You've heard it a million times: It costs a fortune to raise children. But when you're all wrapped up in the joy of it, who's going to take the time to consider the budget or check the insurance plan. According to Cindy Wright, a financial planner based in Bellevue, Iowa, most people don't. "People don't connect pregnancy with financial planning," she claims.

But factoring children into your initial financial plan is of paramount importance. Not only is it ridiculously expensive to pay hospital bills and to buy every baby essential including diapers and strollers, and the prom dresses and college fees that will inevitably follow, but even the pregnancy itself and the frequent checkups before your baby is born can put you in the red. "You will almost always severely underestimate the costs of raising a child," Wright insists. "If you can go in with that theory, then you can pad your savings, and that should give you a pretty good basis. The costs are just phenomenal."

According to a study done by the Department of Family, Youth, and Community Sciences at the University of Florida, normal childbirth expenses - some of which may be covered by insurance - can range from around $2,800 for at-home delivery by a midwife, to $3,200 for delivery at a birthing center with a midwife - and costs can escalate to $7,300 with a physician delivering the child at a hospital. A C-section could cost you at least an extra $2,000, and a difficult pregnancy could be anywhere from two to five times the normal cost. With that in mind, here are a few things to help you stay ahead of the game.

Plan before you plan. Thinking, I'll cross that bridge when I come to it, isn't exactly sound logic when you're planning finances. There will be more surprise expenses during the first 18 years of your child's life than you could possibly imagine. First and foremost, Wright says, if you're planning on starting a family, find out exactly what your insurance plans will cover - e.g., childbirth classes, doula services, tests, prescriptions. "If a catastrophe happens, how will your insurance cover it," Wright asks.

It might even be necessary to enroll in a supplemental insurance policy, in order to cover most of the costs. Once your insurance coverage has been assessed, immediately start saving for incidental expenses, if you haven't already. "I advise to always have three to six months' worth of expenses saved for emergencies," Wright says. "It's a good basis for investing and additional expenses." And more than likely if you're pregnant those additional funds will go toward preparing for childbirth.

Next, consider how you will manage your finances once the child is born. If you plan on going straight back to work, money might not be an immediate problem. But if you plan to take extended maternal leave, any savings might come in handy. If your partner works, that second income will allow you some additional freedom. Also, be sure to look at the big picture. You're going to be supporting your child for at least 17 years. According to 2002 figures from the United States Department of Agriculture, families earning $39,100 to $65,800 per year will spend approximately $170,460 raising one child from birth to age 17.

Throughout the child's adolescence, there will be costs you won't anticipate. For example, Wright's 17-year-old daughter proved rather accident-prone. She has totaled two cars and received two moving violations since she began driving. Even though both wrecks were not the young girl's fault, her portion of Wright's car-insurance policy is now $2,500 a year. Wright says the key is to think of financial planning as "a family issue, not just the child's."

Preparing for the future. It's never too early to start saving for your child's education. Rosemary White, a financial planner with Strong Financial Group in Cambridge, Massachusetts (MoneyTipsOnline.com), says many of the couples she counsels have factored their children's future educations into their financial plans. And now, parents have more options. There are now programs specifically designed for saving money for college.

In Cindy Wright's view, if you're in a low to medium tax bracket, such as a 15 percent bracket, it's not worth it for you to open a trust or gifts account for your child. Opening a regular savings account and setting aside a portion for your child is more sensible.

For people in high tax brackets, uniform trusts or uniform gift accounts will give them some tax relief - but there is a drawback: That money is out of the parents' hands once the child turns 18. "They can go to Harvard or buy a Harley," Wright warns.

Another option for parents and their children is the educational IRA now available in most states. This allows parents to put away a certain amount of money for a child's college education. The parents retain control of it, and the money is tax deferred. This is also a great way for grandparents to reduce cash in their estates, thus avoiding some estate tax.

White has another idea. While she agrees that saving for your child's education is crucial, she advises against the education IRA, also known as the Coverdell ESA, which only allows a maximum yearly contribution of $2,000. Even over several years (not to mention inflation), she says, that amount will not be nearly enough to pay for your child's college education.

Instead, Rosemary White suggests investing in the 529 college-savings plan, which allows each contributor a maximum yearly contribution of $11,000. That means if Mom, Dad, and Grandma want to contribute, that child could have $33,000 in the can in one year's time. It's also a great opportunity for grandparents to avoid hefty estate taxes. Almost every state has one of these, but if for some reason your state doesn't, you can invest in another state's plan.

The money in the 529 plan continues to grow tax deferred as long as the money remains in the program, and when the beneficiary is ready for college, the money can be used for legitimate college purposes (e.g., books, housing, tuition) at any of the 8,300 accredited college or universities in the country. Most importantly, the parents have ultimate control over the money for the duration of its use. So the child can't just withdraw the money and buy a car or use it to go on spring break.

At least 35 states currently offer the 529 plan, but if you live in a state that doesn't offer it, you can invest in another state's plan. Additionally, if there is money left over after your child has finished college, the beneficiary can be changed to another child or even to yourself, for a degree or for continuing education classes.

"This is going to be very popular," White says, adding that the cost of college is growing steadily 4 percent to 5 percent each year. "The cost of college is huge; parents sometimes have to take out a second mortgage."

*taken from "It's Never Too Early to Start" by Amanda Kazdoy, Every Baby magazine, Issue Four.