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July 07, 2008

Costs of raising a child

Children provide much love and pride to parents, but they do cost money. Each year the government updates estimates of what families spend raising their children. What do the latest numbers show? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Well, I'm going to warn our listeners to hold on to their wallets and their pocketbooks, because we're going to talk about some big money. Each year the government does put together numbers estimated to be related to the costs of raising a child. They look at a child from birth to age 18, and they look at costs related to - obviously - food, clothing, medical, entertainment, plus the government does take a share of the price of a home and vehicles, with the notion that bigger families need more vehicles or bigger vehicles, more home, so you should apportion some of that cost to the children. And the government also does assume in looking from birth to age 18 a 3 percent inflation rate each year. So we're talking in economics lingo about nominal dollars, the dollars that actually go out the door. And the last thing the government does, they have three standards of living: low, medium and high. Here are the numbers. To raise a child that would be born today through age 18, if you had a medium standard of living, $269,000 over that time period. If you had a lower standard of living, it's estimated to be $196,000; higher standard of living, $393,000. Now, this is for one child. If you do have multiple children, then the numbers, you wouldn't necessarily multiply by two or three because there are some economies of scale of raising more children, some things need to be shared. But clearly, these are large numbers, and I think that's one of the reasons why raising children today is so challenging."

Posted by Dave at July 7, 2008 10:52 AM