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It’s More Expensive to Raise Kids Today

This article was written by in Family and Life. 14 comments.


Despite low or stagnant measures of inflation, at least as those numbers are reported by the government, families are faced with expenses that continue to rise. It’s been a while since I last wrote about the Department of Agriculture’s calculation of the cost of raising a child. The last time I wrote about this was in 2006, when the average cost of raising a baby to the age of 18 was $190,980.

I haven’t been tracking this figure in the intermediary years, but according to the latest report released by the Department of Agriculture, a child born in 2011 to a middle-income family will cost $234,900 to raise. That calculation doesn’t factor in the effects of future inflation. A family earning less than $59,400 in annual income is projected to spend significantly less, $169,080, while a family earning more than $102,870 will spend $389,670 to support their child through the age of 18.

Teddy BearThis is a 3.5 percent increase since last year’s figures. That increase is similar to what economists expect average inflation to be over the long-term, so the increase doesn’t surprise me. For families, the cost of raising a child is likely to be a major expense, so employers who base cost-of-living increases on government-reported inflation may not be doing enough to ensure their employees maintain their purchasing power year over year. An important idea to take away from this is that you shouldn’t rely on your employer for increasing your wealth; it’s more effective to build it for yourself.

Costs per child decrease as the number of children in the family increase, according to the report. The concept of economies of scale seems to apply to family-building in addition to business.

I ran some figures through the USDA’s calculator to determine the costs of a child per year, assuming I were married and had one child born in 2011. The most significant cost is housing. The cost of shelter, including mortgage payments, utilities, furnishings, repairs, and insurance, would be $10,600 higher each year due to raising a child. Child care and education would subtract $7,538 from my bank account each year over the course of eighteen years. If one parent were to stay home to reduce child care expenses and if the child were to attend public school, this particular expense could be considerably lower.

Transportation costs affect my projected expenses by increasing the annual total by $3,125. This includes car loans, gasoline, and public transportation. This figure could be significantly higher if I were to buy a bigger car designed to transport a child more comfortably as he or she grows. Food, clothing, health care, and miscellaneous expenses add to these figures to bring my total expenses to $28,500 per year.

With expenses at this level, having children would never look like the right choice to make for one’s life based on financial calculations. People use the “return on investment” excuse for not taking part in other activities that enrich their lives, but ask them about the financial return on investment for having their children to stump them. Obviously, having children — when it is a choice at all — is a choice people make for life goal fulfillment and happiness, not for growing wealth.

Studies like the above can help bring attention to the costs of raising children and can inspire families to think about how they’re spending their money. There are always opportunities to save money with children.

  • I received handed-down clothing from a family friend. The same clothing was often kept for my younger brother. The clothing, though, was of higher quality than most cheap clothing today, which seems to be manufactured to be more disposable. Is handed-down clothing as socially acceptable today?
  • I don’t remember specifics, but there were times as a child I received an allowance. I am sure that today’s teenager has higher allowance demands, so it’s worthwhile to make sure that allowance comes with lessons in managing money.

The other side of the equation is earning more money. In many cases, earning more money is a more efficient method of covering growing expenses than finding ways to cut back. And there are gurus who proclaim that everyone should strike out on their own in order to build wealth rather than worrying about shaving 10 percent here and 5 percent there off their budgets. There is some truth to this. Cutting back on expenses can rarely provide the kind of unlimited growth that you could experience through earning more money. Growing income can be as simple as positioning yourself for a significant raise or promotion or building your own business. When you have children, however, not only does your occupation often become a lower priority in your life, but the time you would need to spend building your own business is relatively non-existent.

With Father’s Day around the corner, now might be a good time to thank your parents for their personal financial sacrifices as they raised you until and perhaps beyond the age of 18.

If you have children, how do keep up with the growing expenses of raising a child? How do you cut costs and what do you do to teach your children about money management? Have you been able to grow your income to keep up with your expenses?

Photo: gencartalla
US Department of Agriculture via CNN Money

Published or updated June 15, 2012. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 14 comments… read them below or add one }

avatar krantcents

Thankfully, my children are grown. My wife and I gave them a great foundation to become successful by providing private school, after school activities, sports and a lot more. They are successful because of the values we instilled in them which costs absolutely nothing. Their education provided them a great base to reach for the stars.

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avatar Roger Wohlner

Great article. We are blessed with three great kids, our oldest graduated college and is self-supporting, the other two are still in college. Love them to death, they are all quite responsible, but I often refer to them as the three moneypits. All kidding aside, the money we’ve sepnt on them is more than worth it.

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avatar Evan

I am only 18 months into the adventure known as fatherhood and I don’t think my expenses have actually increased that much. Actually for a while when he was first born and the wife was breastfeeding and we weren’t going out as much they definitely went down!

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avatar Luke Landes ♦127,455 (Platinum)

Evan – glad to hear you’re doing quite well with the baby. Have you had to buy a crib, a car seat, diapers, kids’ clothes, toys, books, or formula? Do you feel you’re able to just find good deals and prevent expenses like those from eating away at your bank account? That’s a good point about going out less. That should put some many back in your account.

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avatar Evan

Since it was our first we got a lot of the items purchased for us at her baby shower and through her blog as a review – afterthealter.com. He only was breastfed until he was 6 or so months so there was no formula purchasing and diapers I think were 20 or 30 bucks a month. Now they are a bit more expensive but not crazy by any means.

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avatar Luke Landes ♦127,455 (Platinum)

That doesn’t sound too bad. Baby showers certainly come in handy… shifting some of the expense away from parents onto their friends (how nice of the friends!). Free products from companies are great if you can score them. I’ve read about couples paying for their wedding by relying in corporate sponsorship. I can imagine it: “Today’s father-daughter dance is brought to you by Kleenex. The centerpieces are here courtesy of 1-800-Flowers. The open bar was made possible by Ketel One.”

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avatar Mike

Another reason why I won’t be thinking about kids until I can afford it.

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avatar qixx ♦1,890 (Half-Dollar)

Hand Me Downs are still more than acceptable. My 2 1/2 year old wears probably 75% hand me down clothes. His 1 1/2 year old cousin wears an even higher percent of hand me downs. So far i think that $28,000 annual cost to be quite a bit high.

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avatar Cherleen @ My Personal Finance Journey

I have three kids and I admit we do not spend much money to raise them. They were breastfed, wore hand-me-downs and gifts from friends and relatives, go to public schools, walk to school, and learned how to play flute from a neighbor. My husband is an artist so he also teaches the kids how to draw and paint. My brother-in-law sends each of them 3 pairs of shoes every year. The amount we save from these “should-be” expenses and the cash gifts they receive during birthdays and Christmas are put on a separate account for their college education.

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avatar Melissa

We have 3 kids, and I will admit, they are expensive, especially since we send them to a private school, but that is a choice, not necessarily a necessity (though our school district is not very good). Years ago Amy Dacyczyn of The Tightwad Gazette broke down how it is much cheaper to have a child than the government estimates.

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avatar the weakonomist

The good news is parents always have discretion on what they want to spend on their child. These figures act like one has to spend that much to raise them. I also got hand-me-downs growing up and my parents used an allowance for me to set up my own discretionary spending.

Unlike a few years ago, kids are also driving a lot less than they did when I was 16. So gas, vehicle, and insurance costs are likely less too.

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avatar Joe Morgan

I have 3 kids and I’ve seen these kinds of reports since the mid 2000′s, and they are largely crap.

Yes, having a child does cost more money than not having a child, and it does mean shifting financial priorities but every story I’ve seen on this topic accepts costs that simply are not necessary. Flexo mentioned some that are (larger car = more gas, etc..) increased home size or apartment size is another, but so much else is not.

Diaper genies, pull-up trainers (when children have outgrown diapers), and on and on all the way to 4 years of private college are counting in such studies, and they are simply not necessary.

The point is, that frugal minded parents can cut these supposed “costs to raise a child” by 50% or more.

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avatar Luke Landes ♦127,455 (Platinum)

It depends on what you mean by “crap.” The studies measure actual figures, but that doesn’t mean that every parent or set of parents needs to spend that much. In fact, if the surveys over the years have any value, the value is that they can bring more attention to the fact that while raising a child can be significantly expensive, and those costs can grown, there are always many opportunities to reduce those costs. The surveys are not saying that you must spend this much in order to properly raise a child to the age of eighteen.

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avatar Joe Morgan

By crap I meant things that are marketed towards new parents, but that are not necessary. And yes, many people do interpret news articles centered around such surveys as what is required to raise a child these days.

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