November 7, 2013 | Posted in:Living on less
Apparently it costs about $15k every year to raise a child through age 18.
A sustained $15k per year for 18 years!? I call bullshit!
Silly Middle Class Americans with your big spending! You aren’t as bad as the High Income folks, though, who will spend around 166% as much (around $25k per year).
While I’ll admit that kids add an extra bit of fluff to the monthly budget I won’t concede to the notion that “kids are expensive”.
Let’s look at the annual budget breakdown of the cost of both of my children’s first years vs. CNN’s “Average American”.
All numbers will relate to the North Eastern United States (where I live), because they’re the highest in the country. And absolutely ridiculous.
Child Care and Education
Being in the Middle Class you’re more than likely not up for any big tax breaks when it comes to Child Care. You make too much damn money for the government to feel bad for you! You’ll get a little bit back on taxes, but not much.
The average family is going to spend around $4,000 per year on Child Care.
According to my ultra-scientific calculations that comes out to $375 per month. I’d say that’s a pretty substantial bite to the monthly budget.
Woah! I wish Child Care would only cost $375 per month. With one child we were spending $600 per month. After putting our second daughter into Child Care it dropped the individual price a little bit — but it still runs us $1,100 monthly.Average citizen spending: $4,000 Moneyseed household spending: $7,200 (1 child) | $13,200 (2 children)
We’re in a time of ever changing Healthcare costs. Especially with the Affordable Care Act rolling into effect, uncertainty in this category is rampant. However, the graphic says that Mr. and Mrs. Middle Class are spending around $500 a year per child for healthcare.
$500 for an entire year is negligible. $40ish bucks a month? I guess it needs to be factored into the equation, but this is less than the cost of going to the movies!
Our healthcare expenses are 100% paid for by our employer, so we save big here. I’m able to see how much our employer pays for our coverage though.
For a single person it’s $209 per month. For a family it’s $475 per month. So the full cost ($475) minus the coverage for both adults ($418) leaves $57 to cover our children. Both of them.Average citizen spending: $500 Moneyseed household spending (as if this was out of pocket): $684
Clothing and Miscellaneous
Up through this point, we’ve looked at some of the expenses that you really don’t have much control over. You can get cheaper healthcare and child care, but I don’t think those areas are worth skimping on.
You do have control when it comes to spending in the clothing and miscellaneous (whatever that means) category. Average North Eastern Americans are spending around $1,700 per year here.
My guess is that miscellaneous is referring to everything that isn’t clothing like: toys, towels, diapers, blankets, pacifiers, swings, changing tables, etc.
In 2012 with 1.25 children (daughter #2 was born in September) we spent a total of $848 on clothing and stuff. This year I’ve projected that we’ll spend $987 for 2 kids. This is mainly due to the fact that most things marketed towards first time parents are completely bullshit. And we were smart enough to realize that.Average citizen spending: $1,700 Moneyseed household spending: $848 (1 child) | $987 (2 children)
Here’s where shit starts to get ridiculous. Who the hell is spending $1,300 a year on their kids to eat food? Especially babies. The average American family is, but seriously what the hell are they feeding their kids!?
Baby food. Expensive formula. Juice boxes. Gimmicks.
2012 was a great year for our family. It was our first full year as parents. It was also a year where our average grocery bill DROPPED by about $25/week.
2013 has been even better. Our grocery spending has DROPPED another $25/week! So, two years in a row we’ve seen significant declines in spending, while continuously making our diets healthier over time.
While I feel inclined to post a negative number in this category, I will include the cost of formula (which we had to use for about 20 weeks for each child). 20 weeks worth of formula ran us $220 for both 2012 and 2013.Average citizen spending: $1,300 Moneyseed household spending: $220 (2012) | $220 (2013)
Now we’re on the meat of the “cost to raise a child”. The part that makes up around $7,000/year. The part that I don’t really understand whatsoever.
My children have almost ZERO effect on our housing or transportation costs. We didn’t run out and buy a minivan when our kids were born. And we didn’t shop around for a bigger house. We actually downsized our house around the time our younger daughter turned 1.
One logical expense in the transportation category is car seats. You shouldn’t buy used car seats, because you don’t know their history. But you CAN reuse the ones you do buy for subsequent children. A decent car seat costs around $150. We’ve purchased 2 car seats, and one $70 booster. $370 total.
As far as housing goes, I’ll assume this is where cribs fall into. We bought a decent crib from Target for our first daughter for $150. She has since grown out of it, into a bed, so now our #2 uses the crib.
No other area of our housing or transportation costs are directly related to the raising of our children.Average citizen spending: $7,000 Moneyseed household spending: $300 (1 child) | $220 (2 children)
Here’s a nifty table with all the numbers
|Average US Family (Northeast)||Moneyseeds with One Child||Moneyseeds with Two Children|
|Tax Breaks!||Already factored in||-$2,450||-$3,400|
This is why I think the numbers are bullshit
CNN’s “Cost to raise a child” interactive graph lets you change between regions and income brackets. I flipped through all of the options and made a few observations.
It’s understandable why it would be more expensive to raise a child in the Northeast than the Midwest or the South. The cost of living is higher in the Northeast. Makes sense.
It even makes sense that there is a spending gap between Low and Middle income families. Lower income families usually qualify for more tax breaks and assistance programs than Middle or High income earners.
But why the hell is there such a HUGE disparity between Middle and High income earners? In the Urban Northeast High income earners, on average, will spend $168k more over 18 years on their children. That’s a difference of over $9,000 per year.
This is where you have to understand that the “high cost of having a child” is based on your personal spending HABITS — rather than natural costs. Bigger houses, more luxurious vehicles and private schools are a choice. It’s lifestyle inflation. It’s sickening.
Raising children doesn’t need to be expensive!
Raising children has a certain stigma of being expensive. Personally, I hate when people use blanket statements like “this or that is expensive”. If we give in to these notions that “things are expensive” they will ultimately get the better of us. We’ll end up spending more just because we think that it’s the norm. This goes for anything from cars to electronics to vacations to children.
I don’t question the accuracy of CNN’s statistics either. The Average American is awful with money. Their bad spending habits are exacerbated when they bring children into existence.
You don’t need to be perfect to not be a sucker. As a family our spending isn’t perfect, but we continuously try to optimize our spending so that we can afford more stuff for less money.
One example of this is children’s clothes. When our first daughter was born we were given an enormous (and free) box of clothes from a friend. Since her daughter had grown out of them, she had no use for clothing sized 0-24 months. With gift cards from our baby shower we supplemented this new wardrobe with a few new items from Babies R Us.
It was through this process that we realized how EXPENSIVE it is to buy brand new baby clothes. Since then, all clothes shopping has been done at Goodwill, or similar thrift stores. You can literally buy an entire bag of clothes for the price of one single outfit at Babies R Us. Awesome clothes too. Our kids are the best dressed kids at daycare.
There isn’t much wiggle room when it comes to healthcare and childcare costs, unfortunately. But these two things are SUPER important to a child’s life. Can you really put a price on health or education? Obviously we don’t want to experience price-gouging, but instead of complaining about how much each of these specific things costs, let’s focus our attention on the things that we have the power to control…
…like the costs of food, clothing, miscellaneous, transportation and housing!
I’m not going to go in depth for each category, because I think it’s redundant. And the point is very simple: Some things are price non-negotiable, deal with it. Everything else is a choice and you have the power to spend smart or spend like the Average American.
What are your child care costs like? Do you think the numbers are as bullshit as I do? Explain in the comments below.
**Oh yeah! We’re expecting another baby in March. But don’t expect our spending for 3 kids to be any higher than the Average spending for one