The US Department of Agriculture said in a 6/14/12 report that a middle-class family with a child born in 2011 can expect to spend about $295,560 in the next 17 years on food, shelter and other necessities with projected inflation factored in.

Meanwhile, projected private college tuition and public college tuition is expected to rise to $450,000 and $200,000, respectively.

In total, we can expect a total cost of roughly $500,000-$750,000 to raise a child through the age of 22 if parents are to pay for everything!

Sounds scary right?  The annual expense is therefore about $23,000 to $34,000 compared to the median US household income of roughly $58,000 a year GROSS.  Given half of Americans don’t pay federal income taxes, the $23,000-$34,000 a year annual child-raising cost is probably no more than $25,000-$40,000 in gross income a year.

Still, how does one spend 40-60% of their after tax income every year on one child and manage to pay for rent, food, entertainment and save?  Having a kid, based on this report by the government says that the median household only has about $25,000 a year in after-tax money to spend!


Now that you know that the median household can barely afford one kid on their $58,000 a year gross household annual income, we should come to the following conclusions:

* The government doesn’t want the median household to have more than 1 kid, because having two kids would wipe out all after-tax annual income.

* The government doesn’t want a household who makes less than $25,000 to have kids because someone is going to be starving.

* The government is telling us that there’s nothing really they can do about rising kid-raising inflation costs.

* Americans expect too much out of their children.

* Americans spend too much on their children.

* America is doomed!


I know many families with more than two kids who make less than $80,000 a year.  I’m sure many of you know many of the same as well.  They aren’t in debt.  They save at least 10% of their after-tax income ever year and are on the right course for a comfortable retirement.

Meanwhile, I know a couple families who make less than $60,000 a year and have three kids!  Three kids would dictate an annual cost of $69,000 after-tax = $80,000 gross according to the government.  So where on earth does the missing $20,000 in gross income come from?  Furthermore, once we make up for the missing $20,000 in gross income, what about the at least $15,000 or more in gross income the parents need to just survive?

The logical conclusion is that kids don’t cost the $17,000 a year up until 18, and $23,000-$34,000 a year if taking into account four years of college that the government says they do!

Based on the median household income of $58,000 with 2 kids one can actually calculate how much kids cost.

Income (Year)

$58,000 gross  = $49,000 after-tax assuming a 15% effective total tax rate.

Expenses (Year)

Food: $6,000

Shelter: $15,000

Savings: $5,000

Vacation: $2,000

Car: $2,000

Gas and Energy: $1,500

Entertainment: $2,000

Miscellaneous: $1,500

Total Expenses Pre-Kids: $35,000

Total Disposable Income Pre-Kids Expense: $14,000 for 2


The median cost per kid for the median household making $58,000 a year is therefore $7,000.  The total cost of raising a kid for 18 years is therefore a more digestible $126,600.  If one adds on the cost of education of $200,000-$400,000 for a college degree, then we come up with a total cost of $326,600 to 526,600, or $15,000-$24,000 a year per kids.

Spending $7,000 a year to raise a kid for 18 years sounds much more realistic and reasonable.  Just as a goldfish grows to the size of his bowl, so do parents adjust their spending amounts on their children depending on the size of their income.  Unfortunately, once we add on the estimated college tuition costs, things go to hell!

Solutions to counteracting college education costs:

* Have smart kids.

* Be disciplined parents who make sure they study enough to get straight A’s and therefore scholarships.

* Go to a public school.

* Go to community college then transfer.

* Don’t have many kids.

* Don’t have kids.

* Take anti-horny medicine.

* Start saving $7,000 a year for kids before you have any kids.  Save $7,000 a year before kids for 10 years buys you 10 years of kid expenses and then continue to contribute in a 529 plan.

* Move to Georgia and make sure your kids get at least a 3.0 GPA so they can get a full ride to Georgia Tech or University of Georgia through their brilliant HOPE Program which needs to be adopted by all states.

* Ask the government to give you more than $1,000 per kid for tax credit.

Readers, what are your thoughts on the REAL cost of raising children?  Doesn’t $7,000 a year sound more realistic vs. $22,000 a year according to the US Department of Agriculture?  I have no kids and am just pontificating, hence, I’d love to hear what the real annual costs are of child raising from parents.  Any other tips?

Recommended Reading:

Do Soaring Tuition Costs Matter If The Returns Are Even Greater?

Don’t Have Kids If You Can’t Take Care Of Yourself