Nine Financial Shocks for New Parents

[Jay_Gatsby]

Interesting article:

http://biz.yahoo.com/special/pf0516_article1.html

"According to a recent study by the U.S. Department of Agriculture, it costs a middle-income family $250,000 to raise a child from birth to age 17. And that doesn't include the cost of a college education."

Some of the 9 financial shocks seem to result from poor financial planning, while others appear to be inflated. Nonetheless, it's still an interesting read.

[justin]

Based on personal experience, these costs as presented in the article are misleading and in some cases grossly overstated.

$100 per month for baby wipes? That would equate to 87 diaper changes per day (assuming 2 baby wipes per changing). Babies pee and poop a lot, but not quite that much. I'd say our record day was more like 12 diapers (typical, 6-8).

$2000 for diapers? Buy the store brand at Walmart, and knock off $1000.

[youbet]

Only $250K? I never thought to keep records during the years we were raising the family, but somehow it seemed like much, much more than that. Then the heavy spending post-17 yr old period started!

[MasterBlaster]

If you add in the stay-at-home mom's lost wages and college costs then the cost goes way above $250k.

[justin]

When I add in my billable rate times the number of hours I'll spend on childcare, I get an approximate cost of $1.3 million just for the labor. Obviously that is ridiculous.

[samclem]

Psychotherapy costs maybe?

[HFWR]

Hey, designer clothes, designer furniture, private pre-school, cellphone w/bluetooth...

Some of the high-schoolers here in suburbia drive Beamers to school...

Gets expensive!

[VoyT]

Quote:

Originally Posted by justin Based on personal experience, these costs as presented in the article are misleading and in some cases grossly overstated. $100 per month for baby wipes?* That would equate to 87 diaper changes per day (assuming 2 baby wipes per changing).**

* I spend time over on about's Frugal Living board, where that story also came up ... many of those posters (most of them moms) were totally mystifed by that figure!

Also, I've seen those USDA reports, and they cover expenditures via income levels (averages $26,000, $57,000 and $108,000, though their figures deal with a range of before-tax income). My quick run at the math gives me a $250,000 figure for a family in the $108,000 bracket... perhaps that's what middle-class is now ?
If anyone wants to have a look, the recent USDA report is at http://www.cnpp.usda.gov/Crc/crc2005.pdf

* *

[justin]

I don't think $108,000/yr income is "middle class", at least based on US census data. More like upper middle class. Median household income is more like $45000/yr.

[VoyT]

Quote:

Originally Posted by justin I don't think $108,000/yr income is "middle class", at least based on US census data.* More like upper middle class.* Median household income is more like $45000/yr.*

No argument from me there .... I suspect it's a matter of if you have the $$, you spend it .. Though I really think that whoever wrote that story went for the sensational...

[justin]

Quote:

Originally Posted by VoyT No argument from me there .... I suspect it's a matter of if you have the $$, you spend it .. Though I really think that whoever wrote that story went for the sensational...

Sensational sells. No one cares to read about how it costs $2000/yr to raise a kid if you are reasonably frugal about it. But when the headline is "Kids cost 1/4 million dollars to raise", that sells.

[brewer12345]

Quote:

Originally Posted by justin I don't think $108,000/yr income is "middle class", at least based on US census data.* More like upper middle class.* Median household income is more like $45000/yr.*

Depends where you live. $108k sounds like middle class in many areas near me due to high cost of living. $12k RE tax bills make $108k a year seem like a lot less pretty quickly.

[justin]

I would suggest "middle class" means a different thing in, say, New Jersey/NYC metro area versus Podunk, Mississippi. Middle class in NJ is a lot higher class than Middle Class in MS. There's the cost of living that's higher in NJ, but the standard of living is probably a lot higher too.

[bosco]

Quote:

Originally Posted by justin I would suggest "middle class" means a different thing in, say, New Jersey/NYC metro area versus Podunk, Mississippi.

so does "average intelligence"

see http://chrisevans3d.com/files/iq.htm

(I apologize in advance--I am pretty suspicious of these numbers and the methodology in obtaining them, but that doesn't prevent me from finding them humourous).

[youbet]

Quote:

Originally Posted by bosco (I apologize in advance--I am pretty suspicious of these numbers and the methodology in obtaining them, but that doesn't prevent me from finding them humourous).*

Apology accepted. I did notice Arkansas and Tennessee were pretty far down the list. Sorry Bill and Al.