Preparing financially for your new baby means more than just making room in the budget for diapers and daycare. The baby will have long term financial needs, such as college, that also need planning. How do you fit it all in?

When my son was born — the first of my two children — I watched everything turn upside down. Any young couple with a baby learns that it’s the shortest of hops from a self-centered to a baby-centered life.

“A first baby is such an exciting thing,” says Chris Alberta, founder and president of Alberta Enterprises, a wealth management firm in Brighton, Mich. “As a father of four, I vividly remember every detail of preparation, from reading ‘what to expect’ books to shopping for every possible gadget.”

So what can Alberta pass on to us as a dad and a financial expert? “The best possible advice I could share is make sure to keep a comfortable cushion in the bank,” he says. “While it’s fun to set up that baby room with every novel item — from electric diaper disposal systems to night-vision surveillance cameras — very few things will help you savor first handful of months more than the absence of financial stress.”

I wish I had run into Albert years earlier. A dozen years after my son was born, my wife and I finally built a healthy cushion in the bank just this year, equal to roughly three months of my freelance writer pay. But I still struggle with long-range financial plans as far as my kids go.

For new parents, this means much more than budgeting for Pampers, formula and binkies. College, for example, might seem like an eternity away. Then you turn around and your kid is a toddler, then a pre-adolescent, then in high school. If you haven’t prepared, you might wind up staring down six-digit tuition bills.

“Saving for your child’s education will probably be one of your biggest long-term financial goals,” says Rich Linton, president of Large Institutional Corporate and Individual Markets for Voya Financial. “As with retirement planning, the earlier you start, the more your savings can grow through compounding interest. Often individuals have trouble prioritizing retirement savings over paying for their children’s college. … Every circumstance is different but in general, direct ten cents towards college for every dollar you put towards retirement.”

An excellent vehicle for this is a 529 plan. Earnings in these college savings plans are exempt from federal taxes, and in many cases state tax.

Voya Financial just launched a program to help parents provide for the future, with a promotional twist. The Voya Born to Save program offered every baby born in the U.S. on Oct. 20 a $500 mutual fund investment as a head start on their retirement savings. “It underscored that it’s never too early to start planning and saving for the future,” Linton says.

“Almost every financial plan can be designed and ready before the child arrives,” Alberta adds. “Naturally, once a Social Security number and birth certificate are issued, the plan can be implemented with the appropriate institutions.”

But why beforehand? Alberta answers that question with another question. “Have you ever tried to make responsible decisions while desperately sleep deprived? Bad idea.”

Responsible planning also teaches your child the first of life’s great money lessons: delayed gratification. “Establishing the difference between needs and wants early on is a loving exercise,” Alberta says.

Here are some other tips the financial experts share as you prepare for a baby and nurture one through the first years of life:

Get that emergency fund going

After years of confessing my financial goofs and gaffes, I get to look good for once. “Your emergency fund should generally contain the equivalent of three month’s salary,” Linton says. “You want to help protect your family against unexpected expenses, including illness, an accident or a job loss. It’s a top priority, but try not to let it interfere with your retirement savings.”

Expand your budget for new priorities

In all the baby excitement, it’s easy to forget that your budget must to keep up with the new family addition. “Develop a household financial plan that takes into account income, expenditures, and savings goals for college, debt reduction, medical expenses not covered by insurance, and retirement,” Linton says. “Parents can also consider a Health Savings Account, which allows for flexibility to budget for the family’s out-of-pocket medical expenses.” The HSA dollars are tax free, so if you haven’t pursued this through your employer(s), now’s the time.

Consider life insurance

Here, Alberta speaks from sad experience. “As a father who lost a child very early, I can tell you first hand that suffering that kind of loss is only compounded by the financial stress of lost wages, medical expenses and funeral arrangements,” he says. “A $50,000 policy on a child can cost less than $20 per month and be converted to an investment account down the line.”

In the end, you baby will absorb so much of what you and your spouse do — without your realizing it. Show kids good habits as they grow, and the chances increase that they’ll live them out later on. “Set up an allowance early on for basic chores and encourage saving, tithing, and enjoying non-impulse purchases,” Alberta notes.

That is, after the endless string on pre-dawn feedings and diaper changes. Good luck with that. I’ve done my hitch.

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About the author

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Based in Chicago, Lou Carlozo is a personal finance contributor for Reuters Money, a columnist with DealNews.com, and a former managing editor at AOL's WalletPop.com. Contact him with story ideas for Money Under 30 at [email protected], or follow him via LinkedIn and Twitter (@LouCarlozo63).