is scary to think about, it’s critical to consider. If both parents die, your minor child will need a guardian.”
Hendrix said that parents oftentimes choose a grandparent or other close relative to take responsibility for the child. Hendrix said many tools exist for estate planning, and it’s important to match the tool to your individual situation and preferences. Guardianship, power of attorney, beneficiary designations, trusts and wills are some of the tools available.
“Most people prefer to give guardianship to someone who would consider their wishes when making decisions on their behalf,” Hendrix said. “When considering minor children, who would you trust to make these decisions for you? Who has the capability to provide the care your child needs?
“Who has resources or can manage the resources you leave?” she said. “Is geographic location a concern? Will your child need to stay in the local area — in their hometown, at their current school — or would moving to another location be an option? Is the person willing and able to be a guardian for your child?”
For parents who decide to hire a financial professional for estate planning, Hendrix said it’s important to check credentials, ask for references and schedule a consultation to ensure the person is reputable and a good fit for their needs.
For more information on budgeting and financial planning, visit the Personal Finance page on the Cooperative Extension Service website.
To learn about extension programs in Arkansas, contact your local Cooperative Extension Service agent or visit uaex.uada.edu. Follow us on Facebook and Instagram. To learn more about the Division of Agriculture, visit uada.edu. To learn more about ag and food research in Arkansas, visit the Arkansas Agricultural Experiment Station at aaes.uada.edu.
About the Division of Agriculture
The University of Arkansas Division of Agriculture’s mission is to strengthen agriculture, communities, and families by connecting trusted research to the adoption of best practices. Through the Agricultural Experiment Station and the Cooperative Extension Service, the Division of Agriculture conducts research and extension work within the nation’s historic land grant education system.
The Division of Agriculture is one of 22 entities within the University of Arkansas System. It has offices in all 75 counties in Arkansas and faculty on three campuses.
Pursuant to 7 CFR § 15.3, the University of Arkansas Division of Agriculture offers all its Extension and Research programs and services (including employment) without regard to race, color, sex, national origin, religion, age, disability, marital or veteran status, genetic information, sexual preference, pregnancy or any other legally protected status, and is an equal opportunity institution.
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Media Contact:
Rebekah Hall
rkhall@uada.edu
501-671-2061