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Families with infants and toddlers face significant, ongoing child-related expenses, such as daycare, diapers, and formula, that can strain household budgets. Couple these with unexpected shocks, such as a medical bill for a sick child or lost wages from caring for a sick child (i.e., no paid leave) and a lack of emergency savings, and it’s easy to see how families with young children—even against a backdrop of low unemployment and an improving economy—struggle with financial instability.

We turned to data from a unique data source—the Urban Institute’s Well-Being and Basic Needs Survey—to understand financial instability among parents of young children, which can have short- and long-term consequences for children’s development.

The survey found that a significant share of parents of children under age 3 face financial challenges, including unexpected drops in income, unexpected expenses, and the inability to cover a $400 emergency expense. Low-income parents of young children are substantially more likely—in some cases twice as likely—compared with all parents of young children to face these challenges.