The cost of raising your child can loom over your future budget. But how much does it cost? Hint: it’s not just about the money.
As expecting or first-time parents, most people re-evaluate their budget and finances because they know that change is in the air. While most folks know that raising children is expensive - Bank of America says you will spend on average 233K to raise an American child until age 17 – this is just the dollar figure.
The real cost of parenting stretches far beyond the dollar, pound, or euro - it's not just about purchasing a home with an extra bedroom or paying school fees, buying birthday presents or booking art classes.
1. Having children is exhausting.
Whether it's losing sleep due to your infant, worrying about your teenager or supervising studies, you will lose at least 6 months of sleep during your child's life.
2. You will spend far more than you think
Your priorities shift when you have children, and most folks, frankly, don't know how much childcare, diapers, and baby food costs. Once parents are faced with these new costs, 48% say these expenses are making them feel restricted in what they can do financially.
3. You'll buy emotionally
Much of your spending on behalf of children, say parents and economists, goes toward easing a rising panic – concerns that if you decide against educationally enriching activities, sports, tutors or musical instruments, your children won't be happy, fit into their social group, get into the right college or be successful. This explains why low-income families living in Shanghai's central Jing'an District, for example, spend an average of 70% of what they earn on their children – a stunning digit. And this focus on spending for your kids is true for the poor and wealthy alike: in 2014, the wealthiest 1% of Americans spent 860% more than the national average on education for their progeny.
4. It's highly likely your income will dip
Recently research was published on how Dutch mothers lose almost half their income when they give birth to their first child. Most new parents decide to work less or not at all, for a period of time. This cost, which ranges from interrupting your career to the depreciation of one's perceived worth as an employee upon returning to the workplace, stretches for years and years into the future. The cost of childcare is sometimes SO high compared to the money you're making, that 38% of millennial moms and 20% of millennial dads became stay-at-home parents in the US in recent years.
5. Time and effort spent caring for your child will be your greatest investment
And the time spent with children has gone up across the globe – even with more women working outside the home! The Economist reported in 2017, that the average mother spends 104 minutes a day caring for children – up from 54 minutes a day in 1965. Men do less caring than women, but far more than men in the past: their child-caring time has jumped from 16 minutes a day to 59. How did this happen? Back in the sixties, childcare was a largely supervisory or background activity by Mom, who was busy making dinner or cleaning the house. Today, parents spend more quality time and engage with their children.
If all these stats stress you out, remember that the average cost of a child doesn't represent the necessary or needed amount. The dollar figure represents what the average middle-income family spends raising their child. Is every expense involved necessary? Probably not. Some of the costs can probably be attributed to unnecessary toys or clothes. Others are due to the choice to live in expensive areas.
Another thing to note is that the amount estimated decreases after each child. So, the first one is considered the most expensive, the second one not so much and the third is the least expensive, etc.
But knowing the numbers is better than going in blind. And when your kid complains that you're not buying them this, or buying them that? Then you can always remind them that back in the 19th century, they'd be working in a factory, mine or farm making money for the family, as opposed to costing it.