Two-Thirds of Households With Children Live Paycheck to Paycheck

Essential expenses for working caregivers can consume more than one-third of young families’ budgets.

The cost of raising children heavily impacts families with dependents too young to enter school, threatening financial lifestyles already on shaky ground. According to the July report “New Reality Check: The Paycheck-to-Paycheck Report,” a PYMNTS and LendingClub collaboration, 66% of consumers with children under 18 in the household live paycheck to paycheck.

This number may be set to rise further for the subset of consumers living with children who are under the age of 18 but too young to attend public (or other tuition-free) schools. Childcare costs across most of the United States are “unaffordable” for most consumers when compared against average incomes by geography, according to the nonpartisan think tank Economic Policy Institute. Even in the relatively inexpensive South Dakota, infant childcare is determined to be affordable to only 29% of families in the state.

The impact of these high costs on young families could put this demographic further into financial instability. Even as prices generally fall, tuition for nursery and private preschools rose at nearly twice the national inflation rate in July from the previous year, The Wall Street Journal (WSJ) reported Aug. 17. Potential causes include schools and centers raising prices to cover their increased costs as well as the end of pandemic-driven emergency aid in some areas, and each development puts even more pressure on families relying on these childcare providers.

These consumers have more to pay for than increased childcare costs. Like most consumers, higher prices for nearly every staple along a child’s development, from buying diapers to co-signing student loans, is causing a strain on household finances. The stretch is felt across generations of parents as well, be it millennials who may be raising young families or Generation X, possibly caught between raising children and supporting aging parents.

For many of these families there’s not much choice but to find ways to stretch their already limited budget further to handle these, and any other, increased costs.