What budget? Why worry? How do people do it?

[beaucoup]

You forgot to mention you don't have kids. DH and I would live much better than we already do if we didn't have kids.

That was a decision we made. And a decision you made. I didn't see the need to mention it. Still don't.

Its funny when you are young people tell you kids don't cost much. Have them. Just some food & diapers, etc.
Yet, later when they aren't doing as well as they could, they blame it all on having kids.

You can't have it both ways.

If you want to blame it on having children, then some of our friends who have grown children who have graduated college should be doing better, but still can't seem to figure out how. Its not the kids. Its their ways, their decisions on money, their priorities, or lack of know how in some cases.

In our case, buying a cheaper townhouse (same # of square feet than friends houses, same town) rather than buying a more expensive house was a smart decision & makes no difference about having kids or not. Money saved. Place to live. Same # of bedrooms & size. They choice the more expensive decision. See, didn't see the need to mention kids there. Not part of the equation. They aren't always happy with their decision either. Mortgage payment, work to fix stuff & take care of yard, cost of equipment to maintain said yard, etc. Nothing to do with kids.

 

[SaraJayne]

That was a decision we made. And a decision you made. I didn't see the need to mention it. Still don't.

Its funny when you are young people tell you kids don't cost much. Have them. Just some food & diapers, etc.
Yet, later when they aren't doing as well as they could, they blame it all on having kids.

You can't have it both ways.

If you want to blame it on having children, then some of our friends who have grown children who have graduated college should be doing better, but still can't seem to figure out how. Its not the kids. Its their ways, their decisions on money, their priorities, or lack of know how in some cases.

In our case, buying a cheaper townhouse (same # of square feet than friends houses, same town) rather than buying a more expensive house was a smart decision & makes no difference about having kids or not. Money saved. Place to live. Same # of bedrooms & size. They choice the more expensive decision. See, didn't see the need to mention kids there. Not part of the equation. They aren't always happy with their decision either. Mortgage payment, work to fix stuff & take care of yard, cost of equipment to maintain said yard, etc. Nothing to do with kids.

It's an easy thing for you to say they don't matter in the financial equation when you really have no idea how much they cost.

As mentioned above, we'd have a lot more disposable income than we currently do if we didn't have children. THAT was my point.

 

[beaucoup]

It's an easy thing for you to say they don't matter in the financial equation when you really have no idea how much they cost.

As mentioned above, we'd have a lot more disposable income than we currently do if we didn't have children. THAT was my point.

And my point was about decisions that everyone can make, then live with their decisions.

People have kids. Then don't be complaining they are the reason for not having money. Not you personally.

I don't consider too much of DH's income disposable. When I was working, THAT was the disposable income. Now it goes to necessities & savings.

 

[Pea-n-Me]

You forgot to mention you don't have kids. DH and I would live much better than we already do if we didn't have kids.

I admit this was my thought when reading that post as well.

Sorry beaucoup, it's a valid point.

Kids suck the life out of a budget!

Wasn't there an estimate saying to raise a kid from birth to age 18 was $200,000? Not counting college? Multiplied times however many kids you have? I believe this is probably true, easily.

 

[disneysteve]

Wasn't there an estimate saying to raise a kid from birth to age 18 was $200,000? Not counting college? Multiplied times however many kids you have? I believe this is probably true, easily.

This figure is nonsense. If you have 2 kids, that would mean $400,000 not including college. If you earn the US median income of $50,000, that would mean every single penny of your income for 8 full years went to child-rearing costs. Since about 1/3 of your gross goes to taxes, that would actually mean every single penny of your take-home pay for about 11-1/2 years out of 18 went to child-rearing costs. Take out your mortgage, utilities, auto expenses, food, health care and everything else we spend money on and you'd probably come out negative if the 200K figure was true, and that's if you earn 50K. If you only earn 40K, you could probably show that the 200K figure per kid would account for your entire income. That just isn't possible. Plus, that's for 2 kids. I know plenty of families with 3 or 4. They absolutely are not spending anywhere near 200K per child. They'd be completely broke and living in a cardboard box somewhere.

 

[Sith Lord 13]

This figure is nonsense. If you have 2 kids, that would mean $400,000 not including college. If you earn the US median income of $50,000, that would mean every single penny of your income for 8 full years went to child-rearing costs. Since about 1/3 of your gross goes to taxes, that would actually mean every single penny of your take-home pay for about 11-1/2 years out of 18 went to child-rearing costs. Take out your mortgage, utilities, auto expenses, food, health care and everything else we spend money on and you'd probably come out negative if the 200K figure was true, and that's if you earn 50K. If you only earn 40K, you could probably show that the 200K figure per kid would account for your entire income. That just isn't possible. Plus, that's for 2 kids. I know plenty of families with 3 or 4. They absolutely are not spending anywhere near 200K per child. They'd be completely broke and living in a cardboard box somewhere.

http://www.babycenter.com/cost-of-raising-child-calculator

In the north east, in a city, in a non-single parent home, making under $60K, the cost is $196,260. Without college.

 

[Pea-n-Me]

This figure is nonsense.

Not according to the USDA, who's been tracking the costs since 1960.

Forbes Report:

Have $235,000? That's What It Costs To Raise A Kid Today-Before College

Halah Touryalai, Forbes Staff

6/14/2012

Take your pick. Would you rather buy a 2012 Ferrari or would you rather–have a baby? The choice is yours but the cost for each is about the same.

This little guy will set you back $234,900 before he even heads to college. Good luck.

A report out today from USDA reveals that a middle-income family with a child born in 2011 can expect to spend about $234,900 ($295,560 if projected inflation costs are factored in).

That’s a 3.5% increase from 2010 and a 23% hike from 1960 (that’s when the USDA first issued this report) when the cost of raising a child was equivalent to $191,723.

The $234,900 represents costs for food, shelter and other necessities to raise a child for 17 years. The annual cost of raising a child today in a middle class family:$12,290 to $14,320, depending on the age of the child, according to the report.

Why the 3.5% jump from 2010? The report says the cost of transportation, child care, education, and food saw the largest percentage increases related to child rearing from 2010. Health care, clothing and housing costs also increased but to a lesser extent.

Of course, the cost jumps for higher income families; those earning more than $102,870 can expect to spend $389,670. A family earning less than $59,410 per year can expect to spend a total of $169,080 (in 2011 dollars) on a child from birth through high school.

Note that the $234, 900 figure does not include college costs since it covers the cost of raising a child for 17 years. With college costs soaring here’s hoping your little ones are smart enough to get a free ride–or least a call from Peter Thiel.

http://www.forbes.com/sites/halahto...it-costs-to-raise-a-kid-today-before-college/

If you have 2 kids, that would mean $400,000 not including college.

Yes.

If you earn the US median income of $50,000, that would mean every single penny of your income for 8 full years went to child-rearing costs. Since about 1/3 of your gross goes to taxes, that would actually mean every single penny of your take-home pay for about 11-1/2 years out of 18 went to child-rearing costs. Take out your mortgage, utilities, auto expenses, food, health care and everything else we spend money on and you'd probably come out negative if the 200K figure was true, and that's if you earn 50K. If you only earn 40K, you could probably show that the 200K figure per kid would account for your entire income. That just isn't possible. Plus, that's for 2 kids. I know plenty of families with 3 or 4. They absolutely are not spending anywhere near 200K per child. They'd be completely broke and living in a cardboard box somewhere.

Naturally there are adjustments for things like income level, number of earners in the household, and even region.

But yeah, it really does cost that much.

Full USDA report

 

[ilovemk76]

http://www.babycenter.com/cost-of-raising-child-calculator

In the north east, in a city, in a non-single parent home, making under $60K, the cost is $196,260. Without college.

They are allocating the part of the house they live in. Does a childless couple buy only a one bedroom house?

If a childless couple lives next door to a couple with 10 kids, and both houses cost the same, then the childless couple pays six times more for housing that the 10 child couple alone. The children are allocated the rest of the money.

They include childcare. A family with a SAHP is the one doing the childcare.

They also forget to deduct the child tax credit and the extra deduction on their taxes.

 

[disneysteve]

http://www.babycenter.com/cost-of-raising-child-calculator

In the north east, in a city, in a non-single parent home, making under $60K, the cost is $196,260. Without college.

That calculator says we will have spent $421,000 on our daughter. Sorry but it just ain't true.

Childcare and Education of $7,800 this year. Since she is 16 and attends public school, where exactly are we spending almost 8K. Sure we spend some money on school supplies at Walmart. Maybe $200. That's about it.

Clothing of $1,400? No way we spend over $100/month on her clothes.

Housing of $8,350. Really? We bought this house a while before we had her. Had we never had a child, we'd still live in the same house and have pretty much the same expenses. Yes, the utility costs are a little higher with a 3rd person in the house but that's about it. All of the other costs are fixed regardless of how many people live here.

Sorry but I see these reports just like everybody else does and I think they are complete and utter nonsense.

 

[Colleen27]

Sorry but I see these reports just like everybody else does and I think they are complete and utter nonsense.

I agree. There's no way we spend $2800 more per year than we would without kids, much less $2800 PER CHILD more. The clothing estimates are way high, the food estimates are way high except when it comes to my teenage son, the transportation numbers are just crazy (where exactly m I supposed to be driving my 3yo for $1000/year?!?), the child care/education numbers are high even for the one of our children in private school and are ridiculous for the two that attend public, etc.

 

[carrie1626]

Here's what I have to say on that....

I'm going to add one....people who buy a house that is more than they can realistically afford just because the bank told them they could buy it.

I understand there is a need for public assistance but it should be temporary, and used as a stepping stone and not a way of life. I have no problem at all helping people down on their luck and in this economy, finding a job is not as simple as just moving. Having said that, make decisions. If you make a bad decision, learn from it and don't repeat it.

If you came to my home for the first time AND THEN found out how often I've gone to WDW, you might think hmmmmmmmmmmmmmm.....

I can only say that I made the conscious decision to spend MY $$$ on WDW vacations instead of other things. NO REGRETS!!

I roll my eyes at those Cable TV home shows where someone with 2 kids thinks they need a 3500+sq ft house. LOL!!

 

[KennesawNemo]

This figure is nonsense. If you have 2 kids, that would mean $400,000 not including college. If you earn the US median income of $50,000, that would mean every single penny of your income for 8 full years went to child-rearing costs. Since about 1/3 of your gross goes to taxes, that would actually mean every single penny of your take-home pay for about 11-1/2 years out of 18 went to child-rearing costs. Take out your mortgage, utilities, auto expenses, food, health care and everything else we spend money on and you'd probably come out negative if the 200K figure was true, and that's if you earn 50K. If you only earn 40K, you could probably show that the 200K figure per kid would account for your entire income. That just isn't possible. Plus, that's for 2 kids. I know plenty of families with 3 or 4. They absolutely are not spending anywhere near 200K per child. They'd be completely broke and living in a cardboard box somewhere.

I think they are also counting the loss of one parent's income becauseh he/she now would stay home.

It's rather opportunity cost, not accounting cost.

 

[mistysue]

Part of the cost of children is also in their usage of gas, electricity and general wear on household items. They open doors when it is hot or cold out, they use the fridge, microwave, TV, computer... Kids ruin things, get sick and go to the doctor, cause you to miss work, cause wear on your car (in some cases require a different/larger car) add to insurance costs, cause you to need new carpeting, put dents in the walls, drop your cell phone in the sink or run a pen through your washing machine... Not that any of these are every day, but a home with kids takes a beating. Kids cause a parent to miss days, missing that promotion or leave a career entirely. Kids come with a TON of hidden costs.

I am in a low COL area and by the time my kids start school I will spend about $45,000 on daycare alone. (my daughter was well above that due to delays) That is before I get all the lunch supplies and send them with all the snacks and servings of food most of which goes to waste. The $5,000 or so in tax credits I get during that time for paying for daycare really doesn't even that out.

Of course you can't say the cost is identical across the board, but the fact is that on average, larger families require bigger homes and bigger cars. They require extra or larger hotel rooms, extra plane tickets and larger grocery budgets. These figures include families with a special needs child who goes to therapy twice/week, kids who eat special formulas for illness or allergies and kids who are just clumsy and break a bone every 6 months. The numbers might sound crazy if your kids are completely typical, but they aren't just made up.

 

[crisi]

That calculator says we will have spent $421,000 on our daughter. Sorry but it just ain't true.

Childcare and Education of $7,800 this year. Since she is 16 and attends public school, where exactly are we spending almost 8K. Sure we spend some money on school supplies at Walmart. Maybe $200. That's about it.

Clothing of $1,400? No way we spend over $100/month on her clothes.

Housing of $8,350. Really? We bought this house a while before we had her. Had we never had a child, we'd still live in the same house and have pretty much the same expenses. Yes, the utility costs are a little higher with a 3rd person in the house but that's about it. All of the other costs are fixed regardless of how many people live here.

Sorry but I see these reports just like everybody else does and I think they are complete and utter nonsense.

Well, you may not, but other people have their kids tutored by Sylvan. They sign them up for piano, dance, traveling hockey or traveling soccer. They have them in $20k a year private schools and have them head off for $2k camp in the summer.

The number of "median-type" income families I know who spend $10k per year per child on those sorts of fees is pretty high. A lot of "its a good investment for the hockey scholarship we'll get."

And IIRC, your wife was a SAHM for many years, I suspect they are putting in her lost income into child care expenses. Just six years home with a child to get them to first grade at $30k a year is $180k. Spread that over 17 years and you have $10,600 a year in "education" costs.

You are a doctor Steve, you know how it feels when your patients look at professional research and call it nonsense (I don't need to loose weight, quit smoking, lower my blood sugar, vaccinate my kids.....I don't believe the studies). Do other professionals the same favor of knowing their field. This isn't a journalist making up numbers, this is from a peer reviewed government report. You also know that some people can smoke three packs a day and live to be 90 with few or no ill effects - studies suck at predicting individual behavior.

 

[disneysteve]

Regarding the cost of raising a child, you've all made some good points that I hadn't really thought about.

1. The numbers are averages. We may spend very little on "childcare and education" but others may spend 10K or 20K/year so that creates an average that might seem ridiculous to us but perfectly reasonable to others.

2. If they factor in the lost income of a stay at home parent, that definitely makes the numbers a lot more reasonable.

Those two items alone do help explain those numbers a lot so thank you for pointing them out to me. I was looking at the numbers more literally as actual spending costs.

I would still maintain that it is by no means necessary to spend those amounts for the average person. We bought a modest home, cooked most meals at home, shopped at thrift shops, took budget vacations and did plenty of other frugal things to stay on the low end of those averages.

 

[budafam]

I also completely disagree with those charts and numbers. I stay at home and have never spent a penny on childcare for my children. As for clothes, I buy the vast majority at garage sales or thrift shops. I'm talking .25-.50 for jeans and shirts. They have bigger wardrobes than I do and all are in excellent condition.

My DH makes $35,000 a year and I babysit part time. We live on this. Somehow we manage to put away in savings & take numerous vacations a year. We have a mortgage & do not deprive ourselves of small luxurious purchases. We know people that make twice as much as our household does, they rent a home & made the decision to smoke (both of them). They NEVER go on vacation anywhere and are unable to purchase anything. That's their decision. They are blown away at the fact that we can afford to do the things we do. I'm blown away that they can't

 

[disneysteve]

I stay at home and have never spent a penny on childcare for my children.

I think the point others were making is that staying at home is a cost in itself. If you could get a job and earn 30K but instead choose to stay home, after 5 years, you've failed to earn 150K. Paid childcare wouldn't have cost that much so you have a net loss eve though you didn't actually spend money out of pocket. Or if you could have worked and had a family member care for your kid for free, you've lost even more. If that is factored into those numbers, they make a lot more sense.

 

[Marionnette]

I also completely disagree with those charts and numbers. I stay at home and have never spent a penny on childcare for my children. As for clothes, I buy the vast majority at garage sales or thrift shops. I'm talking .25-.50 for jeans and shirts. They have bigger wardrobes than I do and all are in excellent condition.

My DH makes $35,000 a year and I babysit part time. We live on this. Somehow we manage to put away in savings & take numerous vacations a year. We have a mortgage & do not deprive ourselves of small luxurious purchases. We know people that make twice as much as our household does, they rent a home & made the decision to smoke (both of them). They NEVER go on vacation anywhere and are unable to purchase anything. That's their decision. They are blown away at the fact that we can afford to do the things we do. I'm blown away that they can't

I can assure you that for every person who lives your frugal lifestyle, there are at least 3 families that do spend more on childcare and clothing. That doesn't make their choices wrong, just different from yours.

 

[mrodgers]

Those indicating the loss of a SAHP's income, it states the cost of a child at $50k income. Median income for a family of 4 is $53k if I recall correctly. So, it is approximately the same as the study states, thus you can't factor in a loss of income. It is pretty much saying the cost of having a child for a median income family.

A couple of my numbers are fairly close. There is no breakdown of utilities, so I would put that in housing. We would have the same thimble sized house had we not had kids, but electric and heat would certainly rise. Don't know how the percentages would factor out for that one.

The food cost and health care cost is just about on par. Average for a year on food, the study says $2210. Average for our food cost based on the 16% per kid in the study would be about $1900.

Just the difference in my health insurance would be $1300/year, actually doesn't matter how many kids. I have available spouse +1 or Family plans available. So, that is $650/kid for us. $455 difference left from the study. Add in all the doctor visits throughout the year, we are just about there.

We don't have childcare and education costs are very small.

Transportation? $2000 per year per kid? Where the heck am I taking my kids? 99% of the time when the kids are in the car, we'd be in the car anyways. We also probably would have purchased a more expensive car instead of what we have to haul around the kids. Thus, the 2000 per kid per year would be 154,000 miles hauling the kids around per year with fuel usage. That's a lot of driving the kids around when I drive my work car 20k/year and my wife drives the family car to work as well as everything else at 25k/year. That's not taking into consideration the cost of 2 kids, only 1 kid. Factor in 2000/year for each of the kids and it's over 300,000 miles worth of gas per year.

 

[crashbb]

Transportation? $2000 per year per kid? Where the heck am I taking my kids? 99% of the time when the kids are in the car, we'd be in the car anyways. We also probably would have purchased a more expensive car instead of what we have to haul around the kids. Thus, the 2000 per kid per year would be 154,000 miles hauling the kids around per year with fuel usage. That's a lot of driving the kids around when I drive my work car 20k/year and my wife drives the family car to work as well as everything else at 25k/year. That's not taking into consideration the cost of 2 kids, only 1 kid. Factor in 2000/year for each of the kids and it's over 300,000 miles worth of gas per year.

The transportation costs include airfare is taking a trip somewhere - I didn't look into the details enough to see how many trips they assume you take (or if they assume that having a child changes that number).