26% of Parents Feel Financially Unprepared to Raise Their Children Amid Pandemic

26% of Parents Feel Financially Unprepared to Raise Their Children Amid Pandemic

Parents invest more in protections like life insurance, estate plans and medical expense funds
Holding a pregnancy test

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.