Family Finances During the Pandemic: Americans Are Prioritizing Saving More for their Kids

A Recent UNest/Harris Poll Shows that Parents Saving for their Kids has Increased Dramatically Throughout the Pandemic

2020 was quite a year. No one could have predicted the impact that COVID would have on everyone’s lives. From the devastating healthcare toll to the changes we all faced in even the most mundane aspects of our lives, the pandemic was a game-changer. American families were faced with a new set of financial challenges —market volatility, widespread unemployment and shuttered businesses all took their toll on consumer confidence. Thankfully, the response to the tough COVID economy was for American families to save more and prioritize the fundamentals — the future of their kids.   

We were inspired to see family after family step up to the plate and set up their UNest Investment Accounts for Kids. Over the course of 2020, hundreds of UNest families turned into thousands. Then tens of thousands, and now over a 100,000. While we could see that there were more parents than ever before saving for their kids’ futures, we wanted to understand to what extent the pandemic had impacted how parents prioritized saving. What was the most important goal for parents when allocating their money? Were parents more or less confident about meeting their financial goals? What were parents prepared to sacrifice to gain more financial freedom? 

To answer these questions and more, we teamed up with The Harris Poll and Caliber Intelligence to conduct a survey of thousands of consumers. The top level finding? Despite new financial strains due to COVID, parents are saving more, and conclusively place their children’s future as their most pressing savings goal.

Diving into the Numbers

The survey revealed that among parents with children 17 or younger, 44% say that if they could only save for one thing in life, saving for their children would be their most important savings goal. This was far ahead of the second choice of retirement which was selected by 18% of the same group of parents. The delta between savings for children versus retirement was even wider for lower income families: for parents with children 17 or younger in lower-income households (<$50,000 annually), saving for children (49%) holds the largest lead over retirement (9%).

The survey also unearthed a disparity between the genders on how confident they were on being able to save for their child’s college education. Moms are more stressed about affording college than dads. One-in-four (26%) moms with young children (17 or younger) are not at all confident about affording college for their child(ren) without borrowing money or taking a loan, compared to 13% of dads. Conversely, 30% of dads feel extremely confident about affording college without debt, compared to only 13% of moms.

Relative to the pandemic, half (51%) of parents with young children (17 or younger) told us that COVID-19 has increased their desire to save for their children’s future. This desire is led by dads (57%) over moms (46%).

Pragmatic Choices for the Future

The survey also identified that parents value flexibility in how they use the money they save for their children’s education as much as they value the  tax saving associated with college saving plans. In particular, moms (37%) are significantly more likely than dads (24%) to prefer flexibility in use of funds to ensure they can use it for multiple purposes over education specific tax-free savings. In contrast, dads (42%) are more likely than moms (21%) to prefer saving for their child’s education in a specific education fund, but only if it is tax-free.

Additionally, the survey revealed that vacations, new cars, dining out and socializing are the top sacrifices parents would be prepared to make if it meant their child would have a healthier savings nest egg. Close to half of parents with a child 17 or younger would give up vacations or buying a new car (both at 44%), roughly tied with the 42% that would give up dining out or socializing if it would help secure their children’s future. In general, the overwhelming majority (93%) of parents with kids under 17 are willing to make a self-sacrifice if it means their child would have a healthier financial future.

The parents of young children also responded positively about receiving monetary gifts for their children rather than toys, clothes, and other gifts. Nearly half (47%) of parents with young children say a contribution to their child’s college savings account is a valuable gift from family members and friends. The desired financial gifts that parents value include cash/gift cards (65%) or financial investments (i.e., contribution to college savings account & stock or other investments (61%).

The results of the UNest/Harris Poll are consistent with the 2020 Planning & Progress Study conducted by Northwestern Mutual. This survey identifies that nearly three out of ten (28%) millennials have revisited their plans and made significant adjustments because of the pandemic, more than any other generation. The 2020 Planning & Progress Study also points to the fact that 29% of Americans work with a financial advisor and 65% do not. Additional studies by Northwestern Mutual have shown that U.S. adults who work with a financial advisor report “substantially greater financial security, confidence and clarity than those who go it alone”. 

Maintaining the Momentum — $25 When You Open a New UNest Investment Account for Kids 

In recognition of how COVID has increased the desire of parents to save, customers that sign up for a new UNest Investment Account for Kids by the end of February will also receive $25 from UNest to kickstart their family’s savings plan. 

You can read more about the results of the UNest/Harris Poll here.

Ksenia Yudina, CFA, MBA

Founder and CEO

Ksenia is the Founder and CEO of U-Nest, the first mobile app that makes it easy for families to save for college. As an entrepreneur and finance professional, Ksenia has focused on alleviating the impact of student debt on families across the economic spectrum. Previously, Ksenia was a Vice President atCapital Group/American Funds, the largest 529 provider in the U.S. In this role, she played a leadership role in helping parents plan and manage their finances, with a focus on the future well-being of their children. Prior to Capital Group/American Funds, she was founder of a residential real estate company. Ksenia earned her bachelor’s degree in finance from CaliforniaState University Northridge, and an MBA from UCLA’s Anderson School of Management.

Mike Van Kempen

Chief Operating Officer

Mike joined U-Nest in September 2019 as COO. He was previously at Acorns, a financial wellness platform, where he spearheaded the analytics and growth initiatives. Mike successfully expandedAcorns’ paid acquisition strategy, adding over 4.5 million investment accounts. Mike began his career in strategy & analytics at Belly, a Chicago-based loyalty startup in 2012. At Belly, Mike led projects that fueled growth across all aspects of the business, growing the customer base from1,000 to over 11,000 merchants, and accumulating a membership of over 2 million customers.Mike holds a B.B.A. in Finance from Loyola University of Chicago.

Steve Buchanan

Chief Technology Officer

Steve has over 20 years of experience in delivering digital innovations in the financial sector. Steve previously orchestrated product architecture and innovation as a Solutions Architect/ Fintech consultant at Union Bank. Prior to Union Bank, he was Chief Architect and Director of Engineering at Calypso, a Silicon Valley startup, where he architected and built multiple financial solutions. He was also Head of Global Integrations at Globe One in Vietnam where he integrated its Peer-to-Peer lending products into core banking solutions. Steve also built the first ever electronic Equities &Equity Options trading systems for Scottish stock brokers Wood Mackenzie (acquired by CountyNatWest). He is a graduate of Edinburgh University.

Peter Mansfield

Chief Marketing Officer

Peter has built an impressive track record in multiple financial industry segments including payments, credit/prepaid cards and lending. He has played an instrumental role at a succession of financial industry leaders, co-founding companies such as Brand3 (acquired by American Express) and PropertyBridge (acquired by Moneygram), and, as the early stage marketing lead at Marqeta (where he was team member number two), BillFloat and WallabyFinancial (acquired by Bankrate).He has helped fast-growth companies reach an aggregate market value of close to $8 billion. Peter holds a bachelor’s degree in economics from the University of Angila, UK.

Sonya Kidman

Client Relationship Manager

Sonya Kidman is a Customer Success professional with a decade of experience in advocating for consumer through user research and genuine empathy. Sonya specializes in user behavior and regularly attends national and global training sessions in wellness and people analytics tools. Sonya is a true global citizen was born in Russia, grew up in Israel, lived and worked in Canada and NewZealand. That global expertise along with an undergraduate degree in Sociology from Tel AvivUniversity have helped to shape a bullet-prof Sonya's framework to develop a winning customer strategy.

Frank Mastrangelo

Board Member

One part banker and one part technologist, Frank spent his early days with the Annenberg Foundation and PNC Bank. His career path led him to Jefferson Bank, where he led the build-out of its electronic banking platforms, and where he would forge a powerful alliance with The Bancorp co-founder Betsy Z. Cohen. As President and COO of The Bancorp from its inception in 1999 Frank played a critical role in helping the organization become an industry bellwether for branchless financial services and a global leader in payments. For this, he has become a widely respected fintech expert, and thought-leader. Frank was recognized in 2013 by Banking Innovation, a leading industry journal, as an “Innovator to Watch.” and as one of the innovators shaping the future of banking. Frank is a graduate of West Chester University of Pennsylvania.

Disclosure

College Savings Calculator is a hypothetical tool that demonstrates how monthly contributions, age-based asset rebalancing, and tax savings may impact the long-term value of your account, and do not take into account a portfolio’s underlying investment management fees. Calculations assume the private institution cost inflation is 2.8%, public out of state cost inflation is 3.9%, public in state cost inflation is 2.7%. Portfolio is assumed to have only stocks and bonds. Monthly equity returns are based on the historical data from the 10-year track record of the stock market (SPY). Monthly fixed income returns are based on the historical data from the 10-year track record of the bond market index (AGG). The current college expenses are provided by the collegeboard.org. Actual account performance may differ due to market fluctuations, changes in recurring investments, and asset allocation. The information provided here is for illustrative purposes only and does not represent actual or future performance of any investment option and is not intended to predict or project the investment performance of any security or index.