There is a new government report that states the average cost of raising a child from birth to age 18 is $240,340 for a middle-income family in 2013. There is so much public pessimism when it comes to high cost of raising a child. It's almost reassuring to see how our government worked it out as one giant math problem.
As someone who lives this economic reality, I would say the largest economic hit comes from one or both parents scaling back their career in order spend more time parenting. That decision is highly varied. Sometimes there is the typical "stay-at-home" Mom and full-time working Dad. Sometimes it's a stay-at-home Dad, and full-time working Mom. Sometimes both parents take part-time work. Sometimes it a major career shift for both parents-such as deciding to both in Academics instead of Corporate Consulting. Even for the full-time working parent, I think there is this general shift of putting family time ahead of the normal career track. So a working parent might turn down a promotion and pay raise that leads to more travel time or a longer commute.
I know many parents who decide to put family time ahead of straight cash. That value system can happen whether you have one child or ten. For me, the biggest cost in having another baby at age 40 comes from "lost economic opportunity" rather than a straight outlay of cash. Another baby means that my husband will have less time to take on extra freelance work due to being groggy from late night wake-up calls. My writing life will continue to sputter along somewhat half-hazardly for another 2 years. Yet at the end of the day, artists and writers don't tend to make much money. We're talking about losing $500 to $3,000 a year--not forfeiting $50,000 to $100,000.
Putting aside the lost economic opportunity issue, as an experienced Mother, it's hard for me to relate to the formal calculation of a large cash output for each baby.
This is a link to the USDA's "Expenditures on Children by Families." If you are a policy wonk like me, you might like to check out their long explanation of housing costs. If you want to skip to the nitty gritty, go to the helpful graph on page 23.
I'm frustrated that the USDA does everything in "aggregate" numbers and percentages. I'm a girl who uses a monthly family budget. That's how I track our spending. Quite honestly, I'd be both freaked out and confused if my husband said "the new baby Benjamin's clothing allowance should be $14,720 for the next 18 years." As a wife and mother, my response is: "Who shops for 18 years of clothes at the same time? Dude, you only get a paycheck every two weeks! Also, we have no idea if this kid choose to wear ratty sweatshirts and $80 basketball shoes, or $3 neatly pressed Oxford shirts from Goodwill. Lets slow down on the "obsessive planning for the future," and let our son make some of his own clothing decisions as he grows up."
Here's a breakdown of the math behind the sticker shock equation.
$245, 340 for 18 years.
$13, 630 per year*
(this isn't exact because 16 year old boys eat more than 2 year old boys, but lets go with easy numbers for clarity)
The government expects us to spend 30% on extra housing costs per child.
That's $4,089 a year or $340 per month
The government expects us to pay 16% on extra food costs per child
That is $2,180.80 a year or $181 per month.
The government expects us to pay 18% on extra childcare and education per child.
That is $2453 a year or $204 a month.
The government expects us to pay 14% on extra transportation costs per child.
That is $1908 per year or $159 per month.
The problem with these scary sticker shock numbers is that it doesn't work for the economy of scale.
I'd like to take one category--transportation--and show how real life can intersect at odd angels with the government's strange math equation on the cost of raising a child.
When I was pregnant with my first child in 2002, my husband drove a red Jeep that was full paid off and I drove Grand AM that was also paid off. There was nothing wrong with putting a car seat in the backseat of a Jeep that a roll-over bar and a snap on roof (or alternatively only driving the baby in my 4 door car). Yet it didn't feel "right" as new parents to own non-baby friendly Jeep anymore. So my husband decided to trade in his car for a gently used PT Cruiser with a car payment of $252 per month.
So for us--one baby equaled a transportation increase of $252 per month, instead of the government projected increase of $159 from our child free days.
In 2004, we moved out of State. I sold my car when I quit my job to become a stay-at-home Mother. For the next six years, we were a one-car family with only our PT Cruiser. Our maintenance costs went down dramatically by having only one, newish car. We added two more kids in 2005 and 2007. Instead of "moving up" in transportation cost, I went out and bought the skinniest booster seats that I could find. The government "per kid" calculation would have me at $159 x 3 kids, or $477 per month. Instead, I'm still paying $252.00 per month--for the same car at the same price as my first child. That is a savings under my government projected costs of 3 kids at $225 per month.
Honestly lets go on a tangent and talk about real life. I don't know many double income no kid couples that have a single car-payment of $252 per month. Most couples have 2 cars. Most couples have nice, new cars. I'm taking a wild stab here, but it would probably be normal for my husband to upgrade to a Jeep Cherokee and for me to upgrade to a Honda Accord. That's no BMW price--but we'd be looking at $800 in car payments by age 30 easy.
The people who decide to have only one used car, and stick 3 kids in the backseat in skinny car seats are parents. Parents are known as the thrift nuts who go to ridiculous lengths try to save money. When I was a working married wife without kids, I ordered a $2 Tim Hortons donut and a large black coffee special everyday before my commute to work. Now I beg my husband to make me frothy cappuccino with extra cheap coffee every morning at a cost of $0.15 per day. When you have kids, you have an extra incentive to save money.
Okay, tangent over. Back to my transportation story. In 2009, our lovely PT Cruiser broke down immediately after we emptied our entire savings account to pay for one kid's super expensive emergency dental surgery bill. We started taking the City bus. For the next 2 years our transportation budget went $25 for an adult bus pass and $15 for a kids bus pass for a kid over age 5. We also added a new baby. The new baby, and the 3 year old rode free on the City Bus. Now our transportation bill was $25 + $25 +$15 +$15= $80. Now that is $80 for the entire transportation budget--no gas, no tolls, no maintenance fees. According to the standard of the government, I now have 3 kids--but I'm $79 ABOVE the budget for one single kid's transportation fee.
In 2011 we move out to the country and nine months later, I have a fifth baby. There is no bus system in the country, so I need to buy a car. Now my husband is making the same salary, but now I can afford to buy a car because my housing expenses to buy 3 bedroom house in the country is $850 per month (for all housing expenses including taxes) vs paying $1600 a month for a 2 bedroom apartment in a DC Suburb.
I picked out a two year old Chrysler Town and Country with low mileage from Carmax. My husband gets us sometime of crazy, extra maintenance coverage plan--so our $325 car-payment goes up to $455 per month. That car fits seven passengers, 2 adults and 5 kids or 1 adult and 6 kids (if Jon takes his own car whenever we go to church or the beach). I'm now at $455 per month for a regular car payment.
Under the government proposed cost plan, I should have $795 in monthly transportation costs for 5 kids ($159 x 5) or $954 for six kids ($159 x 6). But see my transportation costs don't go up that dramatically. I use slightly more gas to take an extra kid to the doctor or to Swim Team practice or to a play date. But I'm not at all close to $1,000 a month in extra gas or maintenance charges.
In fact, dragging around 6 kids under age 12, means that we pretty much use LESS gas than most 2 kid families that I know. It's a project getting 3 young kids out of the house. For months after a new baby, we voluntarily leave our home only for the essentials of doctor check-up visits, absolutely necessary grocery store runs, and required Sunday Mass. Everything else is like "Let just walk to the park and push the baby in the stroller today. Who wants to deal with the extra crying from infant car-seat trauma!"
Most families that I know use creative problem solving techniques to keep their budgets low. That ability to be prudent, joyful and a tad daring, is a financial skill that can come whether you have 1 kid, 2 kids, 4 kids or 10 kids.
In every category for "child rearing expenses" there is so much flexibility and choice. For example, the government put educational expenses and child care at $204 a month per child. That just seems like a crazy, made up number. For an infant who needs 40 hours of daycare a week that comes out to roughly $1.28 an hour. I don't know who I would find to watch my newborn son at $1.28 an hour---but there is no way in hell that I would trust a stranger who I paid that little.
Educational costs come at such a wide range of prices. $204 a month might cover school supplies and school lunches for a public school kid starting at age 5. Yet we know some Catholic families who pay between $15,000 to $20,000 a year to send their kid to Catholic High School.
Then there is my family's budget for education and child care. We basically have $0 infant child care cost, $0 pre-school costs, and even if I really stretched us with all of my dream History glitter projects and our massive late library fines, I don't spend more than $30 a month for each elementary school student. For fun, I should present my husband proper billing for homeschooling. On the bill would be "Bribes to Teacher-$2 Dove Chocolate Bars, $15 Moms Night Out Movie Night, and $4 Carnations."
How much does it cost to raise a child?
It really depends.
Family budgeting is more of an Art than a Science. Along the way, there is so much room for discovery. I learned how to cook when I became a Mom. The other day, I introduced my 7 year old to the joy of Sun-Dried Tomatoes. I could have paid $15 a plate for nice Pasta Dish with my honey on a more regular basis if we stayed child-free. Yet there is something kind of cool with watching a future Chef eat a Sun-Dried Tomato for the first time. I'm glad I was there to catch my daughter in that unique moment.
I feel like I live a nice life with 5, almost 6, kids. I eat better. I dress better. I laugh more.
I'm someone who spent $85,000 on three years of law school where my memories are mostly of boredom in class, watching snowy grey skies from the Law Library Windows, and eating a $2 Budget Gourmet Frozen Meal every night for dinner. Somehow spending $245,340 (or far less!) on gaining a new son in 2014, seems like a better economic deal.