Sunday, August 18, 2013

How Much Does It Cost To Raise a Child? We Need To Look at These Numbers

A little over a week ago, CBS reported that it costs $241,080 to raise a child from birth to adulthood. I've spent a lot of time looking at that number, because I have 2 children, and we're roughly halfway through their rearing and there's NO WAY I've spent $241,080 on them so far, for the simple fact that I haven't made that much money.

There's a breakdown of how the USDA says we're allocating this $241,080, with a chart comparing how the same information in 1960.

I find it amazing that housing costs have only gone up 1% while the size and cost of houses has gone up exponentially. In the 1960's, a new house, on average, cost around $12,700. Today, that number is closer to $250,000.

To afford these more expensive houses, both parents are working outside the home, more often than not. We've seen the childcare expense go from 2% to 18%: in the CBS story, we see a young man who's wife makes six figures staying home to provide childcare because they can't afford it.

I'm puzzled by some of these other numbers. Why has there been a 10% increase in the cost of food; 5% in clothing, 4% in health care? Part of this may be attributable to having both parents work outside the home;  in homes where one or more parents are in the home more regularly, these costs are consistently lower.

When someone in the home cooks dinner, you don't go out to a restaurant. Yet it is commonly reported that the typical American family eats out 4-5 times a week; the US Bureau of Labor Statistics said the average American family spent $2,505 in restaurants in 2010.

And as for that growth in the miscellaneous category? In the 1960's, kids didn't have cell phones, lap tops, tablets or video games. While tech is ubiquitous among all generations, it's important to recognize that this is an expense parents didn't have 40 years ago. Today, video gaming is a $66 billion dollar industry - and most gamers start playing while they are still children.

Raising Kids When You Don't Have $241,080

Childcare, food, clothing, and health care are all controllable expenses. As parents, we can make lifestyle choices that bring these numbers dramatically down - but we have to be willing to go against what society tells us we should do, and instead do what actually makes sense for our families and our finances.

To the people who say this is impossible, I'd like to remind you that nearly half the world's population - 2.8 billion people - survive on less than $2 a day. Nothing is impossible! Although certainly we are aiming for a better standard of living than that.

I'm not advocating for a life of self-denial and no pleasures. However, anecdotal observation has shown me that the people who are spending the most on their children are not actually the happiest, nor do their children overwhelmingly appear to be more successful in the long run.

We need to be aware that numbers and reports like this serve a cultural purpose. By purporting to describe what's typical, what's average, what 'everyone else' is doing, these reports contribute to a "Keep Up With the Jonses" pressure that is killing us.  Couple that with advertising that continually tells us we're too busy to cook, that there are all these fun, brilliant restaurants, that your kids need the hot new looks for school (and a cart full of supplies for one kid, thank you, Target!), and my personally favorite, that we've got all kinds of illnesses we need to talk to our doctor about, and you get a lot of bad economic decision making as a result.

A Consumption Based Economy

Consumer spending - money that people like you and me spend in retail shops, restaurants, car dealerships, and more - accounts for 71% of the economy. But in return, what do we get? Schools that are underfunded, infrastructure that is falling down all over the place, foreign policy most people don't even know about much less agree with, and a government that spies on us.

This is not a good deal.

It shouldn't cost $241,080 dollar to raise a child. And if it did, I'd expect that child to be exceptionally well educated, extremely healthy, and prepared to change the world when they reached maturity. That's not what we're getting, even if it is what we're spending. Changes to the system are essential, and maybe it begins by buying less stuff for our children and spending more time with our children.

What Do You Think?

I'd love to hear what you think about the report that it costs $241,080 to raise a child. Do these numbers sound realistic, given your own experiences? What do you do to provide your kids with a high quality of life on a limited budget?

These are the discussions we need to be having. I'd love to see the USDA reporting in 5 years that people have brought their spending down and raised their quality of life. I think we can make it happen. But it has to start with someone saying, "No, those numbers are ridiculous, and here's why..."
When people hear that there's another way and that they can make better decisions, they can opt out of the consumer based lifestyle and enjoy their lives more. Even a small change has a positive impact, and we all have to start somewhere!

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