Minimizing the Cost of Raising Kids
The choice to have a child is usually not a financially-focused decision. And we're not so crass to suggest that it should be a dominant factor. But the cost of raising a child properly should at least be one of the factors that couples consider before they take the plunge into parenthood. Why? Because raising kids is a very expensive undertaking.
MSN Money claims that the cost of a child is $221k, and that's only through age 17 (doesn't include college, which could double the amount) for families earning between $56,870 to $98,470 a year. For higher-income families, the cost skyrockets to almost $370k for rural families and over $400k for urban dwellers. Even lower-income families spend $160k raising a child. No matter the level, raising kids is going to take a big bite out of your finances.
The cost break downs, as well as basic suggestions on how to minimize them, are as follows:
Housing cost through age 17: $53,100 to $126,180. You could ignore one of the basic assumptions used in calculating additional housing costs. You could decide not to move into a larger home.
Food cost through age 17: $29,250 to $44,790. Set strict limits on the more discretionary forms of food spending [such as fast food.]
Transportation cost through age 17: $22,710 to $45,570. Avoid buying a new car. Instead, look into a used car such as a relatively new model that's coming off of a one- or two-year lease.
Clothing cost through age 17: $10,860 to $18,540. take full advantage to skirt the outlandish expense of buying clothes for your little one(s). Also, seek out some of the thousands of manufacturer outlets across the country where you can buy perfectly good clothes as low as half their original price.
Health care cost through age 17: $12,810 to $19,860. Because much of this expense comes from health insurance premiums, it pays to shop around if you have the option of choosing your insurance carrier.
Child care and education cost through age 17: $20,670 to $77,130. If staying at home full time isn't feasible, look into forming a cooperative with other parents.
Miscellaneous cost through age 17: $10,470 to $34,590. General cost savings strategies.
These expenses seem a bit over-inflated, and MSN Money recognizes that individual results can vary dramatically (either higher or lower.) However, it's clear to see that there will be extra expenses associated with raising kids and these costs won't be trivial. So, before you "go forth and multiply", it's probably wise to consider and plan for the expense multiplication that occurs when a family gets larger.
Raising your $221,000 baby [MSN Money]
— FREE MONEY FINANCE (Photo: foundphotoslj)
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Comments:
Let me see... I didn't go to prep school, i want to public specialized high school in NYC and went to Cooper Union for free education for college. That's the way to raise a kid. Cost nothing for education and still get an awesome education.
Typical MSN Money article in how they only write to keep businesses happy:
"Also, seek out some of the thousands of manufacturer outlets across the country where you can buy perfectly good clothes as low as half their original price."
No mention of Goodwill, Salvation Army, church thrift stores, school uniform exchanges or any other possible way of keeping children's clothing costs to less 1/4 of what buying new clothing would be...
That childcare cost estimate seems ludicrously low to me. Where I live you can't get infant/toddler daycare for much under $13,000 a year, and I'm in a midwest college town. I'd imagine that if I were still living in the suburbs or the city it'd be far worse.
I wonder how much of it is because we tend to have fewer children and thus invest more in them. The incremental cost of 1 vrs 4 children is probably significant.
@ekthesy: well at that rate none of us would breed til 40. my friend put it best, if it's kids you want, you FIND a way to afford it....even if it means never ever ever going out to eat again. let's face it, you're not going out to eat again anyway, at least not someplace quiet.
my nana had 7 kids and most of the houses they lived in (she was an air force wife) were 4 bedrooms. GASP she lived in a house that didn't have more rooms than kids. so when her children went to college, they knew how to live with a roommate (which is more than I can say about most kids of the spoiled brat generation I live in)
I think one reason these numbers seem so shocking is that we don't otherwise assess the cost of keeping a human being running. If we looked at how much we ourselves cost for the same number of years in adulthood, we'd also be shocked by that. And in some areas we're cheaper, and we're also more likely to defray our own costs with income.
Not meaning to undermine the initial point, just adding that people are expensive, pure and simple.
One thing they failed to mention under clothing - buy second hand, especially for infants and toddlers. Having a child due in November, I can assure you, there's plenty of good kids clothes at Goodwill and consignment shops. Most things we pay $1-$2 for, in comparison to $8-$10 retail.
@ekthesy: Exactly! People need to think of the financial implications of having a child (or children) before doing so. I would imagine having a kid is one of the happiest times in a persons life but should also beindful of the sacrifie and trade offs involved
Agreed. Childcare costs me just under 9K a year, after a government subsidy program...
@econobiker: Or god forbid you just shop at Target or something and teach your kids that all that designer shit is a trick.
While goodwill is nice and all....most of the time I go in there, it is around $3-$4 for a shirt straight out of 1991. And then you will have to pay for therapy because you were buying them clothes from 1963, and when they asked for adidas you gave them zips.
@ekthesy: Wishful thinking, it's never going to happen. Having a kid carries such emotional, family and tradition weight that most people simply don't care. Having kids "is the way things should be" regardless of finances, economy, whatever.
1. Where is it written that every family must have a minivan, SUV, or big-ass station wagon? Why not just get one five-passenger sedan (Toyota Camry or similar) and one itty bitty subcompact? That worked for us with one kid, and it would have worked just fine with three. Furthermore, you buy the reliable, fuel-efficient family sedan ONCE, not two or three times as your children grow up. It is not unreasonable to expect a Toyota Camry to run reliably for at least ten years, even in the snow belt.
Also, where is it written that each child must have his or her own room? When I was growing up, and I might add that Dad made decent money as a mechanical engineer, solo living arrangements were doled out by seniority. Otherwise, it was two to a room. A three-bedroom house of 1600 SF, the kind they used to build in the 1970s, is perfectly adequate for a family with up to three or four children, depending on the gender breakdown. Of course, most families nowadays cut themselves off at two, which would make this entire argument moot, but oh well.
In short, most of the money mags and money sites kind of assume you have lots of money. Lots and lots of people don't.
@ekthesy: This article should be required reading for anyone who's able to get someone pregnant or to get pregnant, and who hasn't thought seriously about using contraception. Teenage America, I'm looking at you.
@Sparkstalker: I agree. For my precious *first* baby, of course only the newest, cutest clothes would do. For the child I'm expecting now, I would LOVE to buy secondhand, but its not really an option (I live in Germany - husband's in the Army). I've realized how much money was wasted on clothes that my firstborn barely wore before they were outgrown and packed away.
I find this entire approach crass. Do you look at adopting a puppy this way? How much will you spend on that dog over the course of its life? Children are the result of sex which is not a cold, logical undertaking. All classes will have children no matter how much 'thought' you think should go into it. And never forget that contraception is not 100% reliable. If we Americans had more security, like others in developed countries, with much cheaper child care, health care, college, and a better state pension, people would be able to afford to pop out more taxpayers. Surely the government would find that desirable? At the very least, Uncle Sam needs more cannon fodder for his endless wars, no?
@Sparkstalker: Good point. For that matter: YARD SALES! You'd be stunned at what you can save on clothes for babies and children at yard sales.
@econobiker: Jerry Seinfeld had a point about pre-owned clothing. I believe he called it "nastywear." Have you ever been in a Salvation Army store? Bring a respirator mask. Peee-yew!
@cmdrsass: If one of the members of the couple is a stay-at-home mom then it's easy to take care of the kids. However, if both work then you can't leave a two year old at home alone for 9-10+ hours a day.
Thus the necessity of daycare.
So you either pay for daycare or somebody has to stay home from work. Either option can cost you money.
@HurtsSoGood: It's true that you don't have to have big stuff, even though many people do (of course, if you have more than two kids under front-seat age, the five-seater car's out). But even if you do opt for the less pricey purchasing pattern, the aggregate cost is more than a lot of pre-kid peopl realize.
The thing that spooks me the most about having kids is that until they are of a certain age, there is pretty much no way that they can tell us if something specifically is wrong. All they can do is cry. If the baby is crying all night, you probably have no idea why, and feel utterly helpless. And not to mention seeing the baby in pain makes you feel very very terrible.
And once it DOES start talking, it never ever shuts the fuck up.
@Pinget: To put it lightly, that is the second most stupid thing I have heard all day.
And yes, people often drop the ideas of pets because they are too much hassle or expense for them. I just hope more people would think those things over before doing crazy stuff like that.
@HurtsSoGood: don't knock the station wagon....it's nice for when we have to take the recyclables to the dump, and the hidden seats were awesome when we'd go to the drive in. also, I could always fit my entire dorm room in the station wagon and still have room for my parents and myself. i figure the added expense of a station wagon makes up for the fact we never had to rent a truck to move into dorms or move out of dorms. and we could travel in one car not two.
i agree with you on the bedrooms thing. colleges hate it too, because it means they get 18 year olds who don't know how to share a bedroom, and some don't even know how to share a bathroom.
@Pinget:
Well, that works...if the people you are popping out are taxpayers. Seems to me a lot of people are popping them out just to GET tax dollars. And those kids grow up and continue the trend.
And yes, I think people should look at their means to provide if they are having kids. If they are on welfare and can't afford to support themselves...they sure don't need to be bringing more mouths to feed into the world. I always wonder when I see these villages in 3rd world countries with babies covered in flies and no food, and the host is trying to tug on your heart strings. What I think is "that is very cruel and irresponsible of those people to even be having children, if they have no food or water to give them". Now, I realize they don't have birth control, but the observation remains the same.
I do think it would be difficult to have three kids without a mini-van in this day and age. There's too little room between the two car seats to squeeze in a third (or even a booster seat and even three booster seats won't fit). When I was growing up, we just had to wear a seatbelt (and sometimes not even that), so there was room for 3 kids in the back seat, but not now.
However, even needing a mini-van, the transportation costs don't have to be that much more. You can buy a very basic mini-van without all the bells and whistles (and DVD players) for nearly the same amount of money as a sedan. About the only thing that may cost more is the additional gas.
I agree that the child care costs are ridiculously low. No way does child care only cost $3,000 or so in the northeast (for those that need to pay for it) for kids under 5. Maybe once they are old enough not to need paid-for after school care, although the cost of summer camps take their place.
Healthcare costs also seem low, once you add up insurance premiums, co-pays, medication/vitamins, etc.
But clothing is definitely one place you can save, as long as you stay away from designing items and expensive stores.
@HurtsSoGood: As floraposte mentioned, even without all those huge purchases, the kids are still expensive.
My sister and BIL have two sedans (that they have had for years) and yet, my niece is a huge expense.
@jmurphy42: I recommend hiring one of those "Will Work for Food" guys from the side of the road. Make your children hug you like they wish you'd never leave them again when you return.
Even that's a luxury. One should aspire for your children to be better off than ourselves, and that goes for being self-sufficient. By leaving a toddler alone for a good length of time they'll wind up learning how to prepare their own food, change their own diapers, win fights with rats over valuable resources, make alliances with biker gangs for gasoline, and eventually grow to be full productive members of a feral community of similarly raised children.
I mean, we teach a children to swim by just tossing them in, right?
It may be traditional, and society pooh poohs this now, but people shouldn't have children unless they can take care of him/her in the way that they wish you had been taken care of emotionally. Money is a tool, we can all have more of it or less of it at any given time. You adapt and you work within your means. But nothing can replace a parent's love and care - and it's something that gets ignored.
If you wait until you have the money to afford kids, you're looking at it all wrong. Most people will never be able to fully afford children - they just need to make it work within your means. If you can't take care of yourself, you can't take care of a child. It would be irresponsible to have one if you have $9 in savings and no career.
Kids need stability, and they need care and love. If you still want to be out at 2 am with a drink in your hand, sober up and grow up before you even think about planning for children.
@Saboth: It depends where you are. My "local" Goodwill store, in the Chelsea neighborhood in Manhattan, has tons of clothes from Banana Republic, Ann Taylor, Anthropologie, and other fairly classy stores, sometimes with tags still on. Throw whatever you've bought in with your laundry, or drop a few extra bucks to get it dry-cleaned, and you're still way ahead.
There's eBay, too, if you're a label snob who can't really afford to be one. I have a few saved sellers who only sell designer and high-end chain clothes for fractions of their original prices, again sometimes with tags still on them. Secondhand does not have to equal nasty or out of style.
@Saboth: So does a 5 year old child really care about where a play shirt and shorts come from as long as you launder them first? No, not really.
Actually one of my 6 year old son's favorite shirts (until he grew out of it) was a Pokemon Pikachu(sp?- a little yellow cat-type creature or something) shirt that cost about $1 at Goodwill. He liked it enough that we pinned it to a bulletin board in his bedroom after he grew too tall for it.
And the Goodwills across TN have 1st weekend of the month 1/2 price sales on everything in order to clear stock for new inbound items versus having to process it at the Goodwill Outlet Store. Yes, even Goodwills have outlet stores in most major metro area...
My point being is that MSN Money typically doesn't really dig deep for their stories on how to save money.
@Sparkstalker: I know some parents who have formed baby clothes co-ops: get clothes for newborn, pass on to neighbors with newborn when baby is too big, they cycle back when you have the next newborn, etc.
@MostlyHarmless: One of the reasons I don't want children myself. The crying. You can't comfort the baby because it doesn't understand "it will be ok" so it just screams its little head off until its tired.
The issue is really child seats. If you are having more then two small children at any one time it is REALLY hard if not impossible to fit three baby/child/booster seats in the back of a car. Remember, kids now days stay in these things until age eight or beyond.
That said I have a Toyota Camry and a Ford Crown Vic in the driveway. We have a 14 month old and are planning for our second now.
I am all for kids sharing rooms, although I had my own growing up.
@Pinget: My husband and I certainly did look at adopting our cats that way. We had to find an apartment that would allow us to have cats, buy the supplies, and make sure we could afford vet visits and the like before we adopted our first two. We did it all over again when we got our third. We love our cats dearly and take good care of them, and if we hadn't had those conversations, our cats would have been better off waiting in the shelter for someone else to come along.
@floraposte:
Great comment, but I disagree to some degree. Yes, "people are expensive, pure and simple" but especially so if you buy into the trick of big business marketing wants as needs. The two biggest offenders IMO are convenience and pretty. Convenience is nice but often very very expensive so any convenience purchase should consider cost vs. benefit. Pretty (trendy, new, feature packed, etc.) is even more expensive, and frankly just a waste.
Ok. doing cuff of the wrist math here.....
Let's go with $221,190 being the cost to raise a newborn to 17 years old.
That's 204 months of life.
$221,190/204 = $1084.65/month
It was not clear in the article how much differentiated the cost are between the parents and kid. All I know is it says "Second born".
Based on personal experience, if you can house 2 kids comfortably, you can probably house 4-5 kids to to live under your roof with same Sf.
@sponica: Why would you need a truck to move into a dorm room? You're not taking big pieces of furniture with you because the rooms already have dressers, desks, shelving, and beds.
@magstheaxe: Big time on yard sales for baby clothing. Also don't be shy about asking other parents at daycare or mommy's day outs, etc for people with children slightly older than yours so you might be able to pick up some clothing that way. Even store ahead if you have the space.
100k or even 200k over 17 years really isn't that much money. If you were asked to pay up front then it's a little more daunting.
College is $221k now? What?
My local University costs ~$6,000 a year. So, for a bachelors, that's $18k. A far cry from $221k.
And, if your kids want to go to a fancy university/college and not live at home, they need to bear the additional expenses for that themselves.
@ekthesy: And not just fiscally, kids are basically a battle you just cant win. Its like a million factors running against you. Here is something I wrote up about it
[Shameless Plug]
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@HurtsSoGood: "Where is it written that every family must have a minivan, SUV, or big-ass station wagon?"
I need to take Skyler to soccer practice and Dakota to ballet and Madison loves her baby dolls and Keagan needs room for all of his DS accessories, plus my purebred Labradoodles need room to lay down and everyone has to have TVs to watch so they'll leave me alone and I need most of the cupholders for my bulk jars of Valium and Xanax.
Oh jeez-
Who waits until they're financially 'viable' to have kids? Yuppies.
Everyone else in the real world has kids, and you make due.
@sponica:
Some parents I know would have been better off waiting until 40, because at 30, they're not mature enough themselves to raise a child, regardless of the associated financial responsibilities.
@MostlyHarmless: There used to be a very helpful iPhone app that taught people what to do when a baby was crying...
This article should be required reading for those desiring to have children. It might cause some people to think twice, and postpone their decision to a more fiscally responsible time in their lives.