Ask any parent about raising a child, and that parent will likely say that the job isn’t easy. It’s also expensive, and those costs start early.
While child care costs add up for multiple reasons, child care is one of the biggest costs, due to economic demand.
“Child care is the number one reason why it is so expensive to raise a child in the United States. This boils down to simple supply and demand, where the demand for childcare, camps and other child care far outstrips the availability of programs,” Sabatier said. “This causes daycares to raise their prices and creates a vicious cycle where now daycares have outpaced inflation and definitely outpaced wage growth, which prior to this year was historically low. Family salaries and budgets just can’t keep up.”
Providing children with a decent education has also put a dent in family budgets.
“The cost of education has also increased,” said Michael Ryan, a former financial planner and founder of MichaelRyanMoney.com. “I’m not just talking about the cost of college, which has far outpaced inflation over the last 30 years. The cost of ‘free’ public education has risen. Families are now expected to bring supplies to school during the first week of school.”
Add to the mix tutoring or other enrichment programs and the pressure of paying for a private education these days, and the expense adds up.
“Parents also face the astronomical costs of all the extracurricular activities kids have today,” Ryan said. “When I grew up, little league was a few bucks and we all shared a bat. Now the kids have $100 bats and $75 an hour lessons. Or ask a dancing mom how much the lessons cost.”
“Frankly, it’s scary how common it is now for families to spend more than $10,000 on these activities,” he added. “All of these factors combine to make it very expensive to raise a child in today’s world.”
How much does it cost to raise a child?
It’s a sobering number, but raising a middle-class kid will cost you $286,000.
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That’s the total for raising a child for a middle-class American family, according to the US Department of Agriculture, with additional data from CNBC. The $286,000 figure comes from older USDA data showing the cost of raising a child from birth to age 17, for a middle-class family of four, taking into account recent inflation.
“Almost everything gets more expensive over time, so it’s no surprise that the cost of raising a child has increased,” said Grant Sabatier, author of the book Financial Freedom and co-founder of Bank Bonus. “The most surprising thing is how quickly it has escalated.”
Given that the study only tracks how much it costs to raise a child from birth to age 17, the figure is even more frightening.
“It doesn’t take into account the huge cost of college that exceeds the costs of childcare, salaries and even health care,” Sabatier said.
Other financial gurus say rising inflation is making a toxic financial situation worse.
“Because of inflation, we’re talking about an 18% increase in parenting costs since 2015,” said Elle Kaplan, CEO of LexION Capital, an investment management firm in New York, NY. often mom, in an impossible bind expecting them to work full time and take on so much in terms of parenting and domestic responsibilities. That has to stop.”
End of the baby boom?
Perhaps high price tags are the reason so many American adults are childless these days.
“Many people choose not to have children,” said Jay Zigmont, a financial planner and founder of Live, Learn and Plan, a financial advisory firm. “A recent Michigan study found that more than 27% of adults identify themselves as childfree (meaning they don’t have children and don’t plan to have children), while US Census figures found that about 11% of the US over the age of 55 do not have children. “The bottom line is that there is a growing trend.”
Researching her new book, “Portraits of Childfree Wealth,” Zigmont found that finances were a frequently cited reason for not having children.
“While there are many other reasons people choose not to have children, including medical, environmental and social concerns, the $286,000 price tag definitely makes having children less appealing to many,” he said.