How do we do it? It helps that we make more than the average income. But it’s still a pretty big chunk, especially that big, fat, non-negotiable daycare check each month.
Basically we’ve gone from a comfortable household able to save and go on vacations to one living nearly paycheck to paycheck. We also save money by giving stuff up- as I mentioned, we are still in a one-bedroom apartment with a toddler. It’s definitely not ideal but we aren’t ready to shell out the extra $500 a month for larger digs. When we do, we will probably have to move further out, which is another type of lifestyle hit.
Having a parent stay home can save money on the short run, especially if one parent isn’t earning much to begin with. But it costs more than just lost wages- the lost career progression is compounding, so the total loss is several times more.
As for families with less money, they cut corners. An unlicensed home day care in my area is about $800 a month. Sure, they are just going to park the kid in front of the TV and now and then one gets busted for sex abuse, but beggars can’t be choosers. Family also helps.
One big barrier for low-income college students is that they are often expected to stay home to take care of family. And of course, lots of people (and by people, I mean mostly women) give up or hobble their career to get through those tough early years.
There are lots of corners to cut, but most come at a larger future cost.
Well, my wife and I clear about $200K before taxes, so affording the daycare, clothes, food, toys, healthcare, etc is pretty easy since we already live below our means.
You have to include partial costs too. I bet you’re not including the cost of your house in your kid-related expenses, but I also bet you’d have a much smaller/cheaper house if it wasn’t for your kids.
Remember also that this is an average. For the dozen kids that live with their single parent mom in a one-bedroom apartment and have to share a can of green beans for dinner, there’s also Uncle Moneybags kids that are dropping a quarter mil a year for ‘expenses’.
On a per kid basis, the numbers are fairly close. But it’s really difficult to say for certain that we’d spend less on housing or travel or various other stuff if the kids weren’t there.
I asked mizpullin about this (as the banker, she’s the finance minister in our house). Here are the rough numbers we put together (using 2014 dollars as best we can).
Per kid per year:
Housing (their portion of the house): about 3000/year.
Food (a big one, based on cost difference now as empty nesters): 5000/year.
School fees, stuff, trips: 500/yr
Health Care: 2400/yr
Clothes: (very rough guess, low at first, goes up drastically in high school) 800/yr
Transportation costs to school/event/etc: 1000/yr
So I get 12700/year * 18 years = $228600 in annual costs
And another $64000 in the second category.
Up-to-18 total is: $292600 per young’un before college costs. Pretty close to the linked article.
After 18 College/trade school adds a whole 'nuther set of costs. Checking again with mizPullin we’ve spent a total of about $170,000 for their college expenses, and another $60,000 getting my oldest all his flying ratings. Splitting this post-18 total by 2, makes the grand total about $408,000 per kid.
These seem to follow the article pretty closely. Mizpullin is pretty good with records and expenses, so the 300K per kid, with another 100K for college is a pretty good estimate.
These surveys are all rubbish - at least, not rubbish in the sense that they’re untrue, rubbish in the sense that if you pick them apart, you find they’re not actually telling you anything.
So, say you are living with your SO in a dwelling place and your housing costs for rent/mortgage/whatever are $20k a year. You’re each “spending $10k” on your housing costs.
Now you have two kids. Suddenly you’re “spending $5k” per year to house each of them - without moving or actually increasing your costs at all. Of course, now that your family is bigger, you may move to a bigger house - but you might not, I know couples without children who live in bigger houses than my 5-person family. If you have the money you may do so, but if you don’t you won’t. The amount of money you’re actually shelling out may or may not change - but your accounting certainly will. That applies to car costs too. Things like food and clothes go up - but again, lots of people will compensate as long as they’re not on the breadline already, by simply buying cheaper stuff.
And of course, if you’re earning x-amount at your job and after kids you still earn x-amount, then your take-home pay goes up, due to tax concessions.
To look at it another way - lets take US figures since that’s where the study is from - the average income for a 4-person household according to here is around $54k. A quarter of that is $13.5k … not that far off the “cost of children per year” numbers we see here. So we end up with the earth-shattering conclusion that the average family of four is probably spending about a quarter of its income on a quarter of its members. Um - colour me surprised?
I kind of agree with you on the housing; if my husband and I were to have children our house is already big enough to accommodate that, although as others have pointed out, there are school district issues that we don’t have to consider, and obviously if you’re living in a 1 bedroom apartment in a city, things really are going to need to change when you start adding more people to the family.
But the rest of this…all you’re really saying is that the more people you add, the more ways the money is split, and you’re claiming that that means that children don’t really cost anything. Which is silly. There are TONS of costs that are completely child specific (daycare, college, etc). If I’m spending a bunch of money on these things, that means I have less money for other stuff. That’s what it means to say things cost money–you have less of it when you’re done.
Have you looked at the cost breakdowns other posters have listed? How is this “rubbish?”
On housing, our rent went up by 2K per month when we had kids necessitating moving from a 1 Bedroom to a 2 Bedroom (shared by two kids).
I’m reminded of the threads about defining “rich” where people discount cost of living, but I think it comes into play in this discussion. My wife and I make salaries which would (rightly) be considered “rich” in many parts of the country, but where we actually live, we are barely saving any money at all every month after taxes and expenses. Everything is scaled up, so that we might make three times as much as the average person in a lower cost of living area, but we spend four times as much on childcare and housing. And, as taxes don’t adjust with cost of living, the multiplier actually works against you as you scale up.
Point being that putting an absolute dollar amount on the cost of raising a child doesn’t make much sense as there is a scaling multiplier at play. I spend 1700 per month on daycare per child not because I want my precious snowflake to have Mandarin immersion and luge lessons, but because that is how much it costs here. I’m sure that the same daycare would cost half as much in much of the country.
The simple answer to the question of how much of your money it costs to raise a child is “all of it”.
It’s rubbish in the sense that the surveys don’t really tell you anything about how much it costs to raise a child. I paid $6000 a year to cover my husband and two kids on my health insurance. That’s $2000 each, right? Except that once the kids are off the insurance, it will cost me that same $6000 to cover just my husband. ( My jobs have always had either “employee” or “family” coverage and one dependent costs me the same as 10) So will my husband’s cost triple after the last kid is off the policy, or did insuring the kids cost me nothing once I added him? There’s an argument to be made either way, and that’s true for many expenses.* Do I allocate 25% of the cable bill for each kid, or only the fee for their boxes ( which is much less than 25% of the cable bill)?
And I’m actually involved in a similar situation not involving kids. My siblings and I are planning a party. Two are “saying $30 pp for an open bar? Lets just serve beer and wine and run a tab for mixed drinks” and the other two are saying “It’s only $12 pp for the open bar- we’ve already agreed on the $18 for the beer and wine”
If you’re spending $X for Y number of people to use a resource, then it is perfectly valid to say $X/Y = cost per person. $6k to cover 3 people is a better deal than $6k to cover one, and that difference (3 vs. 1) might have you look at other options to cover your husband once the kids are off your health insurance.
If I have a business and I hire two people to create a marketing department (where one didn’t exist before) and I placed them in the same building I’m paying $12k/month for, I would put the proportion of the building that they use on their budget - I wouldn’t say “well, I’m paying $12k anyway, so their space is free” - that would make no sense. If they use 1/20th of the space, then their portion of the rent is $600/month and I would put that on their budget accordingly.
I see what you’re saying, and you’re right in this case. But daycare and additional housing (we didn’t need more than one bedroom before kids. I think it’s fair to take our pre kids rent subtracted from our post kids rent to come up with a “cost” to assign to the kids. 2K in our case.) which are probably the two major costs are costs that would not have to be borne otherwise. For us, this is 2000 housing plus 2 times 1700 (two kids) = 5400 per month or about 65K per year. Before they’ve eaten a thing or worn any clothing! And this is post tax dollars. So, to make this 65 K, we need to make 100K in salary. Again, just to cover additional housing and daycare.
As I said, there are arguments to be made either way. It’s a matter of deciding whether you want to allocate all the costs of running a household across all the members or whether you want to figure out the incremental cost per kid. And BTW, there aren’t any better options. Either I continue to cover my husband on my insurance for $6000 per year, or he or we get coverage from his employer which costs roughly the same amount for inferior coverage. (If his coverage was less expensive , we would have all been covered under his to begin with). But it is a decision. It’s not always a matter of one way is correct and the other way is incorrect.
I think this depends how you look at it. If you fired one of your employees, who was housed in the same office building as the rest of your company, you wouldn’t write your next mortgage check for 19/20 of the usual payment. The bank doesn’t care if you have 1, 5, 15, or 20 employees in your building.
Usually I think I would have a bigger/more expensive house without kids, because I would have more disposable income, and could have nice things that weren’t covered in Hello Kitty stickers and Lego pieces.
True, but from my perspective, the point is how do I allocate that fixed cost? My new Marketing department takes up space that used to be used by the Accounting department. It doesn’t make sense to keep the portion of space used by Marketing on Accounting’s budget - I would allocate it to Marketing.
Same thing with kids. Yeah, I might keep living in the same house post-childbirth, but that doesn’t mean that the kid is living their for free just because we’re paying the same mortgage. Their room used to be my office, my wife’s library, something… now it’s not, and that’s a cost.
It just doesn’t make sense that the AVERAGE household income is $50,000 and the AVERAGE cost per child is $300,000 and the AVERAGE woman has two children. One of these numbers has to be off. The average family can’t be spending 2/3 of their income on just their kids. The numbers don’t make sense.
Median household income was $51k and change in 2012. However, keep in mind that that includes ALL households across the US, not just households with children. Lots of single people, lots of retirees in there. This document says that the median family household income is $65k while median non-family household income is $31k. (Not entirely clear what definition they’re using for family, but since it’s a Census Bureau report, probably family = people who live together and are related by blood or marriage.)
On a more personal note, I totally believe the $300k figure, at least for kid 1. We bought a house and a second car when we had the first kid - didn’t have to do that for the second.
As noted above, keep in mind that the income figures also include unemployed individuals, younger people who tend to make far less earlier in their careers, etc. Also, the childcare expenses as an average could be higher depending on where you live and/or who is taking care of your kids. Were I living in New York as opposed to the Midwest, my husband and I would be hurting a lot more than we are now. Also, private childcare through an individual when kids are babies is usually far less expensive than if you were to send them to, say, a Montessori or have a family member watch them (which is frequently free).
From a personal perspective, it helps that both my husband and I have fairly well-paid jobs. He’s a consultant and I’m in the higher end of middle management. I feel very fortunate that we have enough to cover our expenses as well as a large chunk of college savings for our kids.
But, in my neighborhood, more than half the families are comprised of families whose moms do not work or families whose moms work the same hours their kids are in school, which brings down their child-rearing expenses - particularly in younger years - significantly. If one of us didn’t work, our children would never have gone to daycare and their preschool costs would be lower because they wouldn’t go full time. We probably also wouldn’t be putting so much away for their college.
And neither group is really wrong. Having the open bar is only $12 pp above the sunk cost of having only beer and wine, but it still means that $30 pp comes out of the kitty to pay for it. It’s not as though $12 magically covers the whole thing, ya know?
Yep, and that was my point. Neither position as described* is clearly right or wrong- it’s all a matter of how you look at it in exactly the same way that my kids insurance either cost $600/3 or cost nothing additional since adding them didn’t cost a dime more than covering only my husband.
“as described” for a reason. There are other issues such as are the chances that running a tab cost will more than $12/per person (which is about two drinks), and what it’s worth to limit the potential cost to $12 per person and not have to worry that it might turn out to be $24 pp. Because the beer and wine option isn’t just “beer and wine” - it’s beer and wine and run a tab for anything else ( our choice, not the restaurants)
And of course, when you sell the house for a profit, you’ll credit your child with her share of the profit. Did you add the expense of that into your budget?
If I spent 17 grand per kid, we could get them each their own house and take over the block. That sounds appealing actually. I think my wife, son, daughter, and I will just each have our own in a series of 4 houses.
There are entire families that get by on that.
Though honestly, I find it difficult to determine the marginal cost per kid. A lot of people will have a 3BR or larger house even if childless, for example. Some people “need” extra empty bedrooms and consider it child abuse if they don’t have a pool, tennis courts, and a pony (I had a pony as a kid, fwiw, but I was relatively poor).
Housing and utilities don’t change much with additional kids up to a point. Food does. Clothing. Some things are optional, like outsourcing parenting. Most people don’t have nannies. Some parents need to pay for childcare, some just want to. Some kids go to private schools, many don’t. A lot of expenses are like that. Many things cost more for babies and/or kids during puberty, but less for the steadier growth years.
We live in a middle class house, eat cooked food, have a reliable non-flashy vehicle, wear new functional clothing, have cable/internet/iphones, etc. My kids don’t cost much.
