Before kids, life insurance mostly protected a partner from a mortgage. After kids, it protects someone who can't earn a dime for the next 18-plus years.

And a lot of families are underprotected. Only about 52% of American adults own life insurance, and roughly 92 million adults say they need coverage or need more than they have, according to the 2026 Insurance Barometer Study from LIMRA and Life Happens.

Here's where new parents usually get tripped up:

A common rule of thumb is 10 to 12 times your annual income per working parent. A more personal way to estimate it:

For most young families, term life insurance (coverage for a set period like 20 or 30 years) is the simplest and cheapest fit. Time the term to last until your youngest is out of the house.

The KMONEY move: Use open enrollment to check what your workplace policy actually pays, then price a term policy for each parent that you own outside your job. Your coverage shouldn't depend on your employer.

Here's the cruel irony of new parenthood: the moment your expenses jump is exactly when your savings get drained.

BabyCenter's research put first-year baby costs at more than $20,000, and that's before the hospital bill. Add unpaid parental leave, a daycare deposit, and the pediatric urgent care visit that always happens on a Saturday night, and the cushion you had before the baby can vanish by month six.

The mistake isn't spending the savings. That's what savings are for. The mistake is never rebuilding it, and then putting the next emergency on a credit card at 20%-plus interest.

In the Parent's Emergency Fund issue, we built a five-step formula for your real number. The short version:

Keep it in a high-yield savings account, separate from checking, so it's boring and hard to raid.

The KMONEY move: Set up an automatic transfer the day after payday, even if it's $50. Then check whether you can open a Dependent Care FSA during open enrollment. It lets you pay for daycare with pre-tax dollars, which frees up cash flow for your emergency fund.

This is the one almost nobody wants to talk about, which is exactly why it's the most common mistake on this list.

"Estate planning" sounds like something for people with yachts. It isn't. For a young parent, it really means answering one question: if something happened to both of us, who raises our kids, and who manages the money for them?

According to a LegalShield survey released in August, nearly two-thirds of American parents haven't legally named a guardian for their children. And in Caring.com's long-running wills survey, the most common reason people give for not having a will is that they just haven't gotten around to it.

Without a will, a court decides who raises your kids, and state law decides who gets your assets. That might be the person you'd pick. It might not.

One detail that catches parents off guard: minor children generally can't receive life insurance proceeds directly. If you name your kids as beneficiaries with no trust or custodian in place, a court may have to appoint someone to manage the money. A simple trust or a named custodian solves that.

The KMONEY move: Pick your guardian this week and ask them. Then get a basic will done, whether through an estate attorney or a reputable online will service. Many employers also offer a legal plan as a voluntary benefit, so look for it during open enrollment. Done is better than perfect. You can update it as your family grows.

"College is 18 years away" is exactly why you should start now. The first five years are the most valuable compounding years your kid will ever have, and most parents let them slip by.

Here's what $100 a month becomes at a hypothetical 7% average return, depending on when you start:

Waiting until kindergarten costs you roughly $17,700 in potential growth. Same $100 a month. The only difference is time.

(Returns are hypothetical and never guaranteed. Markets go up and down.)

We covered the full menu in the $100-a-Month Family Wealth Plan, but for new parents, two accounts matter most right now:

One timing note: in many states, contributions have to be made by December 31 to count toward this year's state tax deduction. Check your state's plan rules before the year ends.

The KMONEY move: Open a 529 before the holidays and send the gift link to the grandparents. A lot of relatives would rather fund your kid's future than buy another toy that lights up and sings at 6 a.m.

The baby industry has your number. It knows you're excited, exhausted, a little scared, and willing to pay almost anything for an extra hour of sleep.

That's how a $40 swing turns into a $300 "smart" bassinet, and a closet fills with newborn outfits your baby outgrows before wearing them twice.

As we talked about in The Secret Cost of Being a "Good Parent", a lot of this spending isn't for the baby at all. It's for our guilt, our group chat, or our Instagram feed. Your newborn has no idea what brand the stroller is.

The KMONEY move: Before buying anything for the baby, ask: "Will we use this at least weekly for three months?" If not, borrow it, buy it used, or skip it. When you do buy, buy quality basics on sale, not novelty gear at full price.

When money gets tight with a new baby, the 401(k) is usually the first thing parents cut. It feels responsible. The baby needs things now, and retirement is decades away.

But this might be the most expensive mistake on the list, because it quietly costs you the two most powerful forces in investing: free money and time.

Say you earn $75,000 and your employer matches 50% of what you contribute, up to 6% of your salary. If you stop contributing, you give up $2,250 a year in free money.

Skip it for the first five years of parenthood, and here's what that can cost at a hypothetical 7% average return:

That's nearly six figures of retirement money gone, and it was never even your paycheck to begin with.

(Hypothetical example for illustration. Match formulas vary, and returns are never guaranteed.)

It sounds backwards, but most financial planners put it in this order for a reason. Your kids have options for paying for school: scholarships, work, community college, and student loans. Nobody lends you money for retirement.

And the best gift you can give your kids in 30 years is not needing them to support you while they're raising kids of their own.

For reference, the 2026 employee contribution limit for 401(k), 403(b), and most 457 plans is $24,500. The IRS typically announces next year's limits in the fall, and forecasters expect an increase for 2027. Most new parents won't hit the max, and that's fine. The match is the priority.

The KMONEY move: During open enrollment, confirm you're contributing at least enough to get your full employer match. Then turn on auto-escalation so your contribution rises 1% a year. You'll barely notice it, and your 65-year-old self will be very grateful.

You don't have to fix all six this weekend. Here's a realistic order of operations:

This month (open enrollment)

Before the end of the year

In the next 90 days

Every year until kindergarten

Your baby won't understand any of this yet. But your preschooler will notice more than you think.

When your kids are old enough, tell them why you do the boring stuff: "We save a little every month so that when something breaks, it's not a big deal." Kids who grow up watching parents plan ahead tend to treat money as something you manage, not something that happens to you.

And if you've got relatives asking what to get the kids for the holidays, that 529 gift link turns into a family tradition that keeps paying off for 18 years.

The most expensive financial mistakes new parents make aren't dramatic. Nobody wakes up and decides to skip their will or leave their 401(k) match on the table. It just slides, one exhausted week at a time.

The good news is that every one of these mistakes is fixable, and most of them take less time than assembling a crib. Start with the free money, protect your family, and then let time do the heavy lifting.

Your kids will never thank you for the life insurance policy or the will. But they'll benefit from them either way, and that's the whole point.

The most common financial mistakes new parents make are skipping or underbuying life insurance, not rebuilding an emergency fund, putting off a will and guardianship, delaying college savings, overspending on baby gear, and cutting retirement contributions. Most happen from busyness, not bad decisions.

A common rule of thumb is 10 to 12 times each working parent's annual income. A more precise estimate adds up debts, years of income to replace, and future childcare and college costs, minus existing savings. Stay-at-home parents need coverage too.

Yes. A will is the main legal document where you can name a guardian for minor children. Without one, a court decides who raises your kids and state law decides how your assets are divided.

Most financial planners suggest securing your own retirement first, starting with the full employer match. Your child can use scholarships, work, or loans for school, but there are no loans for retirement.

As early as possible. The first five years give your savings the longest runway to compound. Even $25 to $50 a month started at birth can grow meaningfully by 18.

Buy each stage's gear only when you need it, buy clothes and toys secondhand, register for essentials, and wait 48 hours before unplanned purchases over $100. Buy safety-critical items like car seats and crib mattresses new.

Every backyard renovation has a list. New deck. Better lighting. Maybe that outdoor kitchen you've been pinning for years.

Here's what usually gets left off: shelter. Without it, your brand-new patio is only as good as the weather forecast. A Hansø pergola fixes that. 

Built from T6 aerospace-grade aluminum and engineered for up to 167 mph winds and up to 65 PSF snow load, it keeps your patio covered, comfortable, and in use from spring through winter. Motorized louvers let you decide how much sky you want, anytime.

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The list is long. Make sure the most important thing is on it.

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Hit reply and tell me: which of these six mistakes did you make (or are you making right now)? No judgment. I made a couple of them myself. The best stories might make a future issue.

See you next week,

KMONEY