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  • Starting a family is expensive: healthcare costs associated with childbirth, saving for future college expenses, adding another person to your health insurance, and even potentially upsizing your home. 
  • The sooner you start financially planning to have a family, the easier the expenses will be to manage.
  • If you're thinking of having kids in the next five years, start by opening an HSA and evaluating your health insurance coverage, then considering expenses like childcare.
  • Read more personal finance coverage »

Starting a family can be scary ... and the costs surrounding that choice can be even scarier. 

"Not only do you have the emotional challenges, but you also have the financial challenges," Howard Dvorkin, a CPA and chairman of Debt.com, tells Business Insider. "My advice is plan, plan, plan." 

Those plans probably have an endless to-do list, but here's where Dvorkin says to start:

1. Start saving for healthcare costs in a health savings account

In the United States, having a baby is a huge expense, even if you have health insurance. The typical delivery without any complications will cost an average of $10,800 in medical expenses. The cost can vary from state to state, and the way the baby is delivered. 

A health savings account, or HSA, is a tax-advantaged savings account where funds can only be used for healthcare costs. The funds roll over from year to year, and can be invested to grow over time. An HSA is available to anyone with a high-deductible health insurance plan. 

To set up an HSA, work with your employer's HR or payroll department — the money is deducted from your paycheck  before taxes. 

2. Get familiar with your health insurance coverage

If you're planning on having a baby, re-think your health insurance. You may need to make changes before the baby arrives, and you'll need to plan for the expense of adding another person afterwards.

Not all insurance plans are equal. A high-deductible health insurance plan could leave you with medical bills and debt after the baby comes. If you can take advantage of the November open enrollment period, it could be a good idea to increase your health insurance coverage to a lower deductible plan. While a higher premium might cost more each month, it could reduce your medical bills later. 

"You have usually have 30 days from the time the baby is born to apply for the insurance," Dvorkin says. "But, that's going to be an extra charge. A single policy is going to be one price, but a [family plan] is going to be a lot more in some cases." Start budgeting for higher insurance costs — covering a family will be more pricey.

According to data from the Henry J. Kaiser Family Foundation Employer Health Benefits Survey, the typical individual health insurance plan in 2018 cost a premium of $1,186, or $98 per month. A family plan, however, had a premium of $5,547 per year, or $462 per month. 

3. Start saving for college costs sooner than later

When it comes to saving for college costs, "you have to start early," Dvorkin says. For most American families, a 529 plan is good option to start saving.

These state-sponsored investment accounts help parents, grandparents, or other family members and friends invest money to save for children's' future higher education costs higher education costs, including college. 

With the costs of college going up each year, starting sooner rather than later is a good idea. The accounts can be opened as soon as the baby is born and has a Social Security number, or opened in a parent's name prior to that, then naming the child as the beneficiary later. The sooner you start, the more time your child's college fund will have to grow. 

4. Consider how much space you'll need

Before the baby comes, you may not have thought about space as an issue. But, as they start to grow older, your smaller home might not be feasible any longer. "If you have a one-bedroom apartment now, that's probably not going to work for very long," Dvorkin says. 

The more space you need, the more you'll pay. According to Apartment List's May 2020 National Rent Report, the average difference in the cost between renting a one-bedroom and a two-bedroom apartment in the US is $232 per month.

Or, you might feel like you want to get serious about buying a home — a financial move that could take a lot more planning and saving. 

If you'll need a bigger home once the baby arrives, or by the time they're old enough to start school, start planning for the expenses now. 

5. Don't forget about childcare

After the baby arrives, you won't be back in your normal routine for a while. Finding the right childcare for the baby before you return to work, deciding if one parent should stay home, and whether or not you can take parental leave should be top of mind. 

Only 17% of Americans have access to paid maternity or paternity leave, according to the Bureau of Labor Statistics. If you're one of the many Americans who will need to take unpaid time off to have the baby and care for it (and yourself) in the weeks and months after the baby is born, you'll need to save to do so. 

And, after you return to work, you'll likely face childcare costs. Childcare is a huge expense for many Americans, most of whom can't rely on family to help out. Before and after school daycare costs ranged from about $2,000 per year in Mississippi in 2018, to over $12,000 per year in New York in 2017, Business Insider's Frank Olito reports. For infants and children still too young for school, the costs could be greater.

You and your partner might also consider becoming a single-income household, with one partner staying home with children. But, that will take more financial planning to work — including making sure that you have a full emergency fund, that you'll still have access health insurance, and that you'll have enough to both cover your expenses and save for retirement. 

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