10 major financial issues all parents need to discuss before a new baby

10 major financial issues all parents need to discuss before a new baby10 major financial issues all parents need to discuss before a new babyMy wife and I are talking abouthaving our first child. Obviously, thats a hugefinancialundertaking. Every situation is different, but what are the main things we need to keep in mind, financially, about having a baby? How much should we allocate in ourbudget? Are we screwed? - Robert S., Nashua, N.H.Bringing a baby into your life is exhilarating, no doubt. But as you point out,its also a huge drain on your pocketbook. According to aUSDA study, typical American parents will spend about $12,680 a year in the kids first couple years of life (sadly, those costs stay fairly level throughout their childhood).I know Its a lot. But before you start raiding the liquor cabinet, its important to realize that a little bit of strategizing can sometimes dramatically lessen the damage.Follow Ladders on FlipboardFollow Ladders magazines on Flipboard covering Happiness, Productivity, Job Satisfaction, Neuroscience, and moreThe fact that youre thinking about all this beforehand bodes well. So, what are all thefinancial issuesyou need to handle before becoming a parent? Heres what youll need to keep in mind before bringing a little one into your home.1. Health insuranceThe first year of parenthood is a steady stream of trips to the pediatricians offer for checkups. So even though therbeies no longer a federal mandate, having insurance is a no-brainer.It certainly wont hurt for whichever of you is working to bone up on the implications of adding a child to your employers plan. Depending on who has better insurance, it might be considerably less expensive under one parents plan than the others. If you know youll be trying to conceive, youll want to do a little math to see whether a lower-deductible plan is worth the switch.2. ChildcareOne of the biggest expenditures that parents have to make is paying someone to take care of their baby once mom and dad go back to work. The annual cost of childcare ranges from $4,822 a yearin Mississippi to a staggering $$22,631 in the nations capital.Fortunately, the IRS offers tax relief for working parents. Parents can use the dependent care flexible spending accounts - if your employer offers it - or the child and dependent care credit, which offsets some of the costs associated with cost of daycare and babysitters.Even with that help, though, the costs can be pretty scary. To get around it, you might try asking your employer if you can move to a compressed workweek or even stay at home on certain days in order to eliminate the need for outside help.3. Life and disability insuranceNobody likes to think about the possibility that theyll suddenly take on a life-threatening illness or get into a major accident. But when you have a spouse and child depending on your paycheck, youd be foolhardy not to make sure theyre protected from the worst.Fortunately, parents who are fairly young a nd healthy can normally get termlife insurancewithout breaking the bank. For example, a 30-year-old non-smoking male can get a 20-year term policy with a $500,000 benefit for around $25 a month if theyre in generally good health.But thats not the only protection youll need. For most bread-winners, its also a good idea to spring fordisability coverage, unless your employer offers a substantial benefit as part of your compensation. That way, if you get a serious injury that prevents you from working, your family will be on solid financial ground.4. A Will or TrustPreparing for the worst also involves putting together a will with guardianship instructions. Should the unthinkable happen, itll be you - not the courts - deciding who takes custody of your child. You may also want to create a trust that dictates how and when your heirs will receive any financial assets you leave behind. There are some really inexpensive DIY software programs you can use for this, but if that idea makes yo u nervous, youll have to hire an attorney. Prices vary, of course, although lawyers generally dienstgrad somewhere around $1,000 for a fairly standard will creating a trust will generally set you back at least that much.5. Emergency savingsA rainy day fundis an important failsafe for anyone in good financial health. Even for folks who arent about to enter parenthood anytime soon, the standard advice is to have anywhere from three to six months worth of expenses in asavings account, just in case. Suffice it to say, those with a baby in toe will want to be on the upper end of that range. The last thing you want is to shell out a boatload of cash for a new roof or a broken air conditioner and wonder how youre going to pay for your infants necessities.6. HousingWith a new kid on the way, that tiny one-bedroom apartment may not cut it anymore. For a lot of parents, that first pregnancy means finding greener pastures ideally those that can accommodate future additions to the family as we ll. Its probably not surprising, then, that the USDA study found that housing is the number one child-rearing expense.7. CarsAlready have a trustySUVparked in the driveway? You may not need a new set of wheels. Pulling a stroller out of a hatchback, on the other hand, isnt so fun. If youre in the latter camp, youll need to factor in how much a roomier mode of transportation is going to put you back.8. Food, diapers, etc.Its astounding how fast tiny little humans can go through a giant jar of formula. Needless to say, itll become a sizable part of your monthly budget. And lest you think youre getting off cheap because your wife breastfeeds, just think of all the things shell need to go au naturale pumps, nursing bras, Boppy pillows, milk storage pouches and so on.Diapers are another major culprit, of course.According to Walmart, the average family spends $527 a year if they use name brands, and about half that if they choose their store brand.9. Clothing and Baby GearWhen you add it all up, the list of contraptions youll need for your little one can look pretty scary. Theres the crib, the car seat, the stroller, the baby monitor the list goes on. The good news is that some that you can get some of these things from friends whose kids have outgrown them, and that happens pretty quickly.The same goes for clothes. Unfortunately, babies only fit into a given size for a few months (and sometimes less). Every mom Ive known loves shopping for this stuff, but you may be able to supplement his or her wardrobe with some hand-me-downs from people you know if youre open to it.10. College SavingsTheres no doubt about it the sooner you open a 529 plan for your kids, the better. If history is any guide, whatever money you put in now will grow exponentially by the time your kid is ready to head off to college.According to Savingforcollege.com, youd need to contribute $111 a month to cover even 25 percent of the cost of what a typical public, in-state tuition will be. But the truth is, anything you can kick in is better than nothing.By now, youre probably regretting asking the question. But youll be alright, man. Few would-be parents are 100 percent financially ready for all the challenges that a kid throws at you. At least youre thinking things through beforehand, so youre likely more prepared than most.This article first appeared on Fatherly.com.