“New parents be warned: It could cost nearly a quarter of a million dollars to raise your child -- and that's not even including the cost of college,” warns CNN Your Money.
Saving for children’s college education plays a large role in our conversations with our financial planning clients. We know even before children enter the school system, parents find there are many costs they may not have begun to consider.
Estimates from the U.S. Department of Agriculture, based on the cost of housing, food, transportation, clothing, healthcare, education, child care and miscellaneous expenses (haircuts and cell phones, for example), show the $241,000 cost of raising a child is divided roughly as follows:
- 30% - housing
- 8% - healthcare
- 14% - transportation
- 6% - clothing
- 16% - food
- 8% - miscellaneous
- 18% - childcare and education
As Mark Brown of MoneySense points out, “Having kids changes your life in many ways: sleepless nights, runny noses, and a lighter wallet.” When adjusted for inflation, Brown says, the total cost of raising a child to age 18 is more like $253,946. John Ward, a Kansas economist who consults on economic damages for legal disputes, says even these huge figures are “woefully insufficient” because they don’t consider:
- Property taxes homeowners pay to support public education
- Additional life and disability insurance on the parents
- Saving for college education
- Lost income from having one parent take time off work to care for a child
- Foregone investment earnings
Ward pegs the cost of raising a child to 18 in the U.S. at around $700,000, or closer to $900,000 to age 22.
Comprehensive financial planning is designed to deal with all these considerations, providing counsel on personal resources and goals. At Worley Erhart-Graves Financial Advisors, we’re committed to helping parents handle the family’s “big picture” while providing for the present and future needs of the little ones!
Content was prepared by a freelance journalist on behalf of Worley Erhart-Graves Financial Advisors