Finances when a baby is on the way

Financial preparation for the baby – the checklist (Germany):

7+ months BEFORE the birth:

✅ Change tax class: switch to tax class III (married couples) → higher net pay → higher parental allowance! Must take effect at least 7 months before maternity leave
✅ Top up your emergency fund: at least 6 months' salary, better 9

3–6 months BEFORE the birth:

✅ Insurance: liability (is the child co-insured?), term life insurance (€200,000+), legal expenses if needed
✅ Budget for baby equipment: €1,500–3,000 (pram, cot, clothes, car seat). Buy a lot second-hand!
✅ Plan parental leave: who takes how much? 12+2 months of basic parental allowance or ElterngeldPlus?

AFTER the birth:

✅ Apply for child benefit: €250/month, Familienkasse, ideally in the first 2 weeks
✅ Apply for parental allowance: within 3 months of the birth (only 3 months retroactively!)
✅ Register the child with your health insurer: statutory insurance: family insurance (free!)
✅ Open a junior securities account: child benefit straight into an ETF savings plan → at 18: approx. €107,000

Ongoing baby costs (1st year):

• Nappies: €50–80/month
• Food (after breastfeeding): €50–100/month
• Clothes: €30–50/month (second-hand: €10!)
• Health insurance: €0 (family insurance)
• Total 1st year: approx. €5,000–7,000