Raising a child has always been a financial investment. But, for the already indebted Millennial generation, the economic impact of parenting hits harder than it did for previous generations. The current average cost of raising a child to 18 is $233,610. Just within the baby’s first year, though, two-parent families tend to spend between $21,248 and $51,985 on their newborns — yikes!
How are Millennials dealing with this looming financial challenge? About half of Millennials delay parenthood until they achieve their ideal financial security. According to a Harris Poll, 86 percent of Millennial parents or expecting Millennials had or have a savings plan for their child’s first year. That’s a higher percentage than any previous generation. When it comes to those who aren’t as financially secure, having less than $5,000 in savings, they aren’t above asking their friends and family for assistance — especially their own parents, many of whom are happy to keep their grandchildren healthy and taken care of. An average of $11,011 in financial help comes from grandparents, not to mention the unpaid labor they provide.
For the income they do earn, Millennial parents make food and dining their primary focus. A study by Havenlife found that “costs associated with maintaining a healthy diet” eat up new parents’ spending more than any other category. Millennials with kids are, in fact, the largest organic-buying group. Laura Batcha, CEO of the Organic Trade Organization, reasons that the Millennial fondness for natural foods stems from their environmental concerns.
“Millennial parents seek out organic because they are more aware of the benefits, that they place a greater value on knowing how their food was grown and produced, and that they are deeply committed to supporting a food system that sustains and nurtures the environment,” said Batcha in a press release. “It’s not surprising that they have a greater trust of the organic label.”
Another significant expense devouring parental income is housing. Many are dedicating more than 30 percent of their income to housing costs. These are mainly rental fees, as most Millennials simply cannot afford to purchase their own home in the current economic landscape; according to Morgan Stanley, home prices have increased 250 percent since 1980.
For a generation that has undergone such notable financial struggle, however, instilling the importance of financial security and proper insurance are not high on the to-do list. Most of these new moms and dads are simply trying to teach their children basic principles like respect and compassion. Only 10 percent of parents with children ages 0-5 are already talking to their youngsters about the value of money. So, as a cohort, Millennial families could use some support when it comes to prioritizing and balancing budgets.
What can brands do to help Millennial parents and their families on the journey to security? Understand this generation’s priorities both as Millennials and as moms and dads — and reach out with genuine, affordable options. What comes first for parents is their children’s basic needs, such as health, food, and shelter. By supporting that endeavor and aiming to ensure that they provide both quantity and quality, brands will have a greater chance of earning the loyalty of these consumers.
Check out our Millennial Parenthood Brief for more on Millennial parents!