Are You Prepared for the Cost of Parenthood?

Did you know that childcare is now more expensive than college in 33 states? While parenthood is beautiful, there's no need to go into it blind. If you're planning to start a family, now is the time to start planning for the financial costs of child-rearing, both from the perspective of short-term, monthly cash-flow and the long-term implications that parenthood-related career choices have on lifetime earnings and savings.

Here to talk on the podcast are experts in financial family planning: Siran Cao and Mel Faxon, founders of Mirza, a platform helping empower parents and future parents to take control of their finances and plan for a family. 

We discuss the "motherhood penalty," created by lack of access to paid leave, cultural roles that make mothers the default parent, and workplace cultures that penalize mothers - and the impact that this penalty has on long-term earnings and financial health. Siran and Mel also advise future parents on when they should start family financial planning, how to do so, and what to consider (hint: we discuss at length the shockingly high cost of childcare in the United States, which often catches parents off guard). 

Lastly, Mel and Siran discuss public policy and workplace solutions to the lack of support for parents: what changes are needed for paid parental leave and affordable childcare, and how we must create a culture that promotes gender equity in parenting at all levels, including in the design of our workplace cultures and policies. 

 

LINKS:

- Care.com: This is How Much Child Care Costs in 2021

- CNBC: New Census data reveals no progress has been made on closing the overall gender pay gap (2018-2019 data)

- INC: Every Child a Woman Has Cuts Her Salary by 4%. But Fathers Get a 6% Increase

- Newsweek: Pandemic Could Cost Typical American Woman Nearly $600,000 in Lifetime Income

 

- Financial Post: Women are 30% less wealthy in retirement than men

- Mirza: The Business Case For Paid Leave; how a paid family & medical leave plan would help employers

- Join the movement to gain paid family and medical leave for everyone in the United States: https://paidleave.us/

 

- Project Matriarchs: College students launch virtual tutoring to help working moms with home schooling

 

- The Institute for Women's Policy Research Report: Still A Man's Labor Market
"Women today earn just 49 cents to the typical men’s dollar, much less than the 80 cents usually reported....The penalties of taking time out of the labor force are high—and increasing. For those who took just one year off from work, women’s annual earnings were 39 percent lower...a much higher cost than women faced in the time period beginning in 1968, when one year out of work resulted in a 12 percent cut in earnings."

- Study on the motherhood penalty: 
"Children and Gender Inequality: Evidence from Denmark"
"Using Danish administrative data from 1980-2013 and an event study approach, we show that most of the remaining gender inequality in earnings is due to children. The arrival of children creates a gender gap in earnings of around 20% in the long run, driven in roughly equal proportions by labor force participation, hours of work, and wage rates."

- Forbes: Why Being a Woman Can Cost You More than $400,000
"According to a new analysis of the wage gap by the National Women's Law Center, a woman who is starting her career now will earn $430,480 less than her male counterpart over the course of a 40-year career, if the current wage gap persists. For many minorities, the losses are even larger: African American women will earn $877,480 less over those 40 years, Native American women will earn $883,040 less and and Latina women will miss out on a whopping $1,007,080 in lifetime wages."

- New York Times: Mounting Evidence of Advantages for Children of Working Mothers
"In a new study of 50,000 adults in 25 countries, daughters of working mothers completed more years of education, were more likely to be employed and in supervisory roles and earned higher incomes. Having a working mother didn’t influence the careers of sons, which researchers said was unsurprising because men were generally expected to work — but sons of working mothers did spend more time on child care and housework."

 

- The second shift reflected in the second generation: do parents' gender roles at home predict children's aspirations?
Data from 326 children aged 7 to 13 years revealed that mothers' explicit beliefs about domestic gender roles predicted the beliefs held by their children. In addition, when fathers enacted or espoused a more egalitarian distribution of household labor, their daughters in particular expressed a greater interest in working outside the home and having a less stereotypical occupation.... These findings suggest that a more balanced division of household labor between parents might promote greater workforce equality in future generations.