# Raising a Kid Costs An Arm and a Leg

You may have heard the recent report that raising a kid costs a fortune. To be more specific, the government estimates that it costs \$300,000 over the first 17 years to raise a child. Gulp.

But don’t worry, it gets worse. Add in the cost parents spend on children after age 17 and the income parents forgo during the child rearing years and the cost inches up to a mere \$900,000!

The number comes from an article by Carl Bialik of the WSJ. The number includes the cost of college and the lost opportunity cost for not investing the college tuition.

Now at this point you may be saying it’s impossible to spend \$900,000 on little Johnny because you won’t make that much during his first 20 years or so (at least not after taxes). Not to fear. The United States Department of Agriculture has developed a calculator to help you estimate the cost of raising your little darlings. You can check it out here.

The USDA also keeps copies of its past estimates on raising children. The oldest report I could find online dates back to 1995. As with its current report, it provides three cost estimates based on family income (see graph above).

In 1995 the middle income group spent \$145,320 to raise a child, adjusted for inflation. In the last 17 years the cost has doubled. We can all thank inflation for that increase.

Happy parenting.

Topics: Personal Finance

### 4 Responses to “Raising a Kid Costs An Arm and a Leg”

1. If it’s \$145,320 after adjusting for inflation, how is inflation to blame for the more than doubling in cost?

Interesting statistics on the whole though. I wonder what the trade-off is on having children sooner (while average costs are lower) versus waiting until your income is higher.

2. Personally I believe that everyone should run the calculator provided by the USDA with the numbers from their own budgets. Since this is just the average it represents no one (Don’t you love statistics?). After running the numbers in the USDA calculator I got around 360,000 to raise 4 kids to age 18. Must be a bulk discount or something ;-).

3. The total number accounts for future inflation as well.
In 2010 the spending range for one year was between \$11,880 and \$13,830.
Now in 2011 the value ranges between \$12,290 and \$14,320.
Thats about 3.5% increase which is pretty typical inflation increase from one year to the next. They then add up all the numbers and assume inflation in the future so the total compounds based on future inflation.

4. Kids definitely cost money. But if you only think of kids in financial terms, pity the kids. You can certainly do all the planning and calculations you want, it is good financial advice, but kids are about family, not finance. So don’t spend too much time worrying about the financial part, just enjoy them!