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- More than half of millennial parents underestimated the cost of raising kids, according to a new Bank of America report.
- Millennials are more likely than their parents were to consider finances before starting a family, but kids are pricier than ever.
- This leaves many millennial parents stressed about their savings.
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Millennial parents are experiencing sticker shock.
So finds Bank of America’s latest Better Money Habits report, in which 59% of millennial parent respondents said they underestimated the cost of raising their children. The report surveyed 1,903 Americans ages 18 to 73, defining millennial respondents as those ages 24 to 41.
That might be because raising kids is more expensive than it’s ever been. The average cost of raising a child until age 18 today in America is more than $230,000, according to a Merrill Lynch report. Childcare costs, grocery and health expenses, and education-related costs are partly to blame.
But it’s not that millennials aren’t considering their finances before having kids. On the contrary, 58% of millennial parent respondents in the Bank of America survey said finances were an important consideration when starting a family – more so than both Gen Xers and baby boomers.
It’s a finding that underscores several other studies about the weight money bears among millennials looking to start a family.
The Merrill Lynch report found that the percentage of parents factoring money into their decision to have kids has increased from 33% in 1970 to 73% today. And finances are one of the top reasons why American millennials aren’t having kids or are having fewer kids than they considered ideal, reported Business Insider’s Shana Lebowitz, citing a New York Times survey.
The cost of kids is stressing the already financially-burdened millennial out
Many millennials are aware of how pricey kids can be, but even so, find themselves in for a surprise – and the price tag of having a kid is hurting their financial and mental health.
Nearly half of the millennial parents in the Bank of America survey said they feel restricted in what they can do financially because of the cost of raising kids, and they’re most stressed about not saving enough – 44% cited it as a top financial stressor.
“For millennial parents, money is affecting the shape of their families,” reads the report. Millennial parents are also more likely to carry debt than their childless peers, which they’re balancing with short- and long-term financial goals.
That’s not good news for a generation who is already financially behind from student debt, the fallout of the Great Recession, and other heightened living costs. Only time will tell if the cost of having a kid will compound their wealth-building problems even further.