Money Advice for First-Time Millennial Parents

in Financial Planning by

KEY POINTS
  • Sign up for life and disability insurance.
  • Eliminate your debt as soon as possible.
  • Increase your income stream.

The Millennial generation is the most talked about generation since the Baby Boomers. And while many call Millennials entitled and selfish, others have praised this generation for their commitment to entrepreneurship and drive to making the world a better place.

Millennials have always been in a unique position, raised with the Internet and incredible technological advances but also witnesses to one of the worst recessions in American history. Indeed, it’s this clash of ideals, the fact that Millennials have lived through major economic and social shifts and yet are still optimistic, that makes the challenge of Millennial parenting so unique.

Now that millions of Millennials are starting their own young families, others are curious how we’ll raise the next generation and how that will affect wide scale trends in marketing, business, and finance. According to a recent study conducted by Barkley, whose EVP Jeff Fromm authored the book Marketing to Millennials, there are 10.8 million Millennial households who are raising children, which implies tremendous influence over consumer trends.

Interestingly enough, Fromm says that as Millennials get older and start families, their values change. In fact, Millennials might grow from their reputation of being entitled to take on a reputation of being more traditional, according the study. As a Millennial parent, I definitely felt a value shift when I had children, and I certainly parent differently than I ever thought I would. Going through the test of raising a little one myself and instilling good values in a member of the next generation brings me to – the pros and cons if you’re among America’s Millennials thinking about taking on parenting:

The Pros of Being a Millennial Parent

There are serious issues and roadblocks that face the Millennial parent, most notably in terms of our financial futures, incredible student loan debt statistics, and being able to afford to educate and raise our own children. However, there are also numerous pros, like how Millennials are more focused on happiness and spending quality time with their children than past generations.

The opportunity to prioritize work-life balance. The Barkley study mentioned above, which is called “Millennials as New Parents” showed that 76% of Millennial men and 74% of Millennial women said that work-life balance issues have become more important to them as they age. Additionally, 48% thought children fared better when raised by a stay at home mom. Also, the top concerns of Millennial parents were “environmental issues and what their kids eat, with 52% saying they closely monitor their children’s diet.”

Evolving mindsets. In many ways, this study reflects my own experience as a Millennial parent. It seems that my goals and values are right alongside the Millennials mentioned in this study. I view some of my top concerns as raising my children to be good people and active contributors to society; however, I deeply value quality time with them and their health and happiness more. I choose to stay at home as a work-at-home mom, even though I always thought I’d be a traditional working mom.

Flexibility provided by digital entrepreneurship. However, the trends of the Millennial generation towards digital entrepreneurship and overarching freedom led me down a path to start my own business and work for myself. This lifestyle, in turn, allowed me to get more face time with my children. While it’s been an immensely challenging role trying to balance the two, I feel that it was the right choice for me. It seems that other Millennial parents are seeking ways to find the flexibility to be with their children more, work from home, or work for themselves. As a generation, we’re more committed and open to the idea of working outside of the 9-5 plus benefits structure that our parents and grandparents clung to.

The Cons of Being a Millennial Parent

And then there’s the flipside. While Millennials like me experience numerous pros in parenting, namely living in a generation that values ingenuity, entrepreneurship, happiness, and more, we’re also the product of the economy we were raised in and our own tough financial choices. Many of us, myself included, graduated during the depths of the recession, and that combined with student loan burdens, makes it hard to pursue financial goals, even if we’re on track with our personal and emotional goals.

Financial planning obstacles. One of the biggest negatives of being a Millennial parent is that many of us are behind when it comes to financial planning. The statistics are becoming well known. The average college student in 2016 graduated with $37,000 worth of debt. Additionally, 32% of Millennials still live with their parents, the highest number of young adults living with their parents in 130 years.

Savings deficit. Millennials also put off major life milestones like getting married, buying a home, and having children because of their financial difficulties. By the time Millennials become parents, they might not have nearly enough money saved for retirement or even have their student loans paid off. A recent Personal Capital report actually found that 40% of Millennials haven’t even opened a retirement savings account. This could directly trickle down to their children and can cause their children to take out student loans for their own college degress, which just repeats the cycle.

Student loan repayments. As a Millennial who has six figures of student loan debt and two children, the struggle is real. With average monthly student loan payments for Americans aged 20-30 coming in at $351, it’s hard to balance wanting the best for your children with wanting the best for your future selves. However, the way to remedy financial problems as a Millennial is to rigorously plan ahead (today, when time is on your side) and aggressively tackle debt.

Overcoming Millennial Parenting Obstacles

Any Millennial parent can take the first few basic financial planning steps even if they have serious debt. How, you ask? Here are a few simple ways to get you started:

1. Get insurance. Start by making sure you have life insurance and disability insurance, which can help to protect your family if something happens to them. Once you have that covered, it’s important to focus on building an emergency fund (3-6 months worth of family expenses that will tie you over in case of other financial disasters).

2. Prioritize your financial obligations. Then, try to eliminate your debt as soon as possible, while ensuring that you are at least putting something in your retirement savings. If you’re a Millennial parent who is in serious debt, or if you have nothing saved for retirement, focus on your own financial future before contributing to your children’s college funds.

{More on: How to prioritize student loan debt, saving for retirement, and paying for a child’s college}

3. Boost income. If you can’t make retirement savings and student debt happen at the same time, it might be time to re-evaluate how you can increase your income stream. Look at job sites like Glassdoor to see if you’re getting paid market rate. If not, talk to your boss about working up to a raise. Start an open dialogue now and set goals with your manager. And if you can’t swing a raise at your current job, it might be time to think about getting a side hustle, or switching jobs altogether.

I personally prioritize paying down debt, but my husband does take advantage of his company retirement match at work. We also invest any of our children’s birthday or Christmas money into our children’s college funds, which will help to get things started until we are able to contribute more to the funds ourselves. I know our incomes will grow in the future because they already have and we continue to advance in our careers. Soon, we’ll be able to tackle more and more of our financial planning goals, including paying for our children’s college in full, while still raising happy and well-adjusted kids along the way.

Ultimately, it’s not an easy road for Millennial parents, and I know because I’m on the road myself. However, I still believe that Millennials as a generation have a unique opportunity to raise incredible kids, especially if we as a generation can get our financial lives in proper order as soon as possible. And it starts with a plan.

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Catherine Alford

Catherine Alford is an award winning personal finance writer who contributes to several online publications including The Huffington Post, top personal finance blogs, and her own site, BudgetBlonde.com. She received a B.A. from The College of William and Mary and an M.A. from Virginia Tech. When she is not reading and writing, she is taking care of her young twins. Follow her on twitter @BudgetBlonde.

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