Parenting comes with many rewards. But it can also come with a huge financial burden — and moms and dads are feeling the weight.
The first annual Policygenius Parents & Money Survey sought to analyze financial wellness among American parents of varying age, gender and marital status.
It found 42% of parents say they were not financially prepared to have a child. Among parents who don’t believe they’re prepared, 23% lack key financial instruments, like a traditional savings account or a 529 college savings plan, that make it easier to handle child-related expenses.
In addition, one in three parents name “paying down debt” as their biggest financial goal over “buying a house” and “saving for retirement.”
Every family’s financial situation is unique. But there are steps any parent can take to become (and stay) financially fit. Here are a couple tips.
Draft a household budget. Include fixed expenses, like day care or mortgage payments and discretionary categories, like recreation. Track and adjust as necessary. You can use this simple budgeting spreadsheet to get started.
Save at least three to six months of expenses in an emergency fund. Increase savings via auto-deposit, a spare-change app or high-yield savings account.
Pay down debt quickly using the avalanche method. Make all monthly minimum payments, but put the rest of your available funds toward the debt with the highest interest rate.
Up your retirement savings, even if it’s just 1%. Aim to eventually contribute the annual maximum amount the IRS allows.
Open a 529 college savings plan. Encourage grandparents and relatives to contribute as birthday and graduation gifts.
You can download the Policygenius Parents & Money White Paper below.
Image: Nastia Kobzarenko