Top 10 Financial Mistakes Millennial Parents Make

Were you born between 1980 and 2000? If so, youï ¿ ½re a Millennial. Your generation is said to be the most educated, ethnically diverse, politically liberal and tech savvy generation. And many of you have new skill to add to the list: parenting. According to a new study from the non-profit research organization Young Invincibles, around 30 percent of Millennials have children - who we know come with a hefty price tag. In fact, the USDA says it will cost you over $245,000 for the next 18 years. But with an unemployment rate 40 percent higher than the national average - how can todayï ¿ ½s 18-34 year olds afford to be parents? Sadly, many are struggling. The Young Invincibles study also revealed that one fifth of Millennial parents are living in poverty, mainly due to a ï ¿ ½perfect stormï ¿ ½ of high student loan debt and historically low wages. So what can young parents do to keep their family finances on track? Here are some things for Millennial moms and dads to watch out for. Whatï ¿ ½s the Boomerang Generation? 1. Struggling with financial literacy, but failing to seek help A 2014 study conducted by the Financial Industry Regulatory Authority (FINRA) revealed that Millennials are the least knowledgeable generation when it comes to economics and finance. Yet theyï ¿ ½re also the least likely to get professional help with their money. According to a survey from IQuantifi, most young workers who have financial questions will turn to friends and family, and only 29 percent will ask a financial advisor. Is it a mistake not to hire a financial planner? 2. Being too risk averse when it comes to investing When it comes to money, Millennials are the most conservative generation since the Great Depression. A 2014 study revealed young workers are allocating 75 percent of their retirement savings to cash and bonds, and only 25 percent to equities. But with at least 30 years until retirement, Millennials have plenty of time to absorb the risks associated with investing in stocks and take advantage of their growth potential. 10 investing terms every saver should understand 3. Not saving enough for retirement According to recent data from the Indexed Annuity Leadership Council (IALC), 37 percent of Millennials say they have no money saved for retirement and 24 percent say they owe more than theyï ¿ ½ve saved. The default contribution rate for most employer-sponsored retirement plans remains at 3 percent - thatï ¿ ½s much lower than the 10-15 percent recommended by financial advisors. Whatï ¿ ½s more, the average company match is 4.5 percent. So Millennials who are only investing the minimum are missing out on free money! You donï ¿ ½t have to trade tuition for retirement 4. Being underinsured According to a recent survey from Bankrate, 37 percent of parents donï ¿ ½t have life insurance, and those who do carry very modest policies. Many families believe that life insurance costs much more than it actually does, but in reality young parents can get a decent policy for around $50 a month. Itï ¿ ½s also a good idea to insure a stay-at-home parent - according to salary.com, it would cost $112,962 to pay for everything a stay-at-home mom does for her family! Quiz: Are you a financially savvy parent? 5. Credit cards A survey from Bankrate shows that 63 percent of adults ages 18-29 donï ¿ ½t even have a credit card. While this might seem responsible at first, not having credit is actually hurting some young families. A strong credit score is necessary Millennials who want to buy their first home or eventually get that minivan - come on, you know itï ¿ ½s coming! Top four savings essentials for young families 6. Overpaying for childcare Average full-time annual childcare costs in the U.S. have reached over $16,000 for an infant and over $12,000 for a four-year old, according to research from Childcare Aware. That means if you have a toddler and a new baby, it could cost over half of the average householdï ¿ ½s income to send them both to daycare. Some options for lowering the cost are to try a nanny share, look into churches or other nonprofits, solicit help from family or consider having one spouse stay home until the children reach school age. You may also qualify for a tax credit for up to $3,000 of your childcare expenses with the Childcare and Dependent Tax Credit. How you can start saving for your newbornï ¿ ½s college 7. Keeping up with the Joneses A survey from UBS revealed that compared to older generations, Millennials are more concerned with how their wealth compares to their peers. These young adults who are accustomed to having the latest smart phone and designer clothes will likely become the parent of a baby who has expensive gadgets and the Hermes onesie. But keep in mind kids grow out of toys and clothes very quickly, and wonï ¿ ½t remember any of it. A smarter idea is to save the money for something they will actually need in the future (hint: college!) Four easy ways shoppers can become college savers 8. Not having a baby budget New babies are expensive. According to Parenting.com, a family will spend $12,000 in a babyï ¿ ½s first year. So as soon as you know you want to have a baby, you need to start thinking about costs. Donï ¿ ½t forget to include doctor and hospital visits, diapers, childcare and time off of work. How to pay off student loan debt while saving for the future 9. Not having an emergency fund A new study from Bankrate shows that 65 percent of Americans do not have money set aside for an emergency. A rainy day fund is especially important for families, since the more people in your home, the greater the chances of an unexpected emergency room visit or broken appliance. Parents without a rainy day fund will often find themselves going into debt when unplanned expenses happen. Why you should teach your kids about money 10. Not saving for college Based on todayï ¿ ½s college prices and an inflation rate of four percent, it will cost you over $368,000 to send your two-year old to a four year private college.The best way to start saving is with a 529 plan. Your earnings will grow tax-free and withdrawals wonï ¿ ½t be taxed as long as the funds are used to pay for college. You may also get a state tax break depending on where you live. The earlier you start saving, the better. Letï ¿ ½s say you want to save the total cost of private school with a 529 plan. If you wait another five years to start saving, youï ¿ ½ll have to increase your monthly contributions by $578 a month in order to meet your goal (assuming a 6% annual investment return). Try our Price of Procrastination Calculator Were you born between 1980 and 2000? If so, youï ¿ ½re a Millennial. Your generation is said to be the most educated, ethnically diverse, politically liberal and tech savvy generation. And many of you have new skill to add to the list: parenting. According to a new study from the non-profit research organization Young Invincibles, around 30 percent of Millennials have children - who we know come with a hefty price tag. In fact, the USDA says it will cost you over $245,000 for the next 18 years. But with an unemployment rate 40 percent higher than the national average - how can todayï ¿ ½s 18-34 year olds afford to be parents? Sadly, many are struggling. The Young Invincibles study also revealed that one fifth of Millennial parents are living in poverty, mainly due to a ï ¿ ½perfect stormï ¿ ½ of high student loan debt and historically low wages. So what can young parents do to keep their family finances on track? Here are some things for Millennial moms and dads to watch out for. Whatï ¿ ½s the Boomerang Generation? 1. Struggling with financial literacy, but failing to seek help A 2014 study conducted by the Financial Industry Regulatory Authority (FINRA) revealed that Millennials are the least knowledgeable generation when it comes to economics and finance. Yet theyï ¿ ½re also the least likely to get professional help with their money. According to a survey from IQuantifi, most young workers who have financial questions will turn to friends and family, and only 29 percent will ask a financial advisor. Is it a mistake not to hire a financial planner? 2. Being too risk averse when it comes to investing When it comes to money, Millennials are the most conservative generation since the Great Depression. A 2014 study revealed young workers are allocating 75 percent of their retirement savings to cash and bonds, and only 25 percent to equities. But with at least 30 years until retirement, Millennials have plenty of time to absorb the risks associated with investing in stocks and take advantage of their growth potential. 10 investing terms every saver should understand 3. Not saving enough for retirement According to recent data from the Indexed Annuity Leadership Council (IALC), 37 percent of Millennials say they have no money saved for retirement and 24 percent say they owe more than theyï ¿ ½ve saved. The default contribution rate for most employer-sponsored retirement plans remains at 3 percent - thatï ¿ ½s much lower than the 10-15 percent recommended by financial advisors. Whatï ¿ ½s more, the average company match is 4.5 percent. So Millennials who are only investing the minimum are missing out on free money! You donï ¿ ½t have to trade tuition for retirement 4. Being underinsured According to a recent survey from Bankrate, 37 percent of parents donï ¿ ½t have life insurance, and those who do carry very modest policies. Many families believe that life insurance costs much more than it actually does, but in reality young parents can get a decent policy for around $50 a month. Itï ¿ ½s also a good idea to insure a stay-at-home parent - according to salary.com, it would cost $112,962 to pay for everything a stay-at-home mom does for her family! Quiz: Are you a financially savvy parent? 5. Credit cards A survey from Bankrate shows that 63 percent of adults ages 18-29 donï ¿ ½t even have a credit card. While this might seem responsible at first, not having credit is actually hurting some young families. A strong credit score is necessary Millennials who want to buy their first home or eventually get that minivan - come on, you know itï ¿ ½s coming! Top four savings essentials for young families 6. Overpaying for childcare Average full-time annual childcare costs in the U.S. have reached over $16,000 for an infant and over $12,000 for a four-year old, according to research from Childcare Aware. That means if you have a toddler and a new baby, it could cost over half of the average householdï ¿ ½s income to send them both to daycare. Some options for lowering the cost are to try a nanny share, look into churches or other nonprofits, solicit help from family or consider having one spouse stay home until the children reach school age. You may also qualify for a tax credit for up to $3,000 of your childcare expenses with the Childcare and Dependent Tax Credit. How you can start saving for your newbornï ¿ ½s college 7. Keeping up with the Joneses A survey from UBS revealed that compared to older generations, Millennials are more concerned with how their wealth compares to their peers. These young adults who are accustomed to having the latest smart phone and designer clothes will likely become the parent of a baby who has expensive gadgets and the Hermes onesie. But keep in mind kids grow out of toys and clothes very quickly, and wonï ¿ ½t remember any of it. A smarter idea is to save the money for something they will actually need in the future (hint: college!) Four easy ways shoppers can become college savers 8. Not having a baby budget New babies are expensive. According to Parenting.com, a family will spend $12,000 in a babyï ¿ ½s first year. So as soon as you know you want to have a baby, you need to start thinking about costs. Donï ¿ ½t forget to include doctor and hospital visits, diapers, childcare and time off of work. How to pay off student loan debt while saving for the future 9. Not having an emergency fund A new study from Bankrate shows that 65 percent of Americans do not have money set aside for an emergency. A rainy day fund is especially important for families, since the more people in your home, the greater the chances of an unexpected emergency room visit or broken appliance. Parents without a rainy day fund will often find themselves going into debt when unplanned expenses happen. Why you should teach your kids about money 10. Not saving for college Based on todayï ¿ ½s college prices and an inflation rate of four percent, it will cost you over $368,000 to send your two-year old to a four year private college.The best way to start saving is with a 529 plan. Your earnings will grow tax-free and withdrawals wonï ¿ ½t be taxed as long as the funds are used to pay for college. You may also get a state tax break depending on where you live. The earlier you start saving, the better. Letï ¿ ½s say you want to save the total cost of private school with a 529 plan. If you wait another five years to start saving, youï ¿ ½ll have to increase your monthly contributions by $578 a month in order to meet your goal (assuming a 6% annual investment return). Try our Price of Procrastination Calculator