Survey: 42% of Parents Say They Weren't Financially Prepared to Have a Child
Parenting comes with many rewards. But it can also come with a huge financial burden — and moms and dads are feeling the weight. According to the first annual Parents & Money Survey, 42% of parents say they were not financially prepared to have a child. Among those who don’t feel prepared, 23% lack key financial instruments like a traditional savings account or a 529 college savings plan that can help manage child-related expenses.
Financial Challenges Faced by Parents
The survey also revealed that one in three parents name “paying down debt” as their biggest financial goal, ranking it higher than other goals such as “buying a house” or “saving for retirement.” This highlights the financial pressure that many parents are under as they try to balance immediate needs with long-term financial planning.
Every family’s financial situation is unique, but there are steps any parent can take to become and stay financially fit. Here are some tips to help parents manage their finances more effectively:
Tips for Financial Preparedness
-
Draft a Household Budget: Include fixed expenses like day care or mortgage payments and discretionary categories like recreation. Track your spending and adjust as necessary.
-
Build an Emergency Fund: Save at least three to six months of expenses in an emergency fund. Increase savings via auto-deposit, a spare-change app, or a high-yield savings account.
-
Pay Down Debt Quickly: Use the avalanche method to pay down debt. Make all minimum payments but put the rest of your available funds toward the debt with the highest interest rate.
-
Increase Retirement Savings: Even if it’s just by 1%, aim to contribute more to your retirement accounts. Eventually, aim to contribute the annual maximum amount allowed by the IRS.
-
Open a 529 College Savings Plan: Encourage grandparents and relatives to contribute to your child's 529 plan as birthday or graduation gifts. This will help ease the financial burden of future education expenses.
Looking Ahead
As the survey shows, many parents feel unprepared for the financial demands of raising a child. By taking proactive steps to manage debt, save for the future, and build a solid financial foundation, parents can alleviate some of the stress that comes with parenthood.
Description: A family reviewing their finances together, illustrating the importance of financial planning for parents.
