Rising child-rearing costs seen straining families

Bloomberg News
A middle-income family will spend $241,080 on average for 18 years to raise a child born in 2012, a 2.6 percent increase from a year ago that outpaces the broader inflation rate, according to a government report. More

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ECONOMY

Rising child-rearing costs seen straining families

Bloomberg News
Posted 8/19/13

A middle-income family will spend $241,080 on average for 18 years to raise a child born in 2012, a 2.6 percent increase from a year ago that outpaces the broader inflation rate, according to a government report.

Housing was the largest expense at 30 percent of spending, the U.S. Department of Agriculture said last week in an annual report that also showed wealthier families spent triple the amount on entertainment and reading materials as poorer households. Child care was the second-biggest expense in more-affluent homes, while lower-income households spent a greater proportion on food as federal nutrition aid reached records. Health costs pinched all household budgets.

“The cost of raising a child increases as family income goes up because families have more resources,” Kevin Concannon, the USDA’s undersecretary for food, nutrition and consumer services, said on a conference call with reporters. “The stresses and the challenges get worse as families have less access to resources.”

Child-raising costs are climbing just as elements of the federal health care overhaul take effect, aiming to limit price gains, and as a rebound in U.S. home prices adds expenses for families. U.S. inflation in the year through June was 1.8 percent, according to the government. The USDA report excluded payments for college.

The study, conducted since 1960, tracks seven categories of spending, such as housing, transportation and clothing, and is used to help courts and government agencies estimate child- support costs, the USDA said.

For a typical two-parent, middle-income family, spending on each child was $12,600 to $14,700 in 2012. A family earning less than $60,640 a year will probably spend $173,490 in 2012 dollars, while parents earning more than $105,000 may pay $399,780, according to the study.

Adjusted for anticipated inflation, raising a child in a middle-class family would cost $301,970, the USDA said. The report includes an online calculator to help figure out costs.

Expenses were highest for children raised in the urban Northeast, followed by West and Midwest cities, the USDA said. The urban South and rural areas were the least expensive. While housing accounts for the biggest portion of expenses, across income groups, the next-highest expenses vary depending on household wealth.

Higher- and middle-income households spend the second-most on child care and education, followed by food, while nutrition was a bigger share of expenses for poorer households, with more lower-income families caring for their children at home, the study said. Transportation was the third-biggest expense across all income categories.

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