Any parent can attest to how challenging it is to raise a child, even under the best circumstances. However, during the coronavirus pandemic, many of them didn’t have that luxury.
The second Parents & Money survey from fintech company Policygenius showed that for 60% of parents, the COVID-19 outbreak had no effect on their financial ability to take care of a child. But for over a quarter of respondents (26%), the health crisis left them feeling less financially prepared to raise a family.
COVID-19 compels parents to reevaluate their financial preparedness
According to the Policygenius survey, 45% of all parent respondents felt they weren't financially prepared to have a child. This number included 48% of mothers, perhaps due to many of them putting their careers on pause to hold down the fort at home. In fact, nearly a quarter of all respondents (23%) said that they or their partner worked less hours or quit completely for their child's care and education.
As a result, many families had to reassess the way they managed their finances. Almost 4 in 10 (37%) of respondents turned to their emergency, retirement, travel or college savings to keep their families afloat during the pandemic — a number that rose to 56% among those who felt financially unprepared. In comparison, only 28% of those who said their finances were unaffected by the pandemic said the same.
These changes also affected respondents’ outlooks on their long-term financial goals. When asked about which goals they were most stressed about, their top answers included:
- Saving for retirement (30%)
- Paying down debt (21%)
- Having an adequate emergency fund (16%)
- Affording college tuition (13%)
- Buying a house (13%)
Parents take on new expenses and investments amid pandemic
When it comes to the biggest strains on their budgets, parents reported a variety of expenses, including:
- Food (20%)
- Medical expenses (18%)
- Child care (17%)
- Recreational and extracurricular activities (14%)
But at 23%, the biggest strain for many parents came from their children's educational costs. After paying for items like upgraded Wi-Fi, new devices and school supplies, the average spend for these expenses went up by as much as $580 for some families.
The severity of the COVID-19 outbreak also highlighted how quickly a family's fortunes could change — in some cases, overnight. This reality drove many parents to invest in financial protections for themselves, their partners and their children. For instance, respondents took the following actions during the pandemic:
- Making an estate plan (7%)
- Starting a medical expenses fund (5%)
Purchasing life insurance
- Respondent (5%)
- Respondent’s partner (5%)
- Both respondent and their partner (7%)
These figures were significantly higher — doubled, in some cases — among parents who felt that the pandemic made them more financially prepared to raise a child.
Methodology: Results were gathered using Google Consumer Surveys between March 26 and April 21, 2021, from a nationally representative sample of 1,500 U.S. parents with at least one child age 18 or younger. Percentages were rounded to the nearest whole number.