CNN-Average cost of raising a child hits $245,000

[Frugal Firefighter]

A CNN article posted this morning states that the cost to raise a child for low income and rural families is $245,00 ($13,611.11/yr). Holy cow!  Their figures are based on "the cost of housing, food, transportation, clothing, health care, education, child care and miscellaneous expenses, like haircuts and cell phones."

We'll have our first kiddo here in January. There's no way this is true in the Mustachian realm, right? Does anyone have figures on how much a child costs/year under our lifestyle?

http://money.cnn.com/2014/08/18/pf/child-cost/

[SnpKraklePhyz]

100 years ago (actually about 20 years ago) Amy Dacyczyn covered the same issue. I don't remember the number she came up with but I remember a drawing she made with a kid and a price tag :) http://www.context.org/iclib/ic26/dacyczyn/ Here is a link to one of her articles.  Read the Tightwad Gazette!

[eyePod]

Well, if you're doing daycare, the cost isn't that far off. We were $760 a month and are now up to $860.40 in our new area. But that also allows both of us to work so it's definitely worth it from $$$ only. We're toying around with SAHM for a year though, so if we do that, it will save a TON. These prices will drop when the kid is out of daycare though.

Food is almost no extra costs at a young age. We do a few small vacations, but our ~2 year old doesn't have a cell phone yet. We buy most of her clothes on deep discount at Kohls or at thrift stores/garage sales/craigslist.

Long story short, kids impact your ability to become FI early.

[Bobberth]

It's a sensationalized story.  $245k over 18 years is $13,600/year.  Or $1,100/month.  Considering housing, health care and child care is included, and the fact that it is an average and is thus skewed up, that doesn't seem bad to me.  Can you do it cheaper? Yes.  Can you spend more? Obviously. 

[Jacana]

Depends on your situation. I would imagine with a mustachian lifestyle in Oklahoma it could be a lot lower. Near DC, full-time daycare at a center in our daughter's first year of life would have cost over $20,000, not including diapers, formula, food, etc which we would have needed to provide. Daycare out of a cheap licensed family home would have been about 15,000 in the first year. So, yeah. Expensive in the Northeast.

The article said low-income and rural average was 145,500 not 245,000, which is about 8000/yr. This also includes estimated child care costs. You'll probably be around or over that with daycare for the first few years, and lower without daycare. But after the kids are in public school, and with reasonable expenses in clothing, food, toys, camps, spoiling, etc, I'm sure you'll do it for less!

[frugalnacho]

That's like saying the average cost to live in a nice suburb of detroit is $60,000/yr.  No it's not, that is just what people are currently spending to do it.  They could easily slash that cost to less than half if they wanted to. 

[DecD]

If I add up the expense so far of ONLY childcare while we've both been working full time, plus unearned salary during the time I've taken off for unpaid extended maternity leave (5 months off + another 7 months at quarter time instead of full time work), it's already over $150K.  Not counting any other expenses.  Our kids are 7 and 3.

I'm not fussing, as this was a calculated choice.  We wanted kids. 

But the 'cost' doesn't surprise me, as childcare is expensive, and if you decide to take time off work, well, that's expensive too.

Raising kids isn't necessarily expensive if one parent will be staying home anyway.  But if one parent is missing out on wages or if you're spending $1K/month per child on daycare, well, that adds up.

[Frugal Firefighter]

Sorry about using the wrong cost. I went back to grab the number and looked at the wrong one.

In our area daycares are $25/day. With 251 working days in 2014, that alone is $6,275 so maybe in the initial daycare years it's not too far off the $8,000/yr for rural areas. We're strongly looking into a SAHM with a part-time business in the future, maybe a couple years out. I've also been contemplating side job work on my days off from the fire department vs. being a SAHD on those days. I make more money doing the side job, but the trade off of time with the child is tough to pass up.

That Amy Dacyczyn article was great. I'll probably be spending more time reading into the Tightwad Gazette since MMM is busy on his house.

[v10viperbox]

It's a sensationalized story.  $245k over 18 years is $13,600/year.  Or $1,100/month.  Considering housing, health care and child care is included, and the fact that it is an average and is thus skewed up, that doesn't seem bad to me.  Can you do it cheaper? Yes.  Can you spend more? Obviously.

Out here a single child pre-kintergarden can cost 900 a month purely in daycare. One more bedroom in my neighborhood increase the cost of the home by almost 120K.  I doubt that you could do under 400K, plus its not like the costs suddenly stop when they turn 18, after that is when they get really expensive if you are helping with school or housing.


But its all location dependent and lifestyle dependent like everything you can do it cheaper and in some cases better then the average.

[Bateaux]

If you include college, health insurance, cars and car insurance that number could go higher.

[franklin w. dixon]

A big trick in all of those numbers is that they include a fraction of housing as an automatic childcare expense. It's not necessarily wrong to think about it that way because people obviously do buy bigger houses to hold all their kids (and kids do of course need a place to live). But it skews the numbers up because for every couple who has a kid and stays in the same house, because it was big enough for 3 people in the first place, 1/3 of the rent or mortgage magically gets turned into childcare for statistical purposes.

[greenmimama]

I agree with previous posters, and I also have read the Tightwad Gazette, several times :)

The first time I read those numbers I was appalled, but we don't use daycare, but we are sacrificing me climbing an income ladder of sorts, I am a hairdresser, so becoming a SAHM drastically cuts what I would make, because if I ever try to get in it again, I will be starting from scratch and it takes years to build up a clientele, it was a decision we are fine with. But I can certainly see where the figures come with.

We would never drive a mini van if we didn't have 3 children ;)

[ABC123]

We live a pretty low-key lifestyle -- drive a small car, no fancy vacations, etc.  We have 2 kids, both parents work full time.  The oldest just started kindergarten yesterday, but we were paying approximately $800 per month for daycare/preschool for the two of them.  $800 x 12 months/year, x 5 years for each of them = $48,000.  Now we will have 1 in preschool and 1 in after-school care so it will be a little bit less than $800/month but it won't go down all that much.  So yeah, I can see especially for people in high COL areas who pay much more than we do for daycare, this could be a pretty reasonable amount.  You could of course save all sorts of money by having one parent stay home, but for us, each of our salaries are a good bit higher than daycare.

[Gone Fishing]

Tells a lot about our culture where none of these "studies" include any contribution from the children.  100 years ago, the cost of a child would be significantly offset by the labor they provided around the home/farm especially during their "prime" years between 10 and leaving the home.   My boys cut the grass, work in the garden, split wood, help me process game, etc, and learn something doing it!

[imustachemystash]

I don't think the price is that bad considering the joy and fulfillment my children bring into my life.  If you put it into perspective, that's about 1.5 years of combined income, and cheaper than a house in our area.

[Scandium]

Tells a lot about our culture where none of these "studies" include any contribution from the children.  100 years ago, the cost of a child would be significantly offset by the labor they provided around the home/farm especially during their "prime" years between 10 and leaving the home.   My boys cut the grass, work in the garden, split wood, help me process game, etc, and learn something doing it!

Somewhat true, but I don't live on a farm so rather limited what a child could add. I cut my own grass now anyway, but guess I could do something more productive while my child cuts it so there is some utility. Hard to see many other benefits a child could add though, definitely compared to the work of having one. If you want maximum money I don't think there's any question; don't have kids.

And where do you people here live where daycare is only $800/month?! Nicaragua? Try twice that here in the north-east. I didn't know it was that much more than other places (it does drop to only $1200 for 2+ y.o.)

[Dr. A]

And where do you people here live where daycare is only $800/month?! Nicaragua? Try twice that here in the north-east. I didn't know it was that much more than other places (it does drop to only $1200 for 2+ y.o.)

Um, New York City? I had my little guy in a center-based daycare/pre-school in Queens that ran $850 for a 2 year old. It was more before he turned 2, but not drastically ($990). Now he's 3 an in Massachusetts (not Boston, but not Central America) it's going to be under $800 when he starts at his new pre-school in a week. Though, unlike in Queens, they won't be making him lunch every day.

[Prairie Stash]

I read the USDA report last night, its better than the news. Keep in mind none of it is meant as a goal, it just a compilation of data.In 1960 a parent could expect costs (in todays dollars) of $198,560.

About 30% is for housing costs, 15% of that is for the extra room most people have.  Its pretty common for parents to get a bigger house so the kid can have its own room, when I was single I lived in a single room place which was a lot cheaper. Do you provide a bedroom for the kid? Utilities was also fun, who remembers their parents saying to close the fridge or shut off the lights? It seems fair to include some of the house cost and electricity into the mix.

Childcare/education was the next biggest 18%, think daycare and elementary school costs. It excludes University as that's not for kids. 

Food was also a big one 16%, 18 years is 216 months, at a modest $100/month that's $21,600, they found $181/month was typical.  Obviously some spend more and some less. 

There's also extensive regional variation, Northeast U.S. is far more expensive than Midwest. Also single children are more expensive than multiples, economy of scale kicks in. Hand me downs are awesome cost savers.

The big shocker is high income people spend more than poor people!

[Scandium]

And where do you people here live where daycare is only $800/month?! Nicaragua? Try twice that here in the north-east. I didn't know it was that much more than other places (it does drop to only $1200 for 2+ y.o.)

Um, New York City? I had my little guy in a center-based daycare/pre-school in Queens that ran $850 for a 2 year old. It was more before he turned 2, but not drastically ($990). Now he's 3 an in Massachusetts (not Boston, but not Central America) it's going to be under $800 when he starts at his new pre-school in a week. Though, unlike in Queens, they won't be making him lunch every day.

wow. We checked the three places around here and they were all ~$1600/month for infant care, 6am-6pm. Even the crappy chain ones. Not really any other options that I can see. Don't know why it's so much more here. This is DC/baltimore suburbs.

A coworker looked into moving to NYC though, and said he found that daycare was $2000+.

[Dr. A]

wow. We checked the three places around here and they were all ~$1600/month for infant care, 6am-6pm. Even the crappy chain ones. Not really any other options that I can see. Don't know why it's so much more here. This is DC/baltimore suburbs.

A coworker looked into moving to NYC though, and said he found that daycare was $2000+.

No doubt we were lucky to find a decent one near us that was that inexpensive, but it was possible. Your co-worker was not exaggerating. Especially in Manhattan there are plenty of $2,000+ options. I'm not sure what the suburbs looked like, we may have just been in a sweet spot being in an un-fancy outer borough.

[pdxvandal]

Good full-time daycare in Portland, Oregon, runs between $1,300 - $1,400 per month for infants/toddlers. We're paying 1k per month for our 4-year-old now. Portland, along with the Boston area, has some of the highest childcare costs in the nation. Not really sure why. at least in Portland. Daughter's moving to a private Catholic school in a few weeks for a mere $550 per month. It's like getting a raise.

[Gone Fishing]

I wonder if they are including the full additional cost of a family medical plan?  If they are, the incremental cost of a second child would be lower...

[totoro]

Isn't daycare a tax deduction in the US? 

It is in Canada so knock off 30% from the cost. 

In Canada you also get a year of maternity leave at many places with a minimum income guarantee, and sometimes a top up to full salary.  After that you would be in to daycare which can get expensive even with a tax deduction.  Ours wasn't (about $250 per month) because it was subsidized as one of us was in school and it was a university daycare.  Once they started school there was no care needed as I worked from home.

Clothes were mostly second-hand until middle school when they started to care.  Now it is a mix and more expensive.

When our kids were young we lived in university housing for families which was cheaper and nicer than an apartment off-campus. As for owning, well, if you are in an appreciating market and buy more house as a result of kids I suppose you made more and vice versa if you are in a depreciating market.  Housing is not just an expense given that it is also (generally and over time) an appreciating asset if you own. 

There is no question that kids cost money, but in Canada we also have a child tax credit for those in low income brackets that goes quite a long way to pay for basic expenses.

[totoro]

And here is a family of nine that demonstrates how little kids can cost without sacrificing happiness: http://theprudenthomemaker.com/index.php/about

[Jon_Snow]

Being childless isn't the only reason I'm one week from ER, but it is a MASSIVE one. This board is full of examples of "parenting on the cheap" (I don't mean to sound harsh), but still, it surprises me how much having kids is minimized in terms of executing FIRE successfully.

[Gin1984]

Isn't daycare a tax deduction in the US? 

It is in Canada so knock off 30% from the cost. 

In Canada you also get a year of maternity leave at many places with a minimum income guarantee, and sometimes a top up to full salary.  After that you would be in to daycare which can get expensive even with a tax deduction.  Ours wasn't (about $250 per month) because it was subsidized as one of us was in school and it was a university daycare.  Once they started school there was no care needed as I worked from home.

Clothes were mostly second-hand until middle school when they started to care.  Now it is a mix and more expensive.

When our kids were young we lived in university housing for families which was cheaper and nicer than an apartment off-campus. As for owning, well, if you are in an appreciating market and buy more house as a result of kids I suppose you made more and vice versa if you are in a depreciating market.  Housing is not just an expense given that it is also (generally and over time) an appreciating asset if you own. 

There is no question that kids cost money, but in Canada we also have a child tax credit for those in low income brackets that goes quite a long way to pay for basic expenses.

If your employer decides to offer a flex account, you can put $5000 pretaxed for daycare, but that is up to your employer.  We also have a tax credit of a small amount, unrefundable (for me it will be a $600 credit this year), but that is it for daycare.  There also is a refundable $1000/child and the $3950 deduction. 

[Daisy]

I'm childless due to medical reasons. So that's my perspective...

I hear people shocked about how expensive child care is, but say $1500 a month for a 40 hour week (or more since someone mentioned care from 6am-6pm) comes out to about $9/hr. I think that sounds like a reasonable amount of money to pay someone to take care of your precious cargo full time. I'm not sure I would trust a place that would charge me much less. I'd worry what kind of people they could hire at that rate that I would want to leave my children with. I'm not sure what the ratio is of child to worker, but at a very young age I imagine the ratio is small. Plus there's all of the other fixed costs on the location and food and stuff.

Oh well, I'm no expert on this but ran the numbers and found them reasonable.

[MrsPete]

Well, if you're doing daycare, the cost isn't that far off. We were $760 a month and are now up to $860.40 in our new area. But that also allows both of us to work so it's definitely worth it from $$$ only. We're toying around with SAHM for a year though, so if we do that, it will save a TON. These prices will drop when the kid is out of daycare though.

Beware of the idea that day care will disappear completely when your kids start school.  If both parents are working, you'll probably be paying something for either before school or after school care, and while that does vary widely depending upon your needs, it can still be substantial throughout elementary school.  I suggest you assume it'll be 20-30% the cost of preschool daycare, and you'll be safe. 

In fact, after-school care is one of my ideas for a retirement job:  Meet half a dozen kids at the bus stop, see them safely to your own house, feed them a snack, supervise homework -- say goodbye to them 2-3 hours later.  Most of your day is still free, and you'd know your "days off" well in advance.  That type of after school care for elementary school kids in my area runs about $50 a week.  Also, don't forget holidays -- working parents end up scouting around for day camps, etc. when school's closed for teacher workdays or holidays when parents are still working.  Our elementary school used to offer field trips (museum, park, bowling) on those days, and they used to run about $50 per day -- but they were fun, and the kids loved them.   

Being childless isn't the only reason I'm one week from ER, but it is a MASSIVE one. This board is full of examples of "parenting on the cheap" (I don't mean to sound harsh), but still, it surprises me how much having kids is minimized in terms of executing FIRE successfully.

No, doesn't sound harsh -- but also doesn't sound like something that's for me. 

I always wanted kids, and even after I had my first, I definitely felt that I "wasn't done".  No one on this board has ever suggested that you should give up your life priorities and major desires so you can retire early -- and, for many of us, not having kids might have been a money-saver, but it would've been too big a sacrifice.

[totoro]

Yep.  Kids cost money for sure, but they have also made me more motivated to make money. 

I'm not too high ambition so knowing that I wanted to provide a nice lifestyle for them and be at home definitely coloured my education and employment choices, which ended up working out extremely well for me financially.   

[isbjshaffer]

Holy cow...the fact that kids cost money at all is enough of a deterrent for me!

[frugalnacho]

Well, if you're doing daycare, the cost isn't that far off. We were $760 a month and are now up to $860.40 in our new area. But that also allows both of us to work so it's definitely worth it from $$$ only. We're toying around with SAHM for a year though, so if we do that, it will save a TON. These prices will drop when the kid is out of daycare though.

Beware of the idea that day care will disappear completely when your kids start school.  If both parents are working, you'll probably be paying something for either before school or after school care, and while that does vary widely depending upon your needs, it can still be substantial throughout elementary school.  I suggest you assume it'll be 20-30% the cost of preschool daycare, and you'll be safe. 

In fact, after-school care is one of my ideas for a retirement job:  Meet half a dozen kids at the bus stop, see them safely to your own house, feed them a snack, supervise homework -- say goodbye to them 2-3 hours later.  Most of your day is still free, and you'd know your "days off" well in advance.  That type of after school care for elementary school kids in my area runs about $50 a week.  Also, don't forget holidays -- working parents end up scouting around for day camps, etc. when school's closed for teacher workdays or holidays when parents are still working.  Our elementary school used to offer field trips (museum, park, bowling) on those days, and they used to run about $50 per day -- but they were fun, and the kids loved them.   

Being childless isn't the only reason I'm one week from ER, but it is a MASSIVE one. This board is full of examples of "parenting on the cheap" (I don't mean to sound harsh), but still, it surprises me how much having kids is minimized in terms of executing FIRE successfully.

No, doesn't sound harsh -- but also doesn't sound like something that's for me. 

I always wanted kids, and even after I had my first, I definitely felt that I "wasn't done".  No one on this board has ever suggested that you should give up your life priorities and major desires so you can retire early -- and, for many of us, not having kids might have been a money-saver, but it would've been too big a sacrifice.

How do you know your day off in advance?  I doubt the jobs of the parents of all 6 children will align with the school schedule.  Seems like a day of no school will create even more demand for you to watch those kids for an even longer period.   

[totoro]

Having children has meant I have spent less on things like travel and more on housing, which has appreciated where I live. 

We made over $200,000 on our first home which we would never have purchased had we not had kids. 

I'm not sure what investment decisions we would have made without kids, but there is a very good chance that the ones we did make have meant that the costs involved are radically reduced. 

I think at base though a lot of people, me included, have no problem working longer for the benefits having children brings to life.  Just like others might want to travel and are willing to work longer to get to FI or save more to have more income in retirement to do this.