Cost to Raise a Child: Study Results

Last week's Business Week had some data distilled from Agriculture Department studies regarding the cost of raising a child through age 17. The question why the Agriculture Department would be interested in such studies is besides the point, but it is a bit curious. Anyway, I found the data interesting enough to search out the source document on the USDA website and here are some of the interesting things I discovered:

Not surprisingly, the amount of money a family spends on raising a child is proportional to that family's level of income. Families making under $45,800 on average spent $148,320 per child; families earning between $45,800 and $77,100 spent $204,060 and families making more than $77,000 a year spent on average $298,680. That's a big chunk of change, regardless of what income level you are at.

About one third of this total cost across income groups was spent on housing. Food accounted for 20% of the lower income group's spending, but only 14% of the high income group spending. Education accounted for just under 10% of the low income group spending but 13.5% of the high income group spending. Proportionally higher income families spend less on food and more on education, however in absolute dollar terms the higher income group spend more on everything.

By the way, if you happen to live in the "Urban West", such as is our case, the total estimated cost for raising a child to age 17 is around $315,000 if you are in the high income group. A similar family living in the Midwest would spend only $279,000 on average, and a similar family living in a rural community would spend $281,000 on average. That's pretty surprising. I always thought things would tend to be cheaper away from urban centers. Guess that's not necessarily so.

So how does this mesh with our own experience? Let's compare the education portion of the survey to our actual spending, since expenses on education are much easier to allocate than, say, expenses on housing. In our case, I think the numbers are way, and I mean WAY off.

According to the study, an average family in the Urban West would spend about $40K on education and childcare per child by age 17. Problem is, in the San Francisco Bay Area, day care costs about $1,000 per month per child in preschool. We also pay about $600 per month for my older son's after school program (and in both cases this is a city owned facility, not some expensive, yuppy program). Putting these numbers together gives me a total of about $127,000 on education and childcare alone, per child, through age 17.

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