Cost of raising a child
Date posted: May 7, 2012
Each year the government develops updated estimates of the cost of raising a child from birth to age 18. New numbers are out, and N.C. State University economist Mike Walden explains what they show.
“Well, before I (do that) … let me tell you what the government is doing. What they’re doing is they’re trying to estimate again what a family will have to pay from birth … through age 18 for a child for things like food, clothing, recreation, education — as well as a portion of the family’s home and vehicles that are there to service, if you will, the child.
“So, obviously (they’re) not (calculating costs for) the entire house or entire cost of the car, but some part of it. And what the federal government does is they give this number for three different budgets: a low budget, a medium budget and a high budget.
“The current numbers the federal government has generated is for a low budget, $206,000; medium budget, $287,000; and high budget, $477,000. And I should say this does include a factor for inflation. In fact, what the government is using here is a 2.6 percent inflation rate. So, these numbers are including the expectation that prices will go up over time by 2.6 percent.
“Now I should say these are costs per child, and the more children you have, though, you won’t necessarily face those same costs because there are economies of scale. So, if you have one child, yes, these will be the cost; if you have two children, those costs would probably be somewhat less, because for example children can share rooms, perhaps share clothes as they age, et cetera.
“But nevertheless significant numbers — important numbers — for families to take into account.”
Category: Economic Perspective