3 Financial Goals for New Millennial Parents

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Millennials, those born from the early 1980s to the late 1990s, have been considered through the prism of youth for many years now. But we're growing up and starting to act like adults. Now that millions of people from Generation Y are in their 30s, this generation is starting to have children. In fact, there are well more than 20 million millennial parents already. Even though there are endless publicized (and not invalid) reasons why some millennials are avoiding parenthood, thousands of us are taking the plunge every month. So for new millennial parents, and for those considering the idea, here are three ways to prepare for parenthood, financially speaking.

Get Stable

A recent Pew survey found that 75 percent of childless, unmarried Gen-Yers want to have kids someday. Famously, this generation is strapped with debt from school loans and other sources. About 20 percent of millennial parents are currently living in poverty. In many cases, this is unavoidable. There's nothing morally wrong with living in poverty, but the challenges of raising children in such a financial state are undeniable. It is difficult, though not impossible, to become financially stable if you already have children. But it's a lot easier to do it if you don't have kids yet. If you are planning a family for some time in the future, start getting your finances in order now, the sooner the better.

Manage debt. No matter what sort of debt you have, it's worth putting in extra effort to kill it off before you bring kids into the world. Start with credit card debt and other high-interest forms. Lower-interest forms of debt are normal for families of all sorts, and student loan interest can even be deducted from your taxes in many situations. Higher-interest forms of debt tend to accumulate faster than saving and investment can grow money, so focus on this first.

Budget. Learn to manage spending so that you're living well below your means. This may require lifestyle changes, but it's worth it. If you have a firm grasp of how much money is coming in, and how much is going out, you'll be ready to figure out the financial realities of raising children.

Focus on your most immediate financial needs. These include housing, employment, and food. In some situations, starting a family may require moving to a new city, to take advantage of a better job market or cheaper housing options. If it is possible for you to buy a house, do so, even if it means living in a fixer-upper. Your mortgage payments will be much smaller than monthly rent payments you would otherwise make. If you don't know how to cook, learn. Many families spend more money on food than they do on housing, and you'll definitely want to cut down on this cost if money is tight. Finally, try to find work which will make ends meet, and which will work with you when you have kids.

Meeting all of these needs will be a tall order, no question. But anything you can do to make your current financial situation more stable and sustainable, this will go a long way in helping you start your new family.

Get Savvy

There are dozens of parenting and personal finance blogs devoted to helping you raise kids on a budget. You also likely know at least a few new parents your age who will be more than happy to tell you about their money-saving techniques. Learn some techniques before you get started. For instance, it's possible to saving thousands of dollars on the path to potty training by using cloth diapers. Breast feeding is cheaper and, in many ways, healthier than formula feeding. Take advantage of tax savings like the Federal Child and Dependent Care Tax Credit. I could go on, but you get the idea. There's lots of good information out there; find it.

Having kids is expensive; I'm not saying it isn't. But by knowing how to save ahead of time, you'll be able to save thousands of dollars a year. Take advantage of the extra time you have before kids to learn this stuff.

Plan For the Future

After the first year, you'll have a lot of these techniques worked out. The hardest days will be behind you (that is, until you have another child). But there are still plenty of ways to prepare for the future, one where you're baby isn't so little anymore. Whether you want to save for your child's education, or for something to help them out when they want to start an independent life of their own, there are a number of ways to do this.

529 college plans. This is a tax-protected account that lets you invest money for your child's future. Most of the time, the funds are invested aggressively in the early years. As your child gets older, the risk is lessened, and a lump sum becomes secure, to help pay for all or most of a college education.

UGMA, UTMA and Roth IRA. These three tax-sheltered savings and investment accounts are ways for parents to give children a financial head start when they come of age, without being limited to being used for a formal education. If you start investing for your children when they're little, you're liable to have a lot of money to gift to them when they get older.


In the end, there's nothing you can do to be totally prepared for kids, financially or otherwise. You'll figure it out. Hopefully, methods like this will help. I'm writing them as much for my benefit as for yours. In the end, being a parent should be a lot more than worrying about money. But maybe by being prepared for the financial realities of having kids, we won't have to worry so much about money when the time comes.
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