How Physicians Can Financially Prepare for Parenthood

Growing your family is a dream come true for many. It's exciting, transformative, joyful ... and expensive, even when you earn a high salary.

Harboring substantial medical school debt, navigating complicated work schedules and not earning a salary until several years into your career add to the unique financial challenges physicians face in planning to have a child.

However, it’s entirely possible to create financial security that supports both your family and your career goals with proper financial planning. Here is a checklist you can use to prepare financially for a baby.

1. Optimize Your Budget for Parenthood

Your life changes after having a child. You'll likely travel less frequently and incur significant new expenses. You or your partner may reduce your work hours, take an extended leave, or leave the workforce entirely. You might want to move into a larger home to accommodate your new family members. or hire a housekeeper to help you manage your home.

You'll want your budget to reflect these lifestyle changes. If you need help figuring out where to start on baby costs, check out BabyCenter's baby cost calculator and this first-person blog on WealthKeel.

Additional resources on Offcall:

• An Early-Career Physician’s Guide to Buying a Home
• A Step-by-Step Guide to Budgeting
• Buying vs. Leasing a Car: A Guide for Physicians

2. Plan for Childcare: Daycare and Nannies

As a physician, you'll likely incur childcare costs, be it a daycare or nanny. When building your new budget, ensure you're accurately anticipating childcare costs, which are most likely the most significant addition to your list of expenses.

The average infant care costs vary greatly by location and care type. For example, average childcare costs are $6,000 per child in Alabama but nearly $21,000 per child in Massachusetts, according to the Economic Policy Institute. Make sure to estimate your childcare costs by researching about the costs of daycare or nannies in your geographic area.

Tip: Consider opening a Dependent Care Flexible Spending Account (DCFSA). If your employer offers it, look into opening a dependent care flexible spending account (FSA) starting in the first year when you incur childcare costs. Dependent care FSAs allow parents to stash pre-tax earnings into an account that pays for daycare, nannies, nursery school, and more. In 2025, married couples filing jointly can contribute up to $5,000 to a dependent care FSA. Unused funds cannot be carried over into the following year, so only contribute what you plan to spend during the calendar year.

Additional resources on Offcall: The Hidden Financial Benefits of HSAs

3. Plan for College: Strategies to Save

Saving for the college education of a baby may feel premature, but with the cost of higher education today, it's not. If you are interested in helping your child pay for college, building it into your budget now is wise. How much you save now for your child's college education depends on your financial means and how much of their costs you'd like to cover.

There are many ways to save for a college education: a cash savings account, a taxable brokerage account, and state- and federal-sponsored programs, such as Coverdell ESAs and 529 plans. A financial advisor is your best resource for estimating college costs and the best ways to save for it.

Tip: Don't sacrifice your retirement savings for your child's college savings. Your child can pay for college through scholarships and student loans; you can't do the same for retirement.

Additional resources on Offcall:

• How to Save for Your Kid’s College Through Coverdell ESA and 529 Plans
• Easy Investment Strategies for Cash-Strapped Physicians

4. Purchase Life and Disability Insurance to Protect Your Family’s Future

Life insurance is designed to provide a payout to your loved ones in the event of your untimely death. Similarly, disability insurance can provide income if you can no longer work for a covered reason. These protections can help ensure that your family won't struggle financially if you can no longer provide for your family.

Tip: Work with a certified financial planner when choosing a policy. Look for a financial advisor with fiduciary duty, such as a Certified Financial Planner (CFP®), to help you determine if and what type of life and disability insurance is right for you. Fiduciaries are ethically bound to act in your best interest, even if it's not in theirs. Fiduciary duty is helpful in any financial planning context, particularly when seeking advice on insurance products due to the prevalence of commissions.

Additional resources on Offcall:

• How to Choose a Financial Advisor: What Physicians Need to Know

5. Build a Strategic Savings Plan for Your Family

Feeling financially secure before having children can meaningfully lessen the stress of bringing home a baby. Before you start picking out newborn clothes, make sure you have savings in three buckets:

• Savings to cover the immediate costs of having a child, including unreimbursed hospital bills, adoption fees, and fertility costs.
• Savings to cover expenses if you or a spouse take unpaid parental leave
• A separate, break-in-case-of-emergency fund worth between three and six months of essential expenses based on your new budget

Additional resources on Offcall: How to Maximize Earnings From Your Savings Account

Here's an example: Dr. Mia, an internist, hopes to have her first child in the next 1-2 years. Mia’s partner is a lawyer. Both finished paying down their student loans and have amassed $25,000 in cash savings.

Based on their estimates, the one-time costs of having a baby — hospital bills, nursery furniture, car seats, clothes, and other necessities — will total $5,000. Mia further estimates that her current annual spending of $50,000 will increase by about $25,000, with the majority owed to $1,500 monthly daycare costs. Mia and her partner both plan to take off six months when the baby arrives, three of which will be unpaid.

Given these facts, she’ll need:

• $5,000 to cover one-time costs
• $18,750 to cover everyday living costs while both members of the couple are without an income for three months ($75,000 ✕ 3 ÷ 12)
• $37,500 held as an emergency fund
• In total, she’ll want $61,250 saved before your baby arrives.

6. Make an Estate Plan

Writing a will or establishing a living trust is common when you become a parent. It's no fun to think about these things, but it's essential that you consider what you'd like to happen to your minor children if you can no longer care for them.

An estate lawyer or an online will creation service can help you jot down your wishes concerning your children.

Join the Discussion

What questions do you have about financial planning for parenthood? If you are a parent, what strategies did you use to save and plan for your growing family that were most helpful for you? Let us know in the comments below!