Author Topic: $245k to Raise a Kid  (Read 7402 times)

zephyr911

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velocistar237

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Re: $245k to Raise a Kid
« Reply #1 on: April 15, 2015, 09:25:30 AM »
Forget about just the kids, I spend around $33K total on my whole family in a year, and I'm in the Urban Northeast.

The real cost is that my wife stays home, so we miss out on an entire income, which delays financial independence by a few years.

boarder42

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Re: $245k to Raise a Kid
« Reply #2 on: April 15, 2015, 09:44:26 AM »
13k a year on a child isnt extremely high i wouldnt think... yes its high for here.  but some back of the napkin math.  food = 1200 a year per kid.  daycare is 10k a year ... well now we are there practically.  and all those things include the fact that you buy a bigger house etc. 

zephyr911

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Re: $245k to Raise a Kid
« Reply #3 on: April 15, 2015, 09:51:54 AM »
Yeah, I actually meant to comment in the OP that this is nowhere near as bad as some of the estimates you see thrown around.

Gin1984

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Re: $245k to Raise a Kid
« Reply #4 on: April 15, 2015, 09:56:01 AM »
Given the cost of daycare (both full time for the first five years and summer/after school care) that actually does not seem unreasonable. 

thd7t

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Re: $245k to Raise a Kid
« Reply #5 on: April 15, 2015, 12:46:28 PM »
Forget about just the kids, I spend around $33K total on my whole family in a year, and I'm in the Urban Northeast.

The real cost is that my wife stays home, so we miss out on an entire income, which delays financial independence by a few years.
Well, this graphic includes housing, food, utilities.  It treats kids as an equal part of every expense.  Based on your spending, they'd say that you'd spend $198k over 18 years, if you spend $33k total/year. (EDIT: assuming you have one kid.  Then again, the article says that multiple kids are less expensive.)

infogoon

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Re: $245k to Raise a Kid
« Reply #6 on: April 15, 2015, 01:32:33 PM »
Well, this graphic includes housing, food, utilities.  It treats kids as an equal part of every expense.  Based on your spending, they'd say that you'd spend $198k over 18 years, if you spend $33k total/year. (EDIT: assuming you have one kid.  Then again, the article says that multiple kids are less expensive.)

In my experience, two kids are individually cheaper than one, but three raises the prices dramatically -- things like cars and houses tend to be built with an assumption that the customer is a family of four. The move from a sedan to a minivan, or a three-bedroom to a four-bedroom house, is surprisingly pricy.

velocistar237

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Re: $245k to Raise a Kid
« Reply #7 on: April 15, 2015, 01:49:23 PM »
...
Well, this graphic includes housing, food, utilities.  It treats kids as an equal part of every expense.  Based on your spending, they'd say that you'd spend $198k over 18 years, if you spend $33k total/year. (EDIT: assuming you have one kid.  Then again, the article says that multiple kids are less expensive.)

I have three kids. The article says the average extra annual cost for raising three kids is $33K, but that's actually our total annual expenses.

We do have a car, which we might not have if we didn't have three kids. Having kids hasn't changed our housing costs. Actually, we also put in a second bathroom, which we wouldn't have done if we didn't have kids. Maybe they're more expensive than I thought...

zephyr911

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Re: $245k to Raise a Kid
« Reply #8 on: April 15, 2015, 01:53:33 PM »
In my experience, two kids are individually cheaper than one, but three raises the prices dramatically -- things like cars and houses tend to be built with an assumption that the customer is a family of four. The move from a sedan to a minivan, or a three-bedroom to a four-bedroom house, is surprisingly pricy.
I see some awfully anti-Mustachian assumptions *cough*lifestylecreep*cough* in this comment.
My parents had 3 kids, and the biggest car I remember riding in, my entire childhood, was an Escort wagon. That's a compact, FTR.
And we had bunk beds. I fucking LOVE bunk beds! I want one in my guest room now.

thd7t

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Re: $245k to Raise a Kid
« Reply #9 on: April 15, 2015, 02:00:01 PM »
...
Well, this graphic includes housing, food, utilities.  It treats kids as an equal part of every expense.  Based on your spending, they'd say that you'd spend $198k over 18 years, if you spend $33k total/year. (EDIT: assuming you have one kid.  Then again, the article says that multiple kids are less expensive.)

I have three kids. The article says the average extra annual cost for raising three kids is $33K, but that's actually our total annual expenses.

We do have a car, which we might not have if we didn't have three kids. Having kids hasn't changed our housing costs. Actually, we also put in a second bathroom, which we wouldn't have done if we didn't have kids. Maybe they're more expensive than I thought...
I think that actually, part of the implication is that the kid(s) is(are) costing, but reducing the average expense/per person in the house.  Think of it in non-mustachian terms.  You have a 4-bedroom house where you keep your 7 seat SUV (garaged, heated seats) before you even have kids.  Then, they're lowering the average cost/person in the house.  Entertainment is cheap, because your huge cable package already has all the kids channels and your rooms all already have TVs! 

However, based on your numbers, the second kid the cheapest (unless they're triplets), but still around $130k to raise to 18, because for the beginning and end of their childhood, they're in with only one sibling.  The other two are solo for a bit and cost a fortune (maybe $135-140k).  That said, you're killing it!

Gin1984

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Re: $245k to Raise a Kid
« Reply #10 on: April 15, 2015, 02:09:37 PM »
...
Well, this graphic includes housing, food, utilities.  It treats kids as an equal part of every expense.  Based on your spending, they'd say that you'd spend $198k over 18 years, if you spend $33k total/year. (EDIT: assuming you have one kid.  Then again, the article says that multiple kids are less expensive.)

I have three kids. The article says the average extra annual cost for raising three kids is $33K, but that's actually our total annual expenses.

We do have a car, which we might not have if we didn't have three kids. Having kids hasn't changed our housing costs. Actually, we also put in a second bathroom, which we wouldn't have done if we didn't have kids. Maybe they're more expensive than I thought...
Do your kids not have a bedroom?  You would keep an extra bedroom without the kids?

mm1970

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Re: $245k to Raise a Kid
« Reply #11 on: April 15, 2015, 02:47:21 PM »
...
Well, this graphic includes housing, food, utilities.  It treats kids as an equal part of every expense.  Based on your spending, they'd say that you'd spend $198k over 18 years, if you spend $33k total/year. (EDIT: assuming you have one kid.  Then again, the article says that multiple kids are less expensive.)

I have three kids. The article says the average extra annual cost for raising three kids is $33K, but that's actually our total annual expenses.

We do have a car, which we might not have if we didn't have three kids. Having kids hasn't changed our housing costs. Actually, we also put in a second bathroom, which we wouldn't have done if we didn't have kids. Maybe they're more expensive than I thought...
Do your kids not have a bedroom?  You would keep an extra bedroom without the kids?
I personally would, yes.  We bought our (2BR, 1BA) house before we had kids.  There aren't many 1BR houses around, so I guess we could have rented for longer?  Even then we rented a 2BR for most of the time.  It was the combo office/guest room.

gimp

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Re: $245k to Raise a Kid
« Reply #12 on: April 15, 2015, 02:56:52 PM »
~$13600 a year seems a bit high per kid. I assume though, that just like cats, it's much cheaper per kid if you have more than one.

On one hand, it doesn't include the cost of higher education.

On the other hand, these are averages... I would guess many families either spend relatively little (food, clothes, shelter, basic child care, basic sports/activities) and other spend relatively more (private school, tutors, expensive sports/activities, expensive car at 16, etc). $13k is too much for the simple stuff and too little for the fancy stuff. Or so it seems to me. What the hell do I know. It's probably a normal distribution which means I'm precisely wrong.

thd7t

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Re: $245k to Raise a Kid
« Reply #13 on: April 15, 2015, 03:13:49 PM »
~$13600 a year seems a bit high per kid. I assume though, that just like cats, it's much cheaper per kid if you have more than one.

On one hand, it doesn't include the cost of higher education.

On the other hand, these are averages... I would guess many families either spend relatively little (food, clothes, shelter, basic child care, basic sports/activities) and other spend relatively more (private school, tutors, expensive sports/activities, expensive car at 16, etc). $13k is too much for the simple stuff and too little for the fancy stuff. Or so it seems to me. What the hell do I know. It's probably a normal distribution which means I'm precisely wrong.
I think my cats have had a linear increase in cost (only have 2).  Twice the food and litter.  Go to the vet twice as much.  Given how the graph is organized, multiple kids are cheaper, though.

mulescent

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Re: $245k to Raise a Kid
« Reply #14 on: April 15, 2015, 03:25:37 PM »
http://www.vox.com/2014/8/18/6030435/the-245000-price-tag-for-raising-an-american-child-in-5-charts

Daycare ALONE in my city is ~20k/yr.  Factor in increased housing costs and you're easily over the 245k estimate even without the obvious and unavoidable added costs (e.g. healthcare, food, etc).

mm1970

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Re: $245k to Raise a Kid
« Reply #15 on: April 15, 2015, 03:30:04 PM »
~$13600 a year seems a bit high per kid. I assume though, that just like cats, it's much cheaper per kid if you have more than one.

On one hand, it doesn't include the cost of higher education.

On the other hand, these are averages... I would guess many families either spend relatively little (food, clothes, shelter, basic child care, basic sports/activities) and other spend relatively more (private school, tutors, expensive sports/activities, expensive car at 16, etc). $13k is too much for the simple stuff and too little for the fancy stuff. Or so it seems to me. What the hell do I know. It's probably a normal distribution which means I'm precisely wrong.
I'm not sure if it goes down eventually.  Daycare for my toddler was $13k last year and went up to $16k this year.  Now, there's only 5 years of full time daycare, but after that it's still $3k to $6k a year for after school care and summer camp.

That doesn't even include food and clothing.  My boys are eating me out of house and home.

velocistar237

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Re: $245k to Raise a Kid
« Reply #16 on: April 15, 2015, 04:53:13 PM »
You would keep an extra bedroom without the kids?

Maybe. We had two bedrooms in another place before we had kids, but we certainly didn't need it.

LiveLean

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Re: $245k to Raise a Kid
« Reply #17 on: April 16, 2015, 03:16:51 PM »
Why is daycare considered the norm? If you're of Gen X age, you probably don't recall many kids growing up who were in daycare.

Private schools are now far too commonplace, most providing little value. (And I say this as a private school graduate who sends kids to public school). Eliminate daycare and private school from the mix, drive MMM vehicles, stop eating out all the time, stop paying for stupid vacations (Disney), stop giving young kids phones and letting them buy whatever consumer clothes and crap they want, and you can raise two or three kids to 18 for $245K. We'll certainly come under that for our two, now 12 and 9. Heck, with prepaid college done and the Brighter Futures college scholarship available here in Florida, we might get the two of them to 22 for $245K.

I mean, geez, isn't this what MMM is all about?

Gin1984

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Re: $245k to Raise a Kid
« Reply #18 on: April 16, 2015, 03:23:11 PM »
Why is daycare considered the norm? If you're of Gen X age, you probably don't recall many kids growing up who were in daycare.

Private schools are now far too commonplace, most providing little value. (And I say this as a private school graduate who sends kids to public school). Eliminate daycare and private school from the mix, drive MMM vehicles, stop eating out all the time, stop paying for stupid vacations (Disney), stop giving young kids phones and letting them buy whatever consumer clothes and crap they want, and you can raise two or three kids to 18 for $245K. We'll certainly come under that for our two, now 12 and 9. Heck, with prepaid college done and the Brighter Futures college scholarship available here in Florida, we might get the two of them to 22 for $245K.

I mean, geez, isn't this what MMM is all about?
Because women now have the choice to work, even once they have kids.  And no, MMM is not about not having the choice to work and I enjoy my job.  Just because I want financial independence does not mean that my daughter won't go to daycare and yes, private school.  Because I have found my private school education better than many friends who got public educations and I am not a fan of no child left behind or zero tolerance.  But we were not even talking about private school, just daycare. 

infogoon

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Re: $245k to Raise a Kid
« Reply #19 on: April 16, 2015, 03:36:36 PM »
Why is daycare considered the norm? If you're of Gen X age, you probably don't recall many kids growing up who were in daycare.

I don't remember a lot of parents who were paying off student loans, either. Getting a college degree and then staying home with the kids is unpalatable to a lot of people.

mm1970

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Re: $245k to Raise a Kid
« Reply #20 on: April 16, 2015, 04:34:48 PM »
Why is daycare considered the norm? If you're of Gen X age, you probably don't recall many kids growing up who were in daycare.

...

I mean, geez, isn't this what MMM is all about?
Because 70% of mothers of young children work?  The statistics in the 60's and 70's for Gen Xers was much lower than that.  56% in 1969.

In the Gen X years, people married younger and had children younger.
They were less likely to go to college.
They did not have student loans to pay off (see above).
They were unlikely to make enough money to pay for child care.

These days getting married later and having children later means that parents actually have, um, careers before they have kids (not always, but sometimes).
Like it or not, 2 parents working at any normal type of job (barring shift work, which I'd say still requires day care) requires daycare.

Isn't that obvious?

Now, if you argument is that MMM didn't have kids until he retired - well that's true.
If your argument is that everyone should do it that way, well...eh?  I'm not necessarily going to agree with that.
There are parents who are single (whether by choice or not)
There are new converts to MMM who simply cannot afford to quit.
There are families with 2 parents working because:
- they are saving
- they are hedging against future down turns
- they need the health insurance
- they like to work

Yes, you can raise a kid for less than that amount if you don't work and thus don't need daycare, but I would rather work.  Because I love my boys but I do not want to spend 24/7 with them.

mulescent

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Re: $245k to Raise a Kid
« Reply #21 on: April 16, 2015, 05:50:29 PM »
Why is daycare considered the norm? If you're of Gen X age, you probably don't recall many kids growing up who were in daycare.

Private schools are now far too commonplace, most providing little value. (And I say this as a private school graduate who sends kids to public school). Eliminate daycare and private school from the mix, drive MMM vehicles, stop eating out all the time, stop paying for stupid vacations (Disney), stop giving young kids phones and letting them buy whatever consumer clothes and crap they want, and you can raise two or three kids to 18 for $245K. We'll certainly come under that for our two, now 12 and 9. Heck, with prepaid college done and the Brighter Futures college scholarship available here in Florida, we might get the two of them to 22 for $245K.

I mean, geez, isn't this what MMM is all about?

Two answers to this question.  First, as others have pointed out, both I and my partner have careers that we won't give up regardless of FI (see today's post by MMM).  Second, even though 20k/yr for daycare is a lot it's much, much less than either of us make.  So, staying home would seriously disrupt our FI plans.  FYI, we both save about 70% of our incomes by not driving, eating out or doing any of the other stuff you mentioned - we are here, after all!

MrsPete

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Re: $245k to Raise a Kid
« Reply #22 on: April 27, 2015, 09:29:11 PM »
Think this through, folks, and the number won't seem so strange:

Ignore everyone on this board.  We're not average.  Just consider the average American, whom we've heard is two paychecks away from the streets.  We're talking about the average person who pretty much spends everything he has.

If indeed you spend 245K to raise a kid, that's $13,611 x 18 years. 

If the average family is made up of four people, and it costs $13,611 to support each one, the family is earning $54,444 per year.  If you average in the wealthy and the middle class and the unemployed, that's probably about right. 

So they're really just dividing the average American's earnings by four and saying "that's what it costs" to raise a kid. 

Some of the numbers are silly:  For example, the pie chart says that families spend more on housing their children than anything else -- something like 30%.  I disagree.  We bought a 3-bedroom  house before we had children.  We're planning to build a retirement house soon, and it's going to have 3-bedrooms as well.  Not because we're still expecting to house our children, but because it's a nice medium-sized house that's easy to resell.  We spent NOTHING ADDITIONAL because our children lived in the house -- well, okay, the water bill and the electrical bill went up, but we would still have had the bedrooms -- that's in no way our biggest expense! 

LiveLean

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Re: $245k to Raise a Kid
« Reply #23 on: April 28, 2015, 01:29:39 PM »
Why is daycare considered the norm? If you're of Gen X age, you probably don't recall many kids growing up who were in daycare.

...

I mean, geez, isn't this what MMM is all about?
Because 70% of mothers of young children work?  The statistics in the 60's and 70's for Gen Xers was much lower than that.  56% in 1969.

In the Gen X years, people married younger and had children younger.
They were less likely to go to college.
They did not have student loans to pay off (see above).
They were unlikely to make enough money to pay for child care.

These days getting married later and having children later means that parents actually have, um, careers before they have kids (not always, but sometimes).
Like it or not, 2 parents working at any normal type of job (barring shift work, which I'd say still requires day care) requires daycare.

Isn't that obvious?

Now, if you argument is that MMM didn't have kids until he retired - well that's true.
If your argument is that everyone should do it that way, well...eh?  I'm not necessarily going to agree with that.
There are parents who are single (whether by choice or not)
There are new converts to MMM who simply cannot afford to quit.
There are families with 2 parents working because:
- they are saving
- they are hedging against future down turns
- they need the health insurance
- they like to work

Yes, you can raise a kid for less than that amount if you don't work and thus don't need daycare, but I would rather work.  Because I love my boys but I do not want to spend 24/7 with them.

FYI -- Someone in Gen X is by definition born between 1965 and 1980. Gen Xers, folks now between 35 and 50 are generally highly educated and have had kids later.

MgoSam

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Re: $245k to Raise a Kid
« Reply #24 on: April 28, 2015, 01:35:37 PM »

Some of the numbers are silly:  For example, the pie chart says that families spend more on housing their children than anything else -- something like 30%.  I disagree.  We bought a 3-bedroom  house before we had children.  We're planning to build a retirement house soon, and it's going to have 3-bedrooms as well.  Not because we're still expecting to house our children, but because it's a nice medium-sized house that's easy to resell.  We spent NOTHING ADDITIONAL because our children lived in the house -- well, okay, the water bill and the electrical bill went up, but we would still have had the bedrooms -- that's in no way our biggest expense!

I don't disagree with you at all. I'm looking for my first home, and I want it to be 3 bedrooms so that I can rent out the rooms. If someday I get married, I hope to keep this or if I move out, then rent out the entire house. I don't want to have kids, so they don't factor in my thinking. That said, many people that do want kids will spend more on a home due to having a nicer school district. They also might upgrade their home more often as they have more kids. These costs need to get factored in. I don't know how they would quantify this, but it might account for significant differences over time.