Are Kids Just a Money Pit?

Are Kids Just a Money Pit?

A recently published report, released annually by the Department of Agriculture, states that the cost of raising a kid (birth to 18) born in 2013 is $245,340. You can find out more about the study here. I have a confession to make — I am a total math nerd, and upon seeing this I immediately wanted to crunch the numbers to make sense of it, so here goes:

First of all, the report breaks it down by five categories:

-    Housing (30 percent)
-    Child Care and Education (18 percent
-    Food (16 percent)
-    Transportation (14 percent)
-    Other (health care, clothing, miscellaneous) (22 percent)

The annual cost is $13,630, so the categories would look like this:

-    Housing $4,089/year
-    Child Care and Education $2,453.40/year
-    Food $2,180.80/year
-    Transportation $1,908.20/year
-    Other $2,998.60/year

Time for some real talk: I don’t understand this housing figure. Is it to be assumed that when you add a family member in the house, they are to share in the mortgage payment? Wouldn’t you otherwise have to make the same payment, regardless of the child? The only housing expense my son incurs is electricity, and his share couldn’t be more than $500 a year at the absolute maximum. If my son weren’t in the picture, everything else housing-wise would remain the same. Keep in mind, I’m talking about adding one child to a family, so most people with two bedrooms could accommodate a child without their housing expense going up significantly. (For those who live in a one-bedroom apartment and have to get a larger place, the situation would be different.) If you want to include furniture expenses in this figure, then perhaps you could average it out to about $1,000 a year, bringing (our) housing total up to approximately $1,500.

Next we have child care and education. This one is very tricky because it can be all over the place. For someone with a daily nanny and private school, the cost would be exorbitant. For us, we have a babysitter we use for date nights (rarely), and he goes to public school. Her fee is $20 an hour, and we need her maybe three times a month for four hours each. That comes out to $240 a month or $2,880 a year — slightly higher than the study's figure.

The food category baffles me. Kids eat like crazy. They are saying kids cost $181.73 a month for food, but I would say my 5-year-old son is at least $500. We don’t take him to fancy places or anything like that, but that still adds up to $6,000 a year, and truthfully I’m being conservative.

Then there is the transportation category. Where does this come from? The gas it takes to drive him to school and appointments and activities, perhaps? It comes to $159.02 a month, which I think might actually be dead on. The one thing to factor in, though, is when he turns 16, he will be paying for his own car and his own gas, so for two years it would be significantly reduced. Either way, I won’t dispute this category.

Finally we have the “other” category. The study has lumped health care, clothing, and “miscellaneous” all together. If we look at each one, I can shed a little more light on it. For health care, we pay approximately $100 more per month, so that is $1,200 per year. Clothing can vary, but I would say we spend about $1,000 per season, with two seasons per year, equaling $2,000 a year. Finally, the “miscellaneous” category, which is toys, vacations, other kids’ birthday presents, etc. I would say conservatively that this averages to about $3,000 a year. Yes, we spoil our child, and it becomes painfully obvious in this category. Our personal “other” category would total $6,200 a year. Yikes.

To review our personal expenses for our one son:

-    Housing $1,500/year
-    Child Care & Education $2,880/year
-    Food $6,000/year
-    Transportation $1,908.20/year
-    Other $6,200/year

The total is $18,488.20/year – much higher than I originally expected. This amounts to $332,787.60 for a grand total for years 0-18. And then stack on another $500,000 if we end up paying for his college. All in all, I think the cost of having a kid pushes about $1 million in their lifetime, but as the saying goes, having a kid is priceless.


