A Big Bundle New Estimates Underscore Just How Expensive It’S Become To Raise A Child These Days
Prospective parents beware: that bundle of joy will cost a bundle of bucks.
Though staples like food and gas are cheaper now than they were in the 1960s (after adjustment for inflation), the price of bringing up baby is rising, according to a new U.S. Department of Agriculture report.
A middle-income American family can expect to spend $153,000 (in 1997 dollars) to raise a child to age 17. With adjustments for inflation, that’s 20 percent more than the $25,229 a family typically paid in 1960 (in 1960 dollars).
But in making these estimates, the USDA report just considers the basics. A recent article in U.S. News and World Report estimated total cost to be nearly 10 times that, or $1.45 million over 22 years, after it factored in the child’s college expenses and wages forgone due to a parent leaving work for childbirth and child rearing.
The fact that children are expensive is not lost on expectant parents in the Inland Northwest. Many are at least concerned about how they’ll make ends meet. They talk about it with their friends, their financial planners, and sometimes with their childbirth instructors.
“One couple in particular said they would not plan to get pregnant until they had $20,000 in the bank,” said Jeanine Before, a natural childbirth instructor for Group Health Northwest.
That couple may be the extreme, but between stretches, exercises and instructional videos, the parents-tobe inevitably bring up the issue of money.
“They just are really uncertain about what to do,” Before said. “I turn questions like that back to the class. Usually there’s some people who have really investigated the issue.”
According to the USDA report, a family earning an average of $47,200 a year before taxes typically will pay between $8,060 and $9,170 a year (in 1997 dollars) to provide food, housing, clothing, and meet the basic needs of a child.
For that middle-income family, housing comprises the largest portion of child-rearing expenses, up to 37 percent, or between $2,500 and $3,000 a year for a single child. When families grow, many couples move to larger residences for space and a different quality of life.
The second-largest expenditure, food, accounts for 15 to 20 percent of the costs at $990 to $1,920, depending on the age of the child. (And this doesn’t take into account feeding the child’s playtime friends.) Child care for toddlers ages three to five was about $1,260 for that middle-income family and $1,860 for families earning an average $89,300 a year. In Spokane, the going daycare rate of $18 a day brings that annual expense closer to $4,500 (based on 250 days of service).
The sooner people realize how much their children will cost, the better prepared they can be.
That’s why Karene Simchuk took her high school family planning class to Deaconess Medical Center to learn about the expense of childbirth.
In the Spokane area, one day’s cost for mother and baby care, including labor and delivery, is $3,000 to $3,400, according to Community Health Education and Resources, part of Inland Northwest Health Services.
If the mother and child stay a second day, total costs rise to $4,400 to $4,750.
Not long after the class visit to Deaconess, Simchuk’s students planned a baby’s layette, including clothes, diapers, bedding and toys. The high schoolers took their lists to a franchise store and priced the items they had selected. They were stunned by the expense.
“It shocks anybody,” Simchuk said. “We come back and talk about the fact that in this day and age there’s a difference between what you need and luxury.”
The class also discusses the overall costs of raising a child. “If you just look at those figures, nobody would have a baby,” Simchuk said. “It’s very expensive to provide your child with opportunities.”
In addition to the basic expenses, there’s summer camp, sports clubs, piano lessons and tutoring, she said.
But there is more to it than money; otherwise people wouldn’t do it.
When she hit 30, Sigrid Bennett of Spokane knew she wanted a child - regardless of the cost.
Bennett and her husband Chris, who was just starting a business, tried to budget for the new baby.
“We sat down and put down how much the mortgage is, car payments and everything,” she said. They realized it would be a stretch.
Now when money comes up, they talk about how Bennett doesn’t want to work full-time when the baby comes in June and how they’d get by on less money. Bennett works as a claims adjuster for State Farm Insurance and her husband owns Bennidito’s Pizza.
“Even if I worked full-time, I’d still have child care to pay,” she said.
Now that there’s no turning back and they’ve planned a budget, Bennett and her husband have had a few shocks. “I never realized how expensive everything was,” she said. Her eyes were opened when they went shopping for new baby cribs and couldn’t find a decent, safe one for less than $300.
“And then you have to have a dresser and a changing table,” she said. Even pinching pennies, the first few years won’t be as easy as before.
“But it’s worth it to me to be tight,” Bennett said.
With three children of her own, childbirth instructor Before frequently discusses the subject of money with her friends. “Some of us are putting away monthly into accounts,” she said. Others get help from their families.
When it comes to planning their children’s future, Before and her husband don’t try to make money decisions alone. They talk to Tom Uryga, their financial planner at the Spokane Teacher’s Credit Union.
“One of the biggest issues is the increasing cost of college,” Uryga said. “Sometimes it’s daunting to people.”
When a family comes to him for help, he asks some basic questions such as how many children they want to have, how soon they’ll need money for a big expenditure and if they ever plan to retire.
Many of his clients are new families with student loans and credit card debt from before they were married. Those folks he steers away from saving large sums right away.
“Most young families don’t have a lot of money,” he said. “We want to take care of their debt first so they have a maximum efficiency for their money.”
For families who are just starting out and whose children are young, he recommends growth investments such as mutual funds. If the children are older and closer to college, he suggests certificates of deposit or money market accounts that often earn a lower interest, yet can be accessed more easily.
But he also tells them, “there’s many sources of funding for school. Certainly there’s putting money away yourself, money from family, student loans, scholarships and grants. There’s a whole bunch of sources.”
If a family is scraping to make ends meet, he suggests setting aside even $25 a month would provide for something.
But parents, no matter what their age, shouldn’t neglect their own future while trying to cover the costs of their progeny. Years ago, parents expected their children to support them in retirement. Today that’s not the case.
“Parents should provide for themselves,” Uryga said. “When you’re dealing with either college funding or retirement, children have an advantage over middle-aged people, the advantage of time,” he said.
The USDA didn’t exclude single parents in its study. It estimated that a single parent earning less than $35,500 would probably spend $107,100 to raise one child.
Lone parents who earned more than $35,500 would spend more on housing, transportation and child care than their married counterparts, bringing their total expense to $225,360, the report said.
But the financial side of raising a child is not all liability. Parents can still claim a dependent who is worth $2,650 in federal taxes this year. And they get a tax credit for child care.
While the economic returns of parenting may appear slim these days, it doesn’t seem to be stopping parenthood. According to the most recent vital statistics, in 1996, 6,940 babies were born in Spokane and Kootenai counties.
Maybe that’s proof that you can’t put a price on love and family.
Graphic: Bringing up baby