Dramatic changes in one's life often require a reassessment of one's personal finances. And few events have a more profound impact on one's life and finances than the arrival of a first child.

The estimated annual cost to raise a child is $12,290 to $14,320 for an average-income family, according to 2011 figures from the Department of Agriculture. This cost doesn't include college education, or the forgone wages and benefits one or both parents might incur while raising a child. So if you're expecting a child, or one was just born, it's time to do some serious financial planning.

Get That Social Security Number

You'll want to get a Social Security number for your child as soon as possible — not because he or she is going to work soon, but because the number will entitle you to several tax benefits that will help defray some of the child-rearing costs.

Review Employer Benefits & Paychecks

Consider increasing the number of allowances you check off on your W-4 form at work by at least one or two. This will increase the amount of your take-home pay in response to the increased deductions you'll receive for the child.

Add your child to your health insurance plan, and review possible plan changes. Is your pediatrician on your current plan? Does it cover baby visits? Most employers allow such changes even though it may not be during the open enrollment period.

Consider signing up or increasing the amount you put into a flexible spending account (FSA) for health care if it's available at work. If both parents work, considering starting an FSA for child-care. With these types of accounts, pre-tax dollars are set aside from your paycheck — up to $3,000 for medical and $5,000 for child care. You withdraw funds tax free from the accounts as you incur qualified expenses. In the case of the child-care FSA, be aware  that you can't simultaneously claim a child-care tax credit, so you'll have to determine which option offers the greater tax savings.

Revamp Insurance

Increase your life insurance to provide for the future needs of the child in your absence. If you don't have adequate disability insurance, and many people don't, beef that up.

Write or Review Your Will

You'll want to designate a guardian for your new child in your will in the event that you and your spouse die. Discuss who you would like to care for your child, and then talk it over with the person to be sure they're willing and able.

You also may want the will to establish a trust to manage estate assets for your child should both of you die before your child is old enough to manage the inherited assets.

Start Saving 

If you weren't saving or budgeting before, definitely start now because big-ticket expenses will grow with a new child — a larger home, a bigger car, medical expenses and so on.

Start Saving for College

Like any form of investing, the sooner you start the less you need to invest in order to reach a specific target. That's because the power of compound earnings grows stronger the longer the time horizon.

On the other hand, don't save for college at the expense of saving for retirement. First, your child might not go to college and thus you've wasted all those years the money could have grown inside a retirement account. Second, if you haven't saved enough by the time the child reaches college age, there's always financial aid, a less expensive school, scholarships or work. But nobody gives financial aid for retirement.

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