For the dependent care FSA, if one of you hits the FICA cap and/or is above the highly compensated employee threshold and you both have a DCFSA, the DCFSA should come out of the lower earning spouse’s paycheck. The DCFSA amount is often adjusted down due to the HCE equity test. And once you hit the FICA cap you lose the FICA savings on your contributions.
I’ve found the financial challenges of having children are on the spending side of things. So the slight financial advantages they confer can easily be undone with one or two suboptimal spending choices. Child care is the biggest line item by far when both parents work. Nanny shares can sometimes cost less than infant daycare, but come with their own set of advantages and disadvantages. Some people are able to figure out creative solutions in this area, but it’s tough.
The food/dining out line item also often takes a hit when a little one arrives, because you are tired and have less time to be organized. Definitely prep some freezer meals for the time around baby’s arrival. Lower your standards for what makes an acceptable dinner and you’ll be less likely to order “omg I’m so tired and hungry” takeout. Also be sure you’re stocked up on high energy one handed snacks like trail mix and granola bars. Breastfeeding moms need lots of calories.
Breastfeeding can save a lot of money but it’s okay to formula feed if that’s what’s best for your family. Cheap generic formula has to meet the same standards as expensive name brand stuff, so try the less expensive option first. As a general rule always try the least expensive solution to any issue and revisit the more expensive options if the cheap one doesn’t work.
Finally, be sure to continue investing in your marriage or partnership once your little one arrives. A strong partnership is good for your child’s well-being, and helps to keep finances on track as well. Keep reviewing your goals, but also allow room for growth, change, and new hopes and dreams.
Good luck on this exciting new adventure!
