What New Parents Really Need

If you are an expectant parent, you might be starting to worry that you'll have to take out a second mortgage to buy all that stuff you supposedly need for your baby. Friends, family, books and parenting magazines are telling you that you must start stocking up on things you've never even heard of: exersaucer, bouncy seat, co-sleeper, changing table, wipe warmer and the list goes on.

Take it from me -- a mother of two with a third on the way: There is very little you need to buy for a new baby.

A baby needs a place to sleep, and a standard, inexpensive crib will do the trick. He doesn't need a $1,000 crib that he'll sleep in two, maybe three years tops.

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A baby needs clothing, but it doesn't need to be expensive or fancy -- especially in the first few months because he'll grow out of it quickly. Honestly, onesies and footed pajamas are your best option for a while.

A baby needs a car seat if you'll be transporting him by car. An infant car seat is convenient because it works as a carrier, too, but only can be used for about a year because of its small size. You can get a lot more mileage out of a convertible car seat, which can be used until your child is a preschooler. The drawback is that you can't carry the baby in it -- you'll have to take him out of the seat (and possibly wake him up) every time you reach a destination.

A baby needs diapers -- lots of them. If friends and family have planned baby showers for you, let them buy you gear, blankets and clothing. Save your money to stock up on diapers.

There are plenty of other things parents will say they couldn't have lived without. But from my experience, it varies from child to child. One of my girls was addicted to pacifiers; the other didn't need them. Neither liked the swing or bouncy seat we had. I loved carrying my kids in a Baby Bjorn -- some parents prefer slings. That's why it's a good idea to borrow items from friends to test drive them (so to speak) or buy gently used items at a fraction of the cost of new gear.

There's a lot you don't need -- and I'll be posting that list tomorrow. But in addition to the items I listed above, there are only a few things every new parent should have. Don't overlook these essentials in the excitement of having a baby and the whirlwind of buying things you supposedly need.

Life insurance. As I'm sure you've heard, kids are expensive. You can expect to spend at least $200,000 to raise a child, according to some estimates, and that doesn't include college costs. So you need to make sure your child will be supported financially if you die. The best way to do this is with a term-life insurance policy, which gives you the most protection for your money. You can buy several hundred thousand dollars’ worth of coverage for just a few hundred dollars per year. And don't think stay-at-home moms who aren't generating income don't need insurance. Dad would need extra money to cover the cost of child care if something happened to mom. See How Much Life Insurance Do You Need? for a formula to help you figure out how much coverage to buy.

Health insurance. Make sure you add your baby to your health insurance policy after she's born because you'll be making a lot of trips to the doctor for well-baby check-ups -- and you want her to be covered in case there are any major medical problems. If you have coverage through your employer, you have 30 days after your child's birth to add her to the policy (and coverage is retroactive to birth). Otherwise, you have to wait until the next open-enrollment period or appeal to the insurer to add your child to your policy. If you have individual coverage, you may add the baby at any time. But if you sign up more than 30 days after the baby is born, there will be a gap in coverage.

Disability insurance. If you or your spouse were injured or too ill to work for several months, how would you support your children? Disability insurance helps replace lost earnings. You might have some coverage through work, but it probably will replace only 60% of your pre-tax earnings (that's the max for employer-paid disability benefits). For details on finding your own policy and how much you can expect to pay for it, see Better Deals on Disability Insurance.

A will. You don't need to be a Daddy Warbucks to have a will. This important document does much more than just provide instructions for how you want your property distributed after you're gone. It allows you to name a guardian for your children and someone to manage the money you leave them. Even if you think it goes without saying that your parents or your sibling will take care of your kids if you die, you need to put it in writing whom you want to take on this role -- otherwise, a court will decide. See Why Parents Need a Will for more information.

A child-care plan. Ideally, you should figure out who will care for the baby before he or she arrives. That's because you'll likely have to get on a waiting list for daycare, spend time finding a qualified nanny and dealing with the paperwork that having a household employee requires, or crunch the numbers to figure out if one parent can stay at home and start budgeting to make that possible. If you plan on paying someone to care for your child, find out if your employer offers a flexbile spending account that will let you set aside pre-tax dollars (up to $5,000) for dependent-care expenses. Normally, you must determine your FSA contributions before the start of the new year, and you usually have to spend all of the money by the end of the year (or by March 15 of the following year, if your employer offers a grace period). But if your baby isn't due until 2012 and you don't want to commit to a certain contribution amount until then, your plan may allow you to do so because of your change in family status.

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