Actual cost of kids poll

In My Humble Opinion
1

Hi all,

I was reading some data-centric blogs and came across the following graph: http://dadaviz.com/i/1621

For those that don’t want to click through, it essentially says that for middle income folk, the estimated annual expenditures for 1 kid ranges from $13k per year at age 1, to $23k per year at age 17, with a steady increase in expenditure every single year. This adds up to…drumroll…a little over $300,000 to raise a kid to age 18.

To which I say: *“Three hundred thousand dollars, are you nuts??” *

This seemed implausible to me. For one thing, plenty of people have multiple kids, and if you had 3 and were spending $20k a year per kid and taking home $100k a year for the household ($60k a year after taxes), you would have literally $0 left over for all the expenses that you incur without kids. Since single people don’t live for free (although I’m sure family types look back and remember those luxurious pocket-jingling days longingly sometimes), something doesn’t add up.

The source is a USDA study, and reading through the methodology a good part of that is “housing” which they calculate in a way that struck me as likely to load the figure with extra costs. So sure, kids are expensive, but are they that expensive? And if not, how expensive are they?

We all see those figures that a kid will cost you a million dollars over their lifetime, or in this case, a little over $300k from age 1 to 18, and I’ve always wondered what the real costs must be.

I thought I’d turn to the parents of the Dope, and ask you to estimate what your annual expenditures per kid are. Are these estimates reasonable? Are kids actually more expensive than this? Have you all had to sell kidneys and take up high-stakes jewel heists just to keep the kids in Cheerios? In a nutshell:

**Parents of the Dope:

  1. If you were to estimate how much one child has cost you in average annual expenditure, what would that number be? **

If you have multiple children, feel free to add it all up into a total and divide by how many you have.

Even better to hear from empty nesters who might have a total estimated cost to age 18, to see if it jibed with the USDA figure.

2

I skimmed the USDA document and if anything, it seems like an underestimate. For the housing issue, they mention:

The average cost of an additional bedroom approach is a conservative estimate of housing expenses on children because it does not account fully for the fact that some families pay more for housing to live in a community with good schools or other amenities for children. Part of this expense is captured in the cost of the additional bedroom, but parents may be spending more on their own housing to live in certain communities than they would without children. In addition, it is a conservative estimate because it does not account fully for parents’ purchasing of a home with a larger yard, a playroom, or child-specific furnishings in other rooms of the home because of children in the household; however, data on these housing characteristics are limited.

And there are third-order effects as well, such as potentially increased transportation costs (if the parents choose to prioritize good schools over proximity to work, for instance).

The other obvious factor is potentially reduced household income if one parent chooses to stay home with the kids. Also, parenting duties tend to intrude on work performance and may, in the long run, result in a lower rate of promotions/raises/etc. Obviously this opportunity cost is unlimited but it’s easy to imagine $50k or more per year for a typical parent.

At any rate, I’m not sure the responses here will be of much use unless you really spell out what to include in the costs of children. By my reckoning, a child would cost me at least a million bucks, but I’m including a lot of things that perhaps some parents would not (because they’d be doing them anyway, for instance).

3

It’s probably worth noting that there can be some “economies of scale” that come with kids after the first one. The family deductible can make for some small differences in the marginal medical cost for bigger families. Handing down clothes, toys, and other age specific stuff enables some savings for follow on children. There’s room for savings in food and clothing (while still meeting the requirements) that may be ignored while feeding three (1 kid) but get implemented in the family of five. With age dispersed kids some tasks that would get paid for in single child homes (like babysitting) may get tasked to the older children.

It’s probably not appropriate to take the average cost for one kid and assume it’s linearly applied to a second or seventh kid.

4

The thing is, it costs as much as you’ve got and are willing to give. A genius or a learning disabled child costs more to educate. Unless you haven’t got it in which case you settle for what the public schools will do for them.

Clothing - you can go to the Good Will store or shop through the Wooden Soldier catalog.

So if you’re talking about the subsistence, hotdogs and ramen costs, yes, $20k might do it. I’m not sure a “How much do you spend?” summary is of any use, unless perhaps you could produe a percentage of income graph at the various income levels. Even then, you’ll find a vast difference between the nurturers and the narcissists.

5

1 kid.

No need to estimate - we budget and our allocations are tracked per person. Of course, I’m typing this at work so I don’t have the budget in front of me, but a quick and dirty estimate shows that she easily costs $17,000… and I know I’m forgetting some items.

Even more, we let Sophia know how much she costs us, which has proven to be extremely useful. “You want us to buy you that poster? Really - the $52.77/day we spend to maintain your existence in our household isn’t enough? Mind explaining your reasoning, honey?”

This strategy has dramatically cut down on the “I wants” and “Can I have’s” we were peppered with when she was younger.

6

And is going to give her a complex about spending money and hating her parents when she’s older. Of course, I’m sure you could chastise me for some of my parenting decisions taken out of context too, so take that lightly. :smiley:

Counting just daycare for the first year, we spent $16k/year on our first kid alone, although that rate goes down as he gets older and will go away completely when he starts attending the (very good) public schools in our area. With clothes and food, I could easily see us getting over $20k/year.

But then there are a lot of areas that are hugely variable that the kids have a minor impact on. Like, if we didn’t have kids we could have gotten a 2-bedroom instead of a 4-bedroom, which would be cheaper. Or we might have decided to have a couple of guest rooms and gotten a 4-bedroom anyway. Or maybe we would still have gotten the 2 bed, but in a nicer location so it would cost the same. Or maybe we would have continued renting, thereby not building equity. Or maybe we’d have gotten a 30 year mortgage instead of a 15 and paid more in interest. Or we’d rather pay off the mortgage faster and gotten a 7 year mortgage to save on interest. And that’s just housing.

Maybe we’d eat out a lot more if we didn’t have kids, driving up those expenses. We’d certainly go to the movies/sportsball/etc a lot more, which costs money.

But then, maybe I would have taken that job with the $25k raise instead, since I wouldn’t be worried about not spending enough time with the kids.

I think $300k from birth to 18 is a pretty close to accurate number, although as mentioned above, a lot of those costs go way down for the second kid that can use hand-me-downs.

7

Naw, now she just goes out and earns her own money. No “hating” required, and she likes the sense of self-confidence this has given her.

Her most common thing to do is make a bunch of bath soaps and stuff, bottle them up, then print “Sophia’s Scentsables” labels for the bottles. She goes door-to-door selling them and can rack up about $50/hour (more like $15/hour when adding in prep time and deducting for COGS).

8

Our daycare is $1200 a month for three days a week (family takes care of her the other two days). We all share a one-bedroom apartment, but we will need another bedroom at some point, which will be another $500. Health insurance is around $200. We don’t buy a lot of clothes, but diapers and milk are expensive- at least $200 a month for food and supplies.

9

$300 thousand actually seems a little low to me. In a family of three that grosses $100,000 a year, can’t we say each of the family members costs something like $33,333? The child is a family member. He is warmed by the heat, cooled by the AC, sheltered by the house, carried by the car, just like the other family members. Perhaps the adults have uniquely adult costs (booze)but then children have special costs as well (daycare.)

The real expense of kids, for me, was after 18. Before that they live at home and eat what everyone else eating. After that, assuming they go to college, they need a separate place to live, separate food, tuition, car, etc.

10

If we hadn’t had kids, my wife would’ve had her company-paid individual health insurance and I would’ve had mine, so neither one of us would have to pay extra for a family plan.

My father, who was able to retire quite comfortably, once told me, “We never had any money until you kids were out of the house. Every dollar I have, I managed to accumulate in the 15 years after you graduated from college and went on your own.”

11

I raised my kids in the 60s and 70s, and they cost nothing to raise. Clothes came from thrift shops, to supplement new stuff given to them for Christmas by relatives. Feding them cost an extra potato in the pot. School was, believe it or not, free in those days. So was TV and radio. Kids never get so sick they need a doctor, they tough it out and play through pain. Walk or ride your bike to baseball practice, there was no soccer.

12

$300K seems reasonable to low. I’ve got two and my daughter’s preschool alone costs $13,000/year. She’s 5 now. My son is 8. Both of them were in daycare or preschool since about 12 weeks (I work full time), so that works out to about $65,000 per kid on childcare expenses alone during the first five years of their life. And we still have to pay for aftercare once they’re both in public school, which is at least $300-500 per kid per month until they’re in their early teens.

And while the childcare expenses get cheaper as they age, they also start eating more, their clothing increases in cost commensurate to size increases and they’re doing more outside the home, etc. Sure at some point they’re going to have to start making their own spending money (my son already gets an allowance and my daughter isn’t too far from it) but by that point, you’ve spent a shit-ton of cash, excluding any college savings.

13

Well, in our case, the entire process of adopting our son cost over $25,000 before we ever laid eyes on him!

14

Daycare alone for us is $1700 per month per kid. Lunch not included (extra 200 bucks per month). So, we’re at well over 100K before each one hits kindergarten for daycare.

15

So far it looks like:

Fiveyearlurker $100k for 1-5, scaling up maybe $400-$500k to age 18
Overlyverbose Maybe $20k a year, for ~$350-$400k to age 18
evensven $24k a year, for $400k-$500k to age 18
yellowjacketcoder $300k, cheaper for second and third kids
JohnT $17k a year, for $306k to age 18
TruCelt $20k a year, for $360k to age 18
Dr. Strangelove $1M to age 18

So consensus seems to be high $300’s, closer to 4. If we discard our $1M outlier, the average is $374k.

So my second question is, are you all millionaires, or what?? Especially you, Dr. Strangelove! :stuck_out_tongue:

This is after tax money. That’s more than $20k per kid. The US, according to the CIA world factbook, has an average of 2.01 children per woman, so that’s $40k in after tax money. Per year. Average median income is $51k a year. How does this work out, in the aggregate? That $51k is even a pre-tax figure.

Sure, maybe there’s a hand-me-down discount. What might it be, $5k a year? That’s still $35k a year after tax, more than 70% of your pre-tax income. I’m just literally not seeing how this is possible. All other non-child related expenses, including taxes, fit in less than $15k?

So those of you who are actually doing it, how does this work?

16

These numbers seem absurd to me. The average household makes around $50,000, which of course means half make less. The fertility rate averages about 2 children per woman. This would mean a family would spend a total of $600,000 to raise those two children to adulthood, and in those 18 years they would earn $900,000.

The average household spends 2/3 of their money on their children? Implausible.

I have 4 children and our household income is around $70,000. I consider us to have a very comfortable life, with everything we need and a lot of things we want, but don’t need. Our income has not been steady, when we had our first it was around $30,000 and has risen to it’s current amount. So $50,000 is a good average. We would spend $1,200,000 on these 4 children, and over the 25 years of the first being born and the last turning 18, we would have earned $1,250,000.

So that would leave only $50,000 over 25 years to spend on non-kid related expenses. No way.

17

Yearly expenses:

School: $5,400
Church: $600 (we pay a parish commitment of $100/mo because Sophia goes to the parish school. I credit 1/2 of that to her.)
Portion of mortgage that goes to her room and bathroom: $1,800 ($937/mo * (240sf/1500sf)*12)
Her portion of utilities: $500 (cable, internet, electricity, cell phone. We would likely not have cable if it weren’t for her - Lord knows we can do without.)
Entertainment: $2000 (including Xmas & birthday gifts/party, movies, bday gifts for friends, etc.)
Health insurance: $2,400 (the difference between employee+spouse and employee+family)
Clothes: $1,000 (including school uniforms)
Food: $3,650 ($10/day)
College savings: $4,000 (Didn’t include this # in my previous post, btw)
Vacation: $500 (more if we fly)

That’s ~$22k/year. It can be argued that some of these expenses would be incurred if Sophia wasn’t around (especially prorated mortgage and utility expenses (except for her cell phone)), but she does exist and they do get allocated to her.

We have just one child. If we had more, you can probably get rid of the school+church money (public school), the clothes would be less and the food dollar would be stretched more. No vacation, entertainment would be spread among the kids, savings for college would be lower, etc.

And while the average family makes $50k, meaning that half makes less… well, that means that half makes more. And the average woman has 2 kids… again, half of those have fewer than two kids and since you can’t have a fraction of a child, half of women have 0 or 1 child.

So, I don’t find this average figure to be out of whack, not at all.

18

And we won’t get into the lost income from her mother - the years she didn’t work, the years she worked part-time so Sophia would come home from school with her mother being there. That, too, is about $10-30k/year in lost wages.

Now I’m making myself depressed… :wink:

19

A lot depends on how you calculate it and what choices you would have made/options you would have had if you didn’t have the kids. For example, housing- should I allocate some percentage of the mortgage payment to the kids or acknowledge that we wouldn’t have bought a smaller ,less expensive house if we didn’t plan on kids and therefore housing the kids didn’t cost any extra? I would have furnished those bedrooms somehow even if there weren’t kids sleeping in them. Insurance is about $500/month to cover my husband and two kids- but it would be the same price for only him. Some services cost more with two extra people (electricity and cable) and others don’t (heating oil). Vehicles- the minivan I had when I drove my kids around cost less than the SUV I bought once I wasn’t driving them around on vacations. I spend just as much on travel now as I did when I was taking them. It’s just that I do it more often.

With the exception of a few expenses directly related to kids (childcare ,tuition ,camp, clothing,food) it almost seems like you could make the number come up to whatever you wanted to. I mean, there are people who make $500K per year and I could imagine that the opportunity cost of having children is the difference between my salary and $500K- but I wouldn’t have had that sort of job with or without children.

20

Well, I am in fact :slight_smile: (er, wealth, not income). That was just an estimate, but the facts are:

  • I live in a cozy two-bed condo with no yard, etc. Buying a proper house with yard, third bedroom, etc. would at least double my mortgage. That’s ~$18k a year.
  • I’d also have to move farther from work. That’s easily $2k in annual vehicle expenses.
  • It’s clear from the others in the thread that $20k for daycare is not uncommon. Plus I live in a high CoL area.
  • I do some contract work on the side. Kids require, if nothing else, a crapload of time, and I assume I would no longer be able to do this side work. $10k a year.
  • We may only be covering up to age 18, but I’d definitely be starting a college fund from the beginning. With college prices going to the way they are, that’s ~$5k/yr.
  • I get subsidized food at work and normally eat there. With a family, I’d eat dinner at home. So one child would actually cost two people worth. Another few $k per year.
  • Opportunity cost from investments. It’s hard to calculate this, but the fact is that many of a child’s expenses are early on (daycare, etc.). This money would be invested in the market otherwise, and so even adjusting for inflation, actual cost at the end of the 18-year period is effectively much higher than the raw dollar amount would suggest.