money·5 min read

Skimm Money: Child Care Costs, Interest Rates, and Lifestyle Inflation

A mother with a child
Design: theSkimm | Photo: iStock
May 6, 2022

On Monday, Politico published a leaked draft of a Supreme Court decision that suggests the court is poised to overturn Roe v. Wade and end federal protections for abortions. Which would have major implications for women — particularly women from marginalized communities — and their financial health. 

One study found that women who are denied an abortion are 81% more likely to have negative public records (think: eviction or bankruptcy). And 78% more likely to be over 30 days past due on debt payments.Limiting abortion access could also mean fewer women in the workforce. To the tune of about $105 billion per year in losses for the US economy, according to another study. We broke down the financial implications here.

And women are already facing challenges when it comes to joining the workforce… 

Headlines, Skimm'd

  • Back to business? With another strong month for the job market, the US is on track to recoup the number of jobs lost during the pandemic by this summer. But not all industries are bouncing back equally. The child care labor force is still more than 10% behind. And child care shortages and costs are making it difficult for parents — especially women — to get back to work. One report found nearly half of millennial and Gen Z mothers who were unemployed in March quit their job due to child care issues. 

  • Support system. In the biggest move any state has made to address child care costs, New Mexico will offer a year of free child care to most families in the state (i.e., those earning up to about $111,000 for a family of four). Costs were already on the rise before the pandemic exacerbated the problem. The Bureau of Labor Statistics estimates child care costs went up 214% between 1990 and 2020, while the average family income rose 143%.And without affordable choices — or a national paid family leave policy — women often have to stay out of the workforce to care for kids. 

  • Higher and higher. The Fed raised interest rates by half a point — the biggest hike in 22 years.The goal: To boost the economy (and bring down inflation) by making it more expensive to borrow money.What’s getting pricier? Mortgages, auto loans, and credit card debt. Also on the up and up this week? The stock market, with the Dow and S&P 500 each posting their best day since 2020 on Wednesday. Quickly followed by its worst day of 2022 so far on Thursday and another drop this morning. (Hi, volatility.)

Let’s Talk About…

The child tax credit (aka one way the gov helps families take on the cost of raising children). It got a Princess Diaries-level makeover in 2021, thanks to the American Rescue Plan. Which gave families extra help (read: more money) during the pandemic. Offering them advanced monthly payments and higher total credits.

Design: theSkimm

And families felt the benefits. Some used the extra money to build wealth, pay down debt, or set aside cash for an emergency. And it kept over 3.5 million children out of poverty through December 2021. But the expanded benefits have expired. And the child tax credit is set to revert back to the way it was in 2020.

Psst…here’s what you need to know about the child tax credit and its future.

Make Good (Money) Choices

If you relate a bit too much to Jack Harlow’s “First Class”…

Rein in your lifestyle. Good news: Incomes are on the rise. Bad news: So is spending. Because when you start making more, you may be tempted to splurge more. Hint: that's called lifestyle inflation. But with prices going up on everything from travel to eating out,it’s a good idea to spend consciously, build wealth, and not let your living costs take away too much from your financial goals. (Think: Saving for a down payment on a home.) And these tips to avoid lifestyle inflation can help.

Save Your Seat: Future-Proofed

Twice as many men as women invest in crypto. And it’s time we stop feeling like new kids on the block(chain). Sign up for our free, virtual event, Future-Proofed: Closing the Crypto Gender Gap, on Tuesday, May 17 at 7:30pm ET. theSkimm’s Alex Carr will sit down with crypto experts Laura Shin, Maggie Love, and Mags Kala to decipher how blockchain will impact the future of money and how women can get involved in crypto investments.

Thing to Know

Stagflation

Inflation isn’t on the way out just yet. Butget familiar with its cousin: stagflation. Which happens when the economy’s growth slows down (or stagnates) and prices keep rising. The Fed is attempting to boost the economy and bring prices down by raising interest rates. But factors beyond its control (see: war, climate change, the COVID-19 pandemic) could complicate things. Enter: Stagflation.

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