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5 Financial Tips for New Families

Build a (Bigger) Net
As your family grows, build on the safety net you maintained as a couple.
As your family grows, build on the safety net you maintained as a couple.

There are expenses you can count on: diapers, food, retirement, your baby outgrowing his or her car seat. These are easy to plan for, if not to pay for.

And then there are the expenses that sneak up behind you, smack you in the head and laugh at your well-laid plans.

Hopefully, you are already in the practice of putting money aside for a rainy day. If you have a cushion, focus now on making it deeper. Your expenses have grown, and your emergency fund should grow accordingly. Experts recommend having six-to-nine months of living expenses set aside in case of job loss, which becomes even more of a hardship if one spouse is at home now on childcare duty [source: New]. This also serves as a safety net in the case of other unexpected expenses such as major medical bills or a sudden need for a new car, water heater or roof repair.

In the current economy, this safety net is more important than ever. If you haven't started saving yet, now's the time, and this account should be prioritized. You've got almost two decades before college tuition is due, and perhaps 30 or 40 years to save for retirement. Big, unexpected expenses could pop up tomorrow.

Look at your budget and figure out how much you can afford to put into an emergency account after all the absolute necessities are covered. (Hint: The baby swing with the built-in iPod dock is not strictly necessary if there's a non-iPod swing for half the price.) Then, set up an automatic withdrawal so you won't have to think about your fund again until you need it.

Next, a less-than-pleasant task that is now essential ...