New findings from the BMO Real Financial Progress Index highlight the growing financial strain facing American families and the difficult choices many parents are being forced to make. A striking 82% of U.S. parents say the cost of raising children has become unmanageable, while 79% of Americans overall say they are puzzled by how other people can afford to start and raise families.

“Raising children has always required love and commitment, but today it also demands increasingly complex financial planning,” said Robin Growley, U.S. Head of Consumer Products at BMO. “From covering everyday necessities to preparing for college, families are constantly balancing immediate needs against long-term priorities. A practical financial plan can provide much-needed clarity.”

What Parents Spend Each Year
Parents in the U.S. with children under 18 living at home estimate that their annual spending includes:

Although expenses such as childcare and college preparation are obvious financial burdens, food is emerging as one of the largest pressures on household budgets. Parents report spending more on groceries than on most other individual categories. Data from the U.S. Bureau of Labor Statistics indicates that the cost of food consumed at home has risen by 33% since 2019, increasing at a substantially faster pace than in the preceding seven years.

The Emotional Cost of Keeping Up
Inflation is not the only source of pressure. Parents of children under 18 also report feeling the effects of social expectations. Around 74% say they feel an implicit need to match the lifestyles and parenting standards of other families. Meanwhile, 76% say social media influencers who portray seemingly successful family lives contribute to their anxiety and comparisons.

As household expenses continue to rise, parents are increasingly forced to make difficult trade-offs. Eighty-six percent say routine parenting expenses—including childcare, after-school activities, summer camps and school-related purchases—make it harder to save for their children's long-term future.

Family Support: A Financial Lifeline
When the cost of raising children becomes difficult to manage, many parents turn to extended family. Seventy-six percent of parents with children under 18 say financial assistance from relatives is important for providing opportunities for their children.

Among parents of young children, 37% expect to receive financial assistance from their parents or grandparents, or anticipate asking them for help, during the coming year. Of those parents, 47% expect support with everyday expenses, while 43% rely on grandparents to provide childcare or help cover childcare costs. Another 26% expect relatives to contribute toward children's future savings, including 529 plans and similar accounts.

Living near relatives can produce meaningful savings. Forty-five percent of Americans with young children say they live close enough to family members who can provide assistance. Parents with this kind of support report saving approximately $1,915 annually on childcare. Their estimated childcare spending is $1,646 when family assistance is available, compared with $3,561 among those without such help. Grocery spending is also lower, by roughly $1,443 per year, among families with nearby relatives.

The benefits extend beyond the household budget. Eighty-five percent of parents with nearby family support say they feel confident about their financial situation, compared with 71% of parents who lack a local family network.

When Family Support Comes With Responsibilities
Being close to relatives can also create additional obligations. Among parents who live near family, 70% are responsible for the financial or emotional welfare of aging parents, compared with 45% of parents who do not have family nearby. As a result, roughly seven in ten parents with nearby relatives consider themselves part of the “sandwich generation,” supporting both children and older family members.

For 60% of parents who receive childcare help from relatives, providing financial assistance to extended family is considered an unavoidable monthly commitment—comparable to recurring household bills such as rent or utilities.

Family support, therefore, does not necessarily eliminate financial anxiety. Parents living near relatives and receiving childcare assistance are more likely to report feeling overwhelmed by their financial responsibilities on a regular basis, at 74%, compared with 57% among parents without similar support.

Growley noted that decisions to live close to relatives are often driven by emotional considerations rather than financial calculations. While grandparents can provide invaluable assistance in raising children, caregiving frequently involves responsibilities in both directions. Open conversations and joint financial planning can help families manage these competing obligations more effectively.

Looking beyond parents who live near relatives, just under half of American parents—45%—identify as members of the sandwich generation. Among them, 71% help care for parents or in-laws, 57% support other older relatives, and 43% assist extended family members with additional functional needs.

These caregiving responsibilities cost parents an estimated $2,865 annually on average. The amount varies according to the type of support required. For example, parents estimate spending approximately $1,389 a year on elder care and $1,640 on general financial assistance, including necessities such as food and clothing.

Parenthood and Career Decisions
The financial consequences of becoming a parent extend beyond household spending. Parenthood can also influence career choices, earning potential and long-term professional development.

Many parents say they have made career or income sacrifices in order to raise a family. Even households with two incomes are not immune to financial pressure. Seventy-two percent of dual-income households report experiencing financial stress regularly, while 47% say having a child has had a negative effect on their finances. The latter figure is broadly comparable with the 43% reported by single-income households.

For working parents, having two salaries does not necessarily eliminate the economic pressures associated with raising children. Recognizing the impact of parenthood on career progression, advocating for fair compensation and deliberately planning career moves can help parents protect their long-term earning potential.

Concerns About AI and Children's Financial Future
Parents are also increasingly concerned about the economic environment their children will enter as adults. Seventy-seven percent worry about their children's future financial security, while 78% are concerned about how artificial intelligence could affect their children's future ability to earn a living.

At the same time, there is considerable optimism about technology. Forty-two percent of parents with children under 18 believe AI could ultimately improve the next generation's prospects for financial success. Some parents are already using AI in their own households: 23% say they use AI-based tools to organize or manage everyday family finances, rising to 30% among millennials.

Financial Pressure Has Not Stopped Progress
Despite the considerable challenges associated with modern parenthood, families continue to demonstrate resilience. More than half—54%—of parents with children living at home say they feel they are making meaningful financial progress. That compares with 42% among people without children at home.

Raising children can place substantial demands on household finances, but it can also encourage families to become more deliberate about their financial futures.

Steps Toward Greater Financial Confidence
Families can take several practical steps to improve their financial position:

Ultimately, managing the cost of raising a family is not simply about reducing expenses. It requires families to understand their priorities, anticipate future obligations and coordinate financial decisions across generations. With a clear strategy and open communication, parents may be better positioned to navigate today's financial pressures while continuing to work toward long-term security.

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Talking about finances with aging parents can be a sensitive and challenging task for many families. A recent U.S. Bank survey found that nearly half of Americans (45%) are unaware of their parents’ financial situation, and when they do have some knowledge, it’s often about liabilities rather than savings.

“Topics like health, aging, and money can be emotionally charged and lead to awkward discussions,” said Scott Ford, president of U.S. Bank Wealth Management.

“However, delaying these conversations can increase the risk of complications as parents age. It’s crucial to approach these discussions with confidence and care.”

Tips for Starting the Conversation
Show empathy and care
Sarah Darr, head of financial planning at U.S. Bank, emphasizes the importance of approaching these discussions with respect and a genuine desire to support your parents. Some older generations may view financial discussions as inappropriate or taboo, so it’s essential to be patient and understanding.

“Respect their boundaries and explain that the goal is to honor their wishes and prepare for unforeseen circumstances,” advised Darr. Choose a calm, distraction-free setting for these talks, ideally early in the day when everyone is more relaxed and focused. Avoid emotionally charged settings like family gatherings.

Whenever possible, involve both parents in the conversation and limit the number of participants to create a less intimidating environment. Sharing personal experiences about your own financial planning can also help break the ice and encourage your parents to open up.

Organize and Plan
Take inventory of key information
Start by asking about the location of important documents such as wills, insurance policies, and financial passwords. This initial step can make the conversation feel more practical and less intrusive.

Go further by discussing your parents’ assets (bank accounts, retirement funds, real estate) and liabilities (mortgages, credit card debts). It’s also helpful to identify their trusted advisors—such as attorneys or financial planners—and build relationships with them for future guidance.

Address estate planning
Estate planning isn’t just for the wealthy; it ensures your parents’ wishes are carried out as intended. Essential documents include:

If these documents already exist, review them together to ensure they’re up-to-date, reflecting any changes in family circumstances or legal requirements.

Look Ahead
Focus on aspirations and protection
Rather than dwelling on worst-case scenarios, frame the discussion around your parents’ hopes for the future. For example, do they want to leave an inheritance for grandchildren, support a charitable cause, or help a child start a business? Understanding these goals can guide the planning process and provide peace of mind.

Additionally, talk about protection strategies, such as insurance policies, to safeguard their assets and ensure their wishes are carried out.

Seek Professional Support
Many families struggle to discuss personal finances due to fear of judgment or discomfort. Financial advisors can facilitate these conversations and provide a neutral perspective. In fact, over half of affluent Americans report that their advisor has helped navigate challenging family discussions about money.

By approaching these talks with empathy and preparation, you can help your parents feel supported and secure, paving the way for a collaborative financial plan.