Financial Freedom Insights: Issue 8

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Financial Freedom Starts Here

DON’T save your credit card information to make it easier to purchase online next time. Having to go find your credit card and enter in the information before each online order may actually be enough of a deterrent from buying that item you really didn’t want or need. This is a useful technique to help you reduce your online shopping expenses!

Financial Freedom Insight: Table of Contents

Ready to start a family? This will be life changing. Even health insurance providers describe having a baby as a “qualifying life event.” Having a baby is going to dramatically affect your budget for one thing, so it’s helpful to have some idea of what the costs might be and how you can minimize those costs.

In this blog, we outline some benefits your employer might offer you and your family, such as tax-advantaged health savings accounts. We also give tips on updating and managing your health insurance. Important note: always use in-network providers.

If you factor the additional expenses into your budget, with careful planning, you’ll be happily running behind a jogging stroller before you know it (make it a used one to save on equipment costs too!)

What Is the Average Cost of Having a Baby in the First Year?

If you are thinking of starting a family, do the financial planning first. The latest data from BabyCenter show that a baby’s first year will set you back around $20,000. That includes diapers, strollers, nursery supplies, clothing, formula, and food. It also includes nine months of childcare (estimated to cost around $10,000) and $900 towards a college fund.[1]

What that number does not include is the cost of pregnancy and delivery. According to MoneyGeek, pregnancy, childbirth, and postpartum care costs around $2,743.[2]

The actual cost will depend, of course, on your deductible, coinsurance, and out-of-pocket maximum.

So, all in all, you’re probably looking at a minimum of around $23,000, and that’s just the first year.

Now that you’ve had a minute to digest all that. Here are 9 ways to reduce those costs

1. Look At Your Health Insurance Benefits

Having a baby is typically a “qualifying life event” as far as your health insurance is concerned. That means that you can make changes to your health insurance and add your new arrival to the policy within a certain window following the event, usually 60 days. Don’t miss the window because if you do, you’ll likely have to wait until the next open enrollment period to change coverage.

For most health insurance programs, you can only make changes to your health insurance during the Annual Open Enrollment Period (typically November 1 to January 15). Other events that are “qualifying life events” are getting married and moving.

When you add your new baby as a dependent, your premiums are likely to go up. But there might be benefits that you can access through your employer in addition to the basic health insurance plan. For example, some employers offer health savings accounts (HSAs) or flexible savings accounts (FSAs). Let’s take a look at those.

2. Open a Health Savings Account (HSA)

An HSA is a savings account where you can sock away pre-tax funds and use them later to pay for medical care. The benefit of this account is that you are saving tax free. The money you withdraw from the account to pay for qualified medical expenses is not taxed either.

The one caveat is that you have to be enrolled in a high-deductible health plan (HDHP) to open an HSA.

You or your employer can contribute up to $4,400 for individuals ($8,750 for families in 2026).[3]

Often, an HSA account provides you with a credit card to pay for medical expenses, or you pay out-of-pocket and then reimburse yourself. Expenses that you can pay for with an HSA account include deductibles, copays, prescriptions, dental, and vision care.

Warning. If you withdraw funds from your HSA for non-qualified reasons before age 65 incurs, you will have to pay income tax and a 20% penalty. 

3. Open a Flexible Spending Account (FSA)

An FSA is similar to an HSA. It is different from an FSA in that it is available to anyone, regardless of the type of health insurance they have. In 2026, the maximum you can save in a medical FSA is $3,400 per year. If you don’t spend it, up to $680 can roll over into 2027.

One difference between FSAs and HSAs is that FSA funds cannot be rolled over into the following year. Funds must be spent by the end of the year or within a short grace period.

4. Open a Dependent Care FSA Account (DCFSA)

A dependent care FSA helps to reduce the cost of childcare. You can put money into this pre-tax account and use it to reimburse yourself as you pay for childcare. Single taxpayers and those married filing jointly can set aside $7,500 in a DCFSA for 2026 ($3,750 maximum for those married filing separately).[4]

5. Use In-Network Providers

Here are some other ways to bring down the cost of having a baby.

Using in-network doctors and health providers is critical to keeping costs as low as possible. An in-network provider offers discounted rates because they have a contract with your health insurance company. Your insurance provider can tell you which doctors and health professionals are in-network providers.

If you don’t use an in-network provider, your out-of-pocket expenses may be much higher. You might be charged the difference between what your insurance will pay and the health provider’s full fee.

6. Open a 530 Account

The new 530A accounts were created under the 2025 One Big Beautiful Bill Act. They are tax-advantaged accounts designed to encourage parents to save for their child’s education, homeownership, or retirement.

The account is technically owned by the child, but parents are the custodians until the child turns 18. Children born between January 1, 2025, and December 31, 2028, will receive a $1,000 federal deposit into the account. Anyone can contribute to the savings accounts, but there is an annual limit of $5,000.

7. Itemize Deductions for Medical Expenses on Your Tax Return

Save all your receipts for tax-favored reimbursement accounts and all documentation around the pregnancy, delivery, birth, and the first year of your baby’s life. When you have higher medical costs in a particular year, you might qualify for a tax break. The year that you have a baby might well be one of those years.

At tax time, out-of-pocket medical expenses that add up to more than 7.5% of your adjusted gross income can qualify as itemized deductions, and there’s no maximum to the deductions.

8. Consider Hospital Indemnity Insurance

This type of insurance might be available through your employer, or you can purchase it separately. It is not tied to your insurance plan, but the premiums cover eligible hospital stays, and childbirth may require more time in the hospital afterward. Depending on your policy terms and how long the hospital stay lasts, you may be eligible for a payout.

9. Open a 529 Account for the Child’s College Education

A 529 account is designed to help you save for your child’s college education. College might seem a long way off, but if you start now, you can take advantage of tax-free growth for your child’s education.

If your child does not end up going to college, up to $35,000 can be rolled over into a Roth IRA.

Matthew 25:5-7 (ESV)

“But the angel said to the women, “Do not be afraid, for I know that you seek Jesus who was crucified. He is not here, for he has risen, as he said. Come, see the place where he lay. Then go quickly and tell his disciples that he has risen from the dead, and behold, he is going before you to Galilee; there you will see him. See, I have told you.”

Through Jesus we get to spend our eternity in heaven. We have everyone had a happy and blessed easter!

Thanks for reading!

Haas Trade Financial Freedom Insights

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Nathan Haas, Founder & CEO

Caroline Banton, Director of Writing & Editing

www.Carolinebanton.com

www.linkedin.com/in/caroline-banton-writer/

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