My wife and I recently found out that we’re expecting our first child—a moment we’ve dreamed about for years. It’s an incredibly exciting season, but like many first-time parents, we’re also navigating a lot of new experiences and unknowns. And with the unknown often comes anxiety.

As I’ve been preparing my own family—mentally, emotionally, and financially—I realized that many pilots and young families may be going through similar transitions. My hope is that sharing what we’re doing can help you prepare as well.

1. Building Cash Flow Awareness and an Emergency Fund

Before the baby arrives, revisit the basics—starting with cash flow.

As a financial advisor, I always recommend that clients maintain an emergency fund. A common rule of thumb is to save 3 to 6 months’ worth of essential living expenses. I define essential expenses as those bills and costs that would continue to accrue even if both you and your spouse lost your jobs tomorrow.

To calculate your emergency fund, start by adding up your core expenses, including housing, food, gas, and utilities—essentially, the necessary expenses your family incurs. Take that total monthly amount and multiply it by 3 to 6 months, or even up to 12 months if you have a spouse who stays at home. This should give you a rough estimate of how much you should have in your emergency fund. From there, you can adjust the figure upwards or downwards as your circumstances change.

Since estimating that number can be tricky, I encourage people to begin budgeting. A budget isn’t just for restricting spending—it’s a tool that gives you insight into where your money actually goes each month. I think this is the budget’s best value-add. Once you understand those expenses, you can determine the appropriate size of your emergency fund.

Next comes the question:
“Where should I keep my emergency fund?”

Traditional checking and savings accounts often pay very little interest. I prefer money market funds or high-yield savings accounts, which typically offer higher interest rates and create more incentive to build savings.

Once your household emergency fund is in place, the next question becomes:
“How much extra should I save specifically for pregnancy, childbirth, and medical expenses?”

This depends heavily on your health insurance plan—deductibles, out-of-pocket maximums, and what coverage looks like once the little one comes along.

2. Preparing for Medical Expenses

Once my wife and I had our emergency fund and budget in good shape, our next step was saving enough to cover our deductible and out-of-pocket maximum in anticipation of delivery costs.

• A deductible is the amount of medical expenses you will pay out of pocket each year before your insurance benefits kick in.
• The out-of-pocket maximum is the most you will pay each year for health costs.  This number includes your deductible, copays, and coinsurance. Once you hit this amount, your health costs are then covered completely by your insurer for the remainder of the year.

There are two main accounts I recommend for this:

Health Savings Account (HSA)

If you’re eligible, this is one of the best tools for medical savings because:

• Contributions are tax deductible
• Investment growth is tax free
• Withdrawals are tax free for qualified medical expenses

High-Yield Savings Account

If you don’t have access to an HSA or want to supplement the HSA, a high-yield savings account is also effective. It doesn’t have tax advantages, but the higher interest rate helps your savings grow over time.

3. Estate Planning Essentials

Outside of cash flow, expectant parents should review or create basic estate planning documents. At a minimum, both you and your spouse should have:

• Last Will & Testament
  • Make sure your Will includes guardianship for your kids if something happened to you and your spouse, i.e., simultaneous death.
  • If guardianship isn’t listed in your will, then the courts will decide who becomes the guardian of your child when you pass.
• Durable powers of attorney
• Advance healthcare directives

People often ask:
“Do we need a trust?”

Not everyone does, but it’s worth discussing with your financial advisor and estate attorney. What is essential is checking your beneficiary designations on retirement accounts, life insurance policies, bank accounts, and investment accounts.

Remember: beneficiary designations override your will.
If your Will states Person A inherits everything, but your 401(k) lists Person B as the account’s primary beneficiary, the 401(k) will go to Person B—not Person A.

4. Reevaluating Insurance Needs

Insurance becomes even more important once you have children—or children on the way. The easiest and most cost-effective starting point is often your employer-provided life insurance, which may not require medical underwriting up to a certain limit.

The hard part is deciding:

“How much life insurance do I need?”

The answer depends on:

• How much debt you would leave your spouse
• Whether your spouse works
• Expected childcare or daycare costs
• Your long-term financial goals for your family

While employer coverage is helpful, term life insurance is usually the most cost-efficient way to add additional protection for young families. It doesn’t build cash value, but it provides the financial safety net your spouse and child would need if something happened to you.

5. Important To-Dos After Your Baby Is Born

A few key reminders once your child arrives:

Add your baby to your health insurance plan.

Most insurers require notice within 30 days of birth. Check your plan rules before delivery.

Start thinking about savings for your child.

One of the top questions I get is:
“What kind of account should I open for my child?”

The two most common options:

529 College Savings Plan

• Designed for education
• Often includes state tax benefits
• Covers more than just tuition (room, board, meal plans, etc.)

General Brokerage Account

• More flexible (if your child decides not to go to college)
• No penalties for non‑education expenses
• Can be used for things like first car funding, wedding costs, or a down payment later in life

The right choice depends on your goals and overall financial picture.

Final Thoughts

There are many factors to consider when preparing for a child, but these are some of the most important financial steps my wife and I have been working through. If you’d like help navigating your own situation or have questions about planning for your growing family, feel free to reach out anytime at zack@leadingedgeplanning.com—I’m always happy to help.

Best wishes to you and your family as you enter this exciting new chapter.