How to (financially) plan for a second baby
In July 2020, I shared my financial planning journey for my first baby, and in April of the following year, I reflected on the valuable money lessons I learned during my maternity leave. Now, two and a half years after our daughter's arrival, my husband and I are eagerly anticipating the arrival of our second baby in September. Parenthood has been a continuous learning experience, shaping my understanding of financial planning as a parent. In this post, I will discuss some of the expenditures I overlooked in my initial planning and introduce key aspects of financial planning that all parents should consider. At Mana, we want to ensure our readers are equipped with the knowledge they need to navigate this exciting but financially impactful chapter in their lives.
How my financial planning is evolving for baby #2
Like many women I know, my birth and postpartum time was filled with as much elation as anxiety. This time around, I’m planning on paying for the support I learned I’ve needed.
As I approach the birth of my second child, I have recognized the importance of seeking support for the challenges that lie ahead. Good sleep is crucial for my well-being, so my first priority is hiring a night nurse. It's worth noting that night nurses tend to be more expensive than regular day nannies, typically costing 25-30% more in most markets. The average hourly rate for a night nurse across the country ranges between $20 and $45, with larger cities often requiring a minimum number of hours per night. To plan for baby #2, my husband and I interviewed several night nurses and considered their references. We discussed our ideal number of nights and calculated the cost of having a night nurse for three months, which is the average duration families utilize their services. By carefully considering our budget, we made the decision to reduce the number of nights per week to ensure we could prioritize having the night nurse with us for three months, reaching a mutually satisfactory agreement.
Securing child care is another significant priority that requires immediate attention. While my previous post outlined various childcare options available in our country, recent data has shown that the cost of childcare has outpaced inflation since the pandemic. In fact, in 34 states, the price of child care for an infant in a center-based program now exceeds the annual in-state tuition at a public university. With the arrival of a second child, additional factors must be considered. Will both children attend the same nanny/day care center/school? How will drop-offs and pickups work when your older child starts a new school? Moreover, how much will the second baby's care add to your monthly child care expenses? If you reside in one of the more expensive cities for child care, it's crucial to explore different financial scenarios. What worked for your family with one baby might not be the most suitable option for your growing family.
Tradeoffs I’m making
By looking back on my experiences with my first child, I have learned to allocate my resources more mindfully, focusing on services that will best support me and my family during this transformative time. While hiring a birth doula was a worthwhile expense during my first pregnancy and labor, this time around, I feel better equipped to handle those phases of birth. However, I do recognize that I will require substantial support once my son arrives. Therefore, I am dedicating my financial resources to a postpartum doula who will assist with cooking, caring for me, and helping my family through this momentous transition.
What I’m not spending money on this time
On the subject of expenses, I have discovered the wisdom and generosity of other moms, which has allowed me to forgo spending money on baby "stuff." If you have saved baby gear from your first child, have mom friends, participate in mommy and me groups, or engage with local mom communities through social media, chances are you won't need to buy new baby items. Instead of a traditional baby registry, I highly recommend registries like Little Honey Money, which focus on the things that many moms find they genuinely need, such as massages, dog walking services, meal delivery, and postpartum doula assistance. If you have already accumulated enough baby "stuff," this type of registry may be a more meaningful option for you.
Two areas of financial planning not to miss…especially after baby #2
As you prepare for the arrival of a second child, there are two crucial areas of financial planning that should not be overlooked. First, obtaining life insurance becomes even more critical with the increased financial responsibility of raising multiple children. Consider what funds would be available to care for your child(ren) in the event of your or your partner's passing and how you envision that care being provided. If you already have a life insurance policy, it's also an opportune time to review your coverage to ensure it aligns with your current needs. Second, expanding your family necessitates a review of your estate plan. Without certain legal documents in place, the aftermath of an unexpected passing can become confusing and complicated for your family. When creating or updating your estate plan, it's important to make decisions regarding guardianship in the unfortunate event that both you and your partner pass away. These seem like grim considerations, but they are incredibly important acts of love to support your family.
As I eagerly await my due date, I am grateful for the lessons I've learned and the financial planning insights I've gained. Parenthood is an ongoing journey, and as our families grow, so too does our need for careful financial consideration. By proactively addressing the aspects discussed in this post, you can better prepare yourself and your family for the financial responsibilities and amazing joys that lie ahead.
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Stephanie Bucko and Cristina Livadary are fee-only financial planners based in Los Angeles, California. Stephanie is the Chief Investment Officer and Cristina is the Chief Executive Officer at Mana Financial Life Design (FLD). Mana FLD provides comprehensive financial planning and investment management services to help clients grow and protect their wealth throughout life’s journey. Mana FLD specializes in advising ambitious professionals who seek financial knowledge and want to implement creative budgeting, savings, proactive planning and powerful investment strategies. As fee-only fiduciaries and independent financial advisors, Stephanie and Cristina never receive commission of any kind. Stephanie and Cristina are legally bound by their certifications to provide unbiased and trustworthy financial advice.