Raise your hand if you have ever spent money on your child due to guilt? My hand is high in the sky. Case in point: I recently had a baby and often order art supplies and toys to keep my preschooler busy and happy since I know how much time I’m focusing on my newborn.
If you can relate too, we aren’t alone. Ameriprise Financial’s new study, “Parents & Finances,” found that more than half (52%) of the 3,000 moms and dads surveyed report shelling out money for treats and perks due to guilt, as well as nearly half saying they overspent on an item or experience. Meanwhile, a third went over their initial budget.
On top of that, parents are worrying about paying for retirement, their child’s college, and day-to-day expenses. Here’s a breakdown of other key findings of the survey:
- 59% of parents rate saving for retirement among their top financial goals.
- 39% say paying for children’s education is a top priority.
- 36% report that managing day-to-day living expenses is another important goal.
- 91% say checking off items on the family “bucket list” is high on their list.
- 60% worry the tradeoffs they make among these priorities will impact their long-term financial goals.
Experts explain what’s likely causing all the parental guilt and how parents can still focus on saving and prioritizing.
What’s Behind Parental Guilt and Spending?
While the survey found overspending due to guilt is a common theme among parents, researchers also noted this stems from a good place. Almost half (44%) of respondents said they just want to provide the best possible life for their kids.
“Parents we talked to felt pressure to be the perfect parent,” says Deana Healy, vice president of financial planning and advice at Ameriprise.
Healy acknowledges this pressure can leave parents wondering if they’re making the right choices—but that feeling is often valid. “Parents may feel guilty for smaller financial decisions if they’re lacking confidence about whether they’re on track for larger goals, such as a dream family vacation or college savings,” Healy says.
Focusing on Setting up a Budget
The key to overcoming nagging questions about whether you’re on target is to clarify your financial expectations, both large and small, according to Healy. That way, you’ll have confidence in the daily money decisions you’re making.
Janelle Sallenave, chief spending officer at Chime, calls this approach conscious spending.
“Conscious spending means making intentional choices that align with both your financial goals and your values,” she explains. “For instance, if you enjoy treating your kids to activities like movies or special meals, set aside a portion of your budget for guilt-free spending so you can indulge without overspending.”
Indeed, the experts we spoke with emphasize that setting up a budget is one of the most important things parents can do to achieve financial wellness. That’s especially true for two big concerns: college and retirement.
Saving for college
According to the survey, 80% of parents considered finances as part of their family planning. Nearly 90% said they do plan to help pay for college, and nearly half had started putting away money for this large expense before their little one turned 5 years old. A much smaller portion (9%) began saving for higher education prior to their child’s birth.
Healy says it’s never too early to start saving for your child’s college, adding, “If you haven’t started yet, the best day to do so is today.” But even if you only have a few years before your child leaves the nest, Healy says, “you can make meaningful progress toward college tuition through consistent saving and the power of compound interest.”
For the uninitiated (over here!), Sallenave explains that compound interest means you earn interest not just on your initial deposit, but also on the interest that accumulates over time.
But the reality is not everyone can save for college early on. “It’s easy to feel overwhelmed when you see headlines about parents saving for college before their child is even born,” says Allie Danziger, senior vice president and GM at professional training platform AscentUP. “What matters most is creating a plan that works for your family, whenever you’re able to begin.”
What that looks like will be different for everyone. For instance, Healy says many parents offer to cover certain expenses such as tuition, but not room and board. “Some parents decide to have their children pay a portion of their tuition as a way to instill financial independence and underscore the value of the opportunity to attend college,” she says.
It’s also imperative to take advantage of financial aid and scholarships if you’re able to. “By combining consistent savings with available scholarships and financial aid, you can effectively support your child’s educational journey,” Sallenave says.
Saving for retirement
With the looming expense of college, saving for retirement as well can feel even more overwhelming for many parents, me included!
According to Healy, saving for retirement should take priority. “The reality is your children will have access to scholarships, loans, grants, or other financial aid to pay for tuition,” explains Healy. “The same isn’t true of your retirement.”
Tiana Patillo, CFP, financial advisor manager at Vanguard, agrees, telling Parents, “Remember, you can borrow for everything but retirement, so saving for it should remain a top priority.”
One way to think about this is that prioritizing retirement doesn’t mean you’re putting kids’ education on the back-burner, according to Danziger. “It means you’re protecting your family’s long-term stability,” she says.
Ultimately, it can definitely feel challenging to manage your family’s finances, especially given the high-wire act of balancing short- and long-term goals. But as Patillo says, “The key to financial wellness is to take control of your finances, prepare for the unexpected, and make progress toward your goals. If you do these things, you should be able to stay on track no matter where your family is on their financial journey.”
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