03/22/2007

Kids Cost a Pretty Penny

by Karen Willis

Children are priceless. Well, not really according to the government. In fact, the cost of raising a single kid runs about $16,000 a year for those U.S. families in the upper third income bracket. And the numbers don't stop there. The U.S. Department of Agriculture estimates that families making greater than $70,200 per year will pay a $269,520 to rear one of their offspring. While the return on investment cannot be quantified, the expenses are for real. Lower-income families experience similarly shocking costs, with each child requiring $184,370 from birth to the age of seventeen.

What child-related bills are parents footing these days that result in the exorbitant costs to rear kids? The USDA organizes these expenditures into seven categories including housing, food, clothing, transportation, health care, education, and child-care. To break it down even further, housing costs account for rent or mortgage, maintenance, repairs, insurance, utilities, and on and on. And the 'what-ifs' aren't even considered - potential visits to the ER for example.

While Adam Smith encouraged parents to employ their young in The Wealth of Nations claiming "Labor is ... so well-rewarded that a numerous family of children ... is a source of opulence and prosperity to the parents," there are other ways to quell costs. You can start right away.

Tip number one: leave the price tags on those newborn clothes. While doctors have the capability to predict the size of an unborn child, we all know little ones can be unpredictable. In the event Junior is an inch or three longer than expected, those new rags can be returned or exchanged.

Tip two: Avoid day care. Several studies show that the cost of day care exceed even a full-time paycheck. For some, companies offer on site daycare or money saving options. All in all though, the costs typically exceed what one earns on the job.

Tip three is probably the most useful - simply tracking spending habits and figuring out where the leakage is.

While the numbers don't lie, the factors contributing to the reports on the annual and lifetime costs of raising children aren't flawed. On the downside, they all cap off at the age of 17 - meaning the cost, which in four years can equal those first 17, of sending your child to college aren't even considered. Neither are all family situations including child support payments, or foster care cases.

And the good news - people with children have the government's support! The government offers aid to parents who qualify for the Child Tax Credit receive a credit up to $1000. The Child and Dependent Care Credit is also available for qualifying parents with children under the age of 12. It provides a tax credit based on a percentage of your expenses for childcare, daycare, or adult daycare services.



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