Having a baby is a life-changing experience in more ways than one. From a logistical and emotional standpoint, you're suddenly dealing with a whole new family dynamic, not to mention a lot more work and a lot less sleep. And from a financial perspective, you're grappling with new expenses you never had to budget for, like diapers, supplies, food, clothing, and healthcare.

But while many soon-to-be parents know to plan for the logistical side of things (think setting up a nursery and buying the right baby gear in advance), many fail to plan appropriately for the financial side. In fact, 42% of parents admitted that they weren't financially prepared to have a child in a recent Policygenius survey. And among those in the unprepared category, 23% lacked important financial tools, like a traditional savings account or 529 college savings plan, to make early and future child-related expenses more manageable.

A woman feeding a young girl fruit at the table


If you're having a baby, it's critical you tackle the financial end of that equation. Here's how to get started.

1. Map out a new budget

Your household expenses are going to change once you bring a child into the mix. To this end, do some research to see what common expenses like diapers, baby food, formula, and clothing might cost you, and factor them into your monthly budget. You may need to adjust your spending downward in other categories to make room for these expenses, so the sooner you map out those costs, the better.

When creating your new budget, don't forget to account for child care if you'll need it to go back to work. As of last year, the average weekly cost for an infant in a U.S. day care center was $211, according to Care.com, and that number could go up depending on where you live.

2. Build an emergency fund

Having a baby could result in an extended period of parental leave and a huge loss of income during that time. Similarly, if your baby requires an added hospital stay, you could be on the hook for a frightening medical bill. That's why you must go into parenthood with a solid emergency fund -- ideally, enough cash in the bank to cover a good three to six months of essential living expenses. This will help you avoid debt if bills pop up out of the blue, or if your earnings take more of a hit than imagined.

3. Start a college savings plan

Of the various expenses you'll incur by having a child, college could be the most substantial. That's why it actually pays to start setting money aside for higher education as soon as your child is born. It may seem like overkill, but when you think about it, you really only have somewhere in the ballpark of an 18-year savings window to put funds away for college, and the longer you wait to get started, the less time you have to invest your savings and grow your money into a larger sum.

You don't have to save for college in a 529 plan, but there are plenty of good reasons to do so. First, 529 plans let you grow your money tax-free, provided you use it for education purposes. Furthermore, some states offer tax breaks for funding a 529 -- you won't get that if you house your college savings in the bank. Finally, 529s let you invest your money, as opposed to leaving your cash in a savings account paying minimal interest.

To give you a sense of what a 529 plan might do for you when started at an early age, imagine you begin contributing $100 a month to one for the first 18 years of your child's life. If your investments in that account generate an average annual 7% return (which is more than doable over that window), you'll wind up with about $41,000. That's around $20,000 in investment gains you won't pay taxes on, provided you withdraw from that account to pay for college, or for another valid educational purpose.

You owe it to your child to prepare financially for his or her arrival. While the third item on the list above is something you can do after your child's birth, be sure to tackle the first two in advance. That way, you'll be able to better focus on taking care of your new baby without having to worry about money all the time.