Cost of Raising a Child

Glenn Reynolds points us to an article at Shine about the cost of parenting:

Everyone who has ever become a parent can testify to the financial challenges that go with raising kids. In fact, the average cost of raising a child to age 17 is over $150,000 per year.

I’m calling BS on this. I can’t even fathom a way that it costs that much per year to raise a kid, let alone averages to that much. The only possible way that works is if parents making over $150,000 a year give up their job to raise their kids. But I’m pretty sure that puts the earner in the top 5%, meaning there just aren’t enough of them to skew the results that high.

First off, logically speaking, if it costs $150K per year to raise 1 child, isn’t that saying that only people who make more than that can raise kids? I can assure you from personal experience that’s an incorrect statement.

I gave up my job just prior to the lass coming along and at the time I was at $65K per year. On my trajectory at the time, I might be earning around $80K today, assuming I’d stayed out of management. That leaves another $70K just to hit the mark cited by the article. I manage the household finances and I can tell you that it does NOT cost $70K for both kids, let alone one.

Most of the stuff that really hurts when it comes to raising kids are 1 time kind of costs, like birth. But that only happens once per kid. At least, that’s how it was the last time I checked. Anyway, along those lines, things like camp, sports, dance and music lessons and the like are typically on the order of hundreds of dollars per year.

Taxes, you say? Not likely, says I. Sure, that’s a big cost, but there’s that “child deduction” thingy that reduces the tax cost, for one. And for two, taxes are still only in the $5K range (local taxes that contribute to public schools), and that likely way to the high side.

The only other big-time cost might be a Nanny or daycare, but then the situation is likely that the parent has chosen not to give up working. So the major driver of the cost goes way down. Daycare can run $20K to $30K depending on the frequency. A Nanny is essentially an employee, so that’s the most expensive option. But even then, they aren’t being paid anywhere near $100K, let alone $150K.

There are other hidden costs as well, but they still don’t add up. Buying a car big enough to haul the munchkins around, along with all of their crap (not literally, at least, not always…) and the booster seats or child safety seats, certainly cost a lot. But what parent is buying a new car on a yearly basis?

I’d like to see the work done to arrive at this number. It just seems preposterously high.