When you’re having a baby, questions abound: Will the child have your green eyes? Will he or she be a scientist, a musician, a teacher? Then the daydreaming hits the hard brick wall of reality: How will you manage to financially support another human being for the next 18+ years? Don’t panic."Just prepare for new expenses — diapers, formula, baby clothes and, of course, the future — while you aren’t sleep-deprived," says F. John Deyeso III, CFP, of Financial Filosophy. Start with these three pre-baby steps to ensure a smooth transition:

1. Open a 529 (Tax-Advantaged) College Savings Account
   
   Let’s be clear: Saving for your retirement trumps saving for your child’s college education. So, unless you’re maxing out your retirement contributions, you shouldn’t fund the account yourself. "Open one to house gifts of cash that your newborn receives this year and until college," says Jean Chatzky, Today show financial editor and author of The Difference. And every little bit will help, says WISE Financial Group, Inc. president Chris L. Self: "The cost of a college education is expected to more than triple over the next 18 years."


2. Buy Life Insurance
   
   Once you have dependents, life insurance is vital. But, rather than a permanent life insurance plan, Chatzky recommends this less expensive formula: "Calculate how much income you’d need to replace and for how long. Tack on the price of paying off your mortgage and college tuition if you’d like the ability to cover those, as well. Then shop for a 20-year level term life policy." Self adds that you should insure both parents for a minimum of $100K per year, even if one stays at home: "Think about the additional cost to pay for housekeeping, cooking, carpooler, overnight stays if the surviving parent travels for work and so on," she says.


3. Start Living on One Income… Now
   
   It’s important to know your family can live comfortably on one income. So, during the pregnancy, make the adjustments to your lifestyle that would make it possible. "Many parents plan to return to work, but ultimately do not. Plus, in the current job market, no one has a guarantee," Self says. "Learning to live on one income can help guard against the unexpected." And that’s not the only benefit, Chatzky explains: "Not only will this teach you whether or not you can do it, but you can bank the remaining salary and start parenthood with a substantial nest egg."

Two other pre-baby financial checklist items to consider? Creating a will and choosing guardians. "An astonishing number of new parents haven’t done that," says Chatzky.