BMO Real Financial Progress Index: 82% of American parents say costs are out of control

New data from the BMO Real Financial Progress Index reveals how American families are navigating mounting financial pressure, and why many parents may be approaching a financial breaking point. The overwhelming majority of parents (82%) say the cost of raising kids has "gotten out of control" – and their concerns are widely shared. Nearly four in five of all Americans (79%) wonder how people around them can afford to have families. 

Despite the financial pressures, 88% of parents say that becoming a parent brings unmatched joy and fulfillment to their lives.  

On a yearly basis, parents with kids under 18 at home in the U.S. estimate that they are spending: 

• $5,498 on groceries  
• $3,331 on family travel and vacations  
• $2,469 on childcare including babysitters and daycare  
• $2,445 on healthcare 
• $1,886 on college savings  
• $1,271 on clothing and shoes  
• $1,007 on extracurriculars, such as sports and music lessons  
• $926 on baby supplies  
• $878 on entertainment, such as toys, video games and streaming services  
• $836 on summer camps or after school programs  

While the expected costs of college savings and daycare predictably drain wallets, the data reveals that the real budget buster is mealtime at the kids’ table. Parents report spending more on food than almost any other category. According to the US Bureau of Labor Statistics, food at home has become 33% more expensive since 2019, growing five times faster than the previous seven years combined. 

"Raising kids has always been a labor of love, but right now, it is also a major feat of financial engineering with families torn between spending on the urgent and the important. Whether you are budgeting for diapers or dorm rooms, the absolute best antidote to daily financial stress is a clear, actionable plan." 

- Robin Growley, U.S. Head of Consumer Products, BMO 

While everyday inflation stretches household budgets thin, parents with children under 18 at home confess that social pressure to keep up with peers is affecting their psyches – and their wallets. Most feel an unspoken demand to keep up with other parents (74%) and say the constant scroll of seemingly successful parenting influencers on social media fuels their comparative anxiety (76%).  

With rising costs, parents are being forced to choose between day-to-day needs and long-term investment, with 86% of parents with young children at home saying the everyday costs of parenting like daycare, afterschool programs, summer camps and school supplies negatively impact their ability to save for their children’s future. 

It takes a village, but family help goes both ways  

As costs spiral, parents are leaning on every branch of the family tree to make ends meet. These days, 76% of parents with children under 18 believe that financial support from extended family is essential to afford opportunities for their children. 

Nearly two in five (37%) parents of young children expect to receive financial help (or plan to ask for it) from their own parents or grandparents in the next year. Among this group, 47% will receive cash to help with general day-to-day expenses, 43% depend on active grandparents to step in as free childcare or contributing with toys and food, and 26% say their family will help fund their children’s future in a 529 or other savings account. 

For those fortunate enough to have relatives nearby, the savings are tangible. Nearly half (45%) of Americans with young children at home live close to family who can help – and this proximity has real impact.  

Parents with local family support say they save $1,915 per year on childcare, cashing in on babysitting services from willing grandparents ($1,646 vs. $3,561) and $1,443 per year on groceries ($4,660 vs. $6,103).  

Proximity also boosts peace of mind, with 85% of these parents expressing confidence in their finances compared to just 71% of those without a local support network.   

But proximity to family can come with unspoken expectations. The responsibility to care for the next generation is a two-way street: 70% of parents with local family support are also responsible for the financial or emotional well-being of their own aging parents, compared to just 45% of those who do not have family close to home. Seven in ten parents who live near loved ones identify as members of the sandwich generation – simultaneously supporting young children and aging relatives. This feeling of responsibility weighs heavily, with 60% of parents receiving childcare assistance from local family viewing giving money to extended family as a non-negotiable monthly expense, similar to rent or a utility bill. 

Perhaps due to the additional responsibilities that come with familial proximity, parents who get help from family actually experience higher degrees of financial stress. In fact, parents who live close to loved ones who help with childcare are much more likely to regularly feel overwhelmed by financial responsibilities (74% vs. 57%).  

Beyond those with family in the same area, just under half (45%) of all American parents identify as part of the sandwich generation. Among this group, 71% care for parents or in-laws, 57% care for other aging family members, and 43% care for extended family with additional functional needs.  

In general, these caregivers spend $2,865 per year, but costs can differ based on specific needs. For example, caregivers estimate that elder care costs $1,389 on average and general financial support like purchasing food and clothes costs $1,640. 

The AI anxiety is real, but so is the hope  

Parents are deeply anxious about what the future holds for their children. In the current economic climate, 77% of parents actively worry about their children's financial future, while 78% worry about how the rapid rise of AI will impact their children's future ability to earn a living.  

Yet some optimism persists: 42% of parents with children under 18 in the house believe AI will ultimately better prepare the next generation for financial success, with 23% already proactively utilizing AI tools to streamline and manage their family’s daily finances. 

Pet parents paying the price, too 

For many, pets are a key part of the modern family. In fact, four in five (79%) Americans agree with pet owners who say their pet is a full member of the family. Pet ownership is widespread among younger families, with 81% of Gen Z or Millennials having a pet at home.   

Pet owners feel the cost of caring for their four-legged family acutely: 62% of Americans agree that the cost of raising a dog or a cat almost matches that of caring for a child. 

That perception does not quite match reality however: While pet owners report spending significantly on pet-related expenses, these don't quite rival the amounts that parents shell out for children. 

On average, pet owners spend $1,919 per year in total to care for their pets. The most significant annual expense is $804 on pet food, treats, and other routine supplies, followed by $682 on veterinary bills and other medical expenses, and $519 on pet care such as grooming and pet sitting, when applicable. 

Under Pressure, but Making Progress 

Despite the financial pressure of modern parenting, families are proving remarkably resilient.  Encouragingly, 54% of parents with children at home feel like they are making real financial progress, compared to just 42% without kids. Raising kids might be expensive and rewarding, but it’s also motivating families to get serious about their financial futures.  

No matter the size or composition of your family, BMO offers steps to make real financial progress:  

• Plot the path forward: Weighing a move to be closer to family, having another child, or paying for public or private college tuition? Use the new DollarGPS app to plug in different financial choices and project future long-term impacts to see how life’s sliding doors can impact a family’s financial future. 
• Get back to school: No matter the life situation, brushing up on financial fundamentals is a great way to make financial progress. Access resources on BMO's Real Financial Progress Hub to study up with the personal finance tools and resources to reach financial goals.  
• Bring the family financial unit together: If your family shares financial responsibility across generations, consider meeting with a financial advisor together to create a plan that works for the whole family.

To learn more about how BMO can help families make real financial progress, visit BMO.com.