Ask any parent about raising a child, and that parent will likely say the gig isn’t easy. It's also expensive and those costs start early.
While costs accumulate for child care for multiple reasons, child care is one of the largest costs, for economic demand issues.
“Child care is the number one reason it's so expensive to raise a child in the US. This comes down to simple supply and demand, where the demand for daycare, camps, and other child care far outpaces the availability of programs,” said Grant Sabatier, author of the book Financial Freedom, and co-founder of Bank Bonus. “This causes daycares to raise their prices and creates a vicious cycle where now daycare has outpaced inflation and definitely outpaced wage growth, which before this year was historically low. Family salaries and budgets just can't keep up.”
Giving children a decent education has also popped a big dent in household budgets.
“The cost of education has also increased,” said Michael Ryan, a former financial planner and the founder of MichaelRyanMoney.com. “I'm not talking just about the cost of college - which has far outpaced inflation over the past 30 years. The cost of 'free' public education has increased. Families are now expected to bring supplies to school during the first week of school.”
Add into the mix tutoring or other enrichment programs and the pressure of paying for a private education these days, and the spending stacks up.
“Parents also face the astronomical costs of all of the extracurricular activities kids nowadays have,” Ryan said. “When I grew up - the little league was a few dollars and we all shared a bat. Now kids have $100 bats and $75 an hour lessons. Or ask a dance mom how much lessons cost.”
“Frankly, it’s scary how common it is now for families to spend over $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 Raising a Child Cost?
It's a sobering number, but raising a middle-class child will set you back $286,000.
That’s the total of raising a child for a middle-class U.S. family, according to the U.S. Dept. of Agriculture, with additional data from CNBC. The $286,000 figure comes from older USDA data that shows the cost of raising a child from birth to 17, for a middle-class family of four, factoring in recent inflation.
“Almost everything gets more expensive with time, so it's not a surprise the cost to raise a child has gone up,” said Sabatier. “What's most surprising is how quickly it has escalated."
Since the study only tracks how much it costs to raise a kid from birth to the age of 17, the figure is even more frightening.
“It doesn't factor in the enormous cost of college that's outpaced daycare, wages, and even healthcare costs,” Sabatier noted.
Other financial gurus say that rising inflation is making a toxic financial situation worse.
“Due to inflation, we're talking about an 18% increase on child rearing costs since 2015,” said Elle Kaplan, chief executive officer at LexION Capital, an investment management firm in New York, N.Y. “It's hard - we place parents, often Mom, in an impossible bind by expecting them to work full time and take on so much in terms of child rearing and household responsibilities. That has to stop.”
End of the Baby Boom?
Maybe high price tags are why so many U.S. adults are going childless these days.
“Lots of people are opting not to have kids,” said Jay Zigmont, a financial planner and founder of Live, Learn and Plan, a financial advisory firm. “A recent study out of Michigan found that over 27% of adults self-identify as childfree (meaning they don't have kids and aren't planning on having kids), while the US census numbers found that approximately 11% of the US over 55 are Childfree. “The bottom line is that there is a growing trend.”
In researching for his new book, "Portraits of Childfree Wealth", Zigmont found that finances were a frequently mentioned reason to not have children.
“While there are many other reasons why people choose to be childfree, including medical, environmental, and societal concerns, the $286,000 price tag definitely makes having kids less attractive to many," he said.
