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Millennial Parents Struggle with High Cost of Living


For many young adults, heavy debt and lower-paying jobs lead to a delay
in traditional life goals, like buying homes and starting families.
However, research suggests that millennials’ financial worries are
adding up to more than stress and disappointment, particularly once they
become parents.

Two in five young parents rate their financial health as unsatisfactory
and 40 percent said financial stress is putting a strain on their
relationship, according to a survey from the National Endowment for
Financial Education and Parents Magazine. More than half of millennial
parents concede they would surrender a year of their life to have more
financial security.

“Being a parent takes patience, forgiveness and a lot of silent counts
to 10, but it also takes a lot of money,” said Paul Golden, director of
Smart About Money, a nonprofit foundation inspiring educated financial
decision-making for individuals and families through every stage of
life. “Many young adults start off with significant student loan debt.
When you add housing, groceries, utilities, transportation expenses, and
health care costs, the strain increases, and oftentimes the math in the
household budget doesn’t add up.”

The price tag of raising a child is more than $304,000 based on the
projected inflation-adjusted cost of rearing a child until age 18, not
counting college. Managing that financial pressure begins with planning
for the future and truly understanding the costs associated with adding a
baby to the family or buying a new home, Golden added.

“Regularly paying attention to your money and practicing major life
transitions before they happen is an important step toward achieving
financial health,” he said.

As a parent, you have many financial responsibilities to balance, but
planning for the future can help prevent unforeseen expenses from
tipping your scales.

Debt reduction. Make a plan to pay off excessive debt,
particularly credit cards. Tackle your lowest balance first to gain
momentum then take on the next smallest. Additionally, pay attention to
higher interest rates that are costing you a lot of money.

Use a budget. Get a budget and spending plan in place
to keep track of your expenses. Try an envelope system with monthly
allowances for groceries, entertainment, utilities, etc.

Start saving. Build an emergency fund. Aim for a small,
achievable goal as low as $500 then set the bar higher. Participate in
your employer-sponsored savings program to boost retirement savings,
especially if there is a match. Make it an automatic payroll deduction
and increase it when your paycheck goes up. As far as your child’s
college savings, save what you can, when you can. Every little bit will
help when education bills come due.

Child care. Consider establishing a flexible spending
account if one is offered by your employer. Parents can use pretax
dollars to pay up to $5,000 in child care expenses in most states.

Review insurance and important paperwork. Create a will
either by using an online program or hiring a professional to name your
child’s guardian, and designate at what age any payouts, savings or
investments will be distributed. With health insurance, notify your
employer within 30 days of the birth to ensure that the child is
eligible for any dependent benefits. Purchase appropriate health care
coverage to protect your family. Review your employer’s life insurance
plan and determine if it is adequate for your needs. If not, consider
purchasing additional life insurance.

Save for the future. Put money for short-term expenses
(one to five years) in safe investments, such as savings accounts and
certificates of deposit. These low-interest-rate investments will not
grow dramatically, but they will not lose money, either. Money you will
need beyond five years should have the opportunity to grow at a risk
level you are comfortable with. Use a combination of steady-earning
savings accounts and more volatile stock and bond mutual funds to help
protect you against long-term losses.

Get started with these tips and learn more through self-directed courses at SmartAboutMoney.org.
How much does having a baby cost? Along with preparing
for the costs of clothes, furniture, and baby items, take time to review
your health care and employer benefits and policies relating to time
off work.

Spread the costs. Compile a list and calculate the
total of anticipated expenses, including doctor fees, maternity clothes,
birthing classes, unpaid time off for maternity leave, and necessities
for the baby. Distribute the total cost throughout the duration of your
pregnancy. If you pay as you go rather than purchase everything at once,
the sum becomes easier to manage.

Know what’s covered. Health care plans vary widely and
while a friend may have had all the expenses paid for, not all insurance
plans are alike. Know what you will be responsible for and when
payments are due. Ask about co-pays, co-insurance, deductibles,
out-of-pocket costs, birthing and other classes, and specialty tests.
Discuss how costs change if you require a C-section or any other
additional hospitalization.

Account for time off work. Look into maternity and
paternity leave, and learn about additional unpaid time off under the
Family and Medical Leave Act. Be aware that if your company has fewer
than 50 employees, it’s not required to offer FMLA leave. Ask your
employer if you can use unused sick and vacation days to cover your
maternity leave. Don’t forget to calculate any lost pay if you’ll need
unpaid time off for doctor’s appointments.

Source: Family Features