In setting my financial goals, there is nothing exempt from review and this includes the cost of children. I did a quick web search and found some good information on the cost of children from wikipedia. There is a table called Dual-Parent Family – USDA Average Spending per Child. This data was based on a survey by the United States Department of Agriculture that focuses on average spend per child at different ages. Depending on how much a child’s parent earns, the average spend on a child can vary. For example, those parents who earn less than $59,410 before-tax will spend an average of $169,080 on one child in 17 years. Parents who earn between $59,410 and $102,870 before tax will spend an average of $234,900 and parents who earn between $102,870 and $180,040 before tax will spend an average $389,670.
The factors that come into play are housing, food, transportation, clothing, health, child care/education, and a group titled miscellaneous. For those who have multiple children, we would simply multiply these averages out to figure out average spend per multiple children. Obviously, it can get very pricy once you start having multiple children. There is also another table that shows data on single-parent family average spending per child, which is not much lower than a household with dual-parents. This makes sense because a child still needs the bare necessities to live. The factors ranked greatest expense to least is as follows- education (46%), housing (19%), entertainment (12%), clothing (6%), food (5%), transportation (5%), healthcare (4%), and others (3%). I am surprised food and healthcare are not much higher on the list.
We all want to give our children the best, but we also need to make sure we are not living above our means. Additionally, if we are in the higher salary range we should manage our money in such a way that we can get ahead. I typically see the people who make more money, do spend more and this does not need to be the case. 12% of spend on a child is going to entertainment, which is significant and 7% more than the spend on food. I think we need to take a step back and understand exactly what we are spending our money on. Does it make sense? Should we do things differently? Even clothing comes in higher at 6% versus food at 5%. In my mind, food is much more important than entertainment and maybe even clothing. Air Jordans or some other luxury clothing is not necessary for life.
I am satisfied with seeing education at the top with 46% of total spend on a child. Education is extremely important and will help our children realize their full potential. As mentioned in a previous blog post titled Level of education and salaries, I talk about the connection between education and salary. The more education one gets seems to correlate with larger salaries. Of course, it is not always one for one, but there is more opportunity for better educated individuals. We should all keep this in mind.