The High Cost of Raising Kids

While perusing GetRichSlowly yesterday*, I discovered an amusing comic strip related to the high cost of raising kids.

(click to enlarge)

This is funny (to me at least) in large part because it’s true. As a father of four, I can say with certainty that kids are expensive. Yes, there are lots of things that you can do to cut costs — and we do many of them. But there’s no avoiding the fact that it costs more to support more people. And that extra money spent takes away from what you could otherwise be adding to an investment portfolio.

Of course, this isn’t to say that kids aren’t worth the cost. That’s obviously a very personal decision. In our case, we’ve certainly had no regrets. But that doesn’t change the fact that there are a number of financial tradeoffs involved.

It’s been suggested that the cost of raising a child from birth to age 17 is well over $200k. I’ve never sat down and tabulated the cost, but here are just a few things that come to mind.

  • Lost earnings (stay-at-home-parent) and/or childcare
  • Baby stuff, toys, etc.
  • Higher grocery bills for feeding more mouths
  • More clothing for more bodies
  • Larger house to accommodate more people
  • More home furnishings to fill that house
  • More expensive house from living in a better school district
  • Higher property taxes from living in a better school district
  • Private school tuition if you live in a bad school district
  • Larger car (depending on how many kids you have)
  • Gas money for all the extra errands, practices, etc.
  • Piano lessons, taekwando, sports registrations, etc.
  • Increased health insurance costs (premiums, copays, etc.)
  • Increased life insurance costs (a bigger policy to support more people)
  • Increased car insurance costs if/when you have a teenage driver
  • Increased travel costs (e.g., airfare x family size)
  • College education (if you choose to help them out)

And the list goes on…

Of course, you have to trade some of these things out against the costs you might incur in the absence of a family obligation. For example, due to the higher cost of traveling, you might opt for a relatively cheap summer camping trip or a trip to the beach rather than the trip to Europe that the couple next door just took.

And there are, of course, economies of scale… While some of these expenses increase linearly, others do not. The second (and third and fourth) kids don’t double (or triple or quadruple) your costs.

But the larger point still stands. Kids are costly, and you have to be comfortable with that (or at least aware of it) when deciding to start a family.

*Note: I actually discovered this article when reading JD’s article about the XKCD comic strip on compounding interest vs. earning more money. While some of JD’s numbers are suspect, he (and the comic strip) make an excellent point. While smart investing is great, you can’t ignore the power of increasing your earnings.

8 Responses to “The High Cost of Raising Kids”

  1. Anonymous

    Sure kids do cost money. And they are not for everyone. But it does seem strange equating kids to money, since to those of us who enjoy kids they are neither an asset nor a liability, they are just part of life.

  2. Anonymous

    Hmm, personal responsibility applies. I grew up in a house of 4 children and constantly heard from my parents that they couldn’t afford things. That influenced me (us) to have and raise only one child. His college education was paid for by the time he graduated and we gifted him with a future without any student loans to repay. We also take steps so that he won’t have us as a burden on him in our declining years (cross fingers). My father just died and we found that my mother is not provided for enough to meet her needs so I am looking for another job.

  3. Anonymous

    Time spent with children is a wonderful gift (to us anyway), and we have the future to look forward when we’ll share more time with them when they are adults. We’ll also (hopefully) be able to enjoy grandchildren. And, if we are so blessed, they will help us when we get older. I believe that we’ll find our children much more enjoyable than a large portfolio. A large portfolio just means more concern with how the investmentats are performing (or not performing as the case may be).

  4. Anonymous

    The financial calculation is important, but you can’t know the true cost. (Will your kid/kids be healthy or have high medical expenses, will they need special schooling, etc.) But you can know whether you are willing to forgo spending on yourself for nice clothes, expensive vacations, eating out if necessary without resenting the child on whom you have to spend money. If the answer is yes, then at least you will have a good attitude money-wise if you fall on hard times with a child or children you can’t “give back” once you have them.

  5. Anonymous

    I think considering the cost BEFORE you have kids is an incredibly valid point. It’s not saying they’re not worth whatever cost, but being financially prepared–or at least looking at your financed with kids in mind–will only help.

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