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The Cost of Children is on the Rise

Posted on 28. Jan, 2014 by in Financial Planning

Financial experts estimate the average cost of raising a child to be over $240,000 and that is without including the expense of college, which will double the original estimate. The largest part of this staggering amount is providing housing which accounts for over 30%.  Childcare and education comprise eighteen percent of this total and food is equal to sixteen percent. It is obvious that the cost of children is becoming more expensive with time.

Because people are struggling in today’s economy, income levels are down. It is causing people to rethink everything from their menu to who takes care of their children. Some families are beginning to question the amount of money it takes to have children in daycare as opposed to how much money they are making. If it costs more than the salary of one of the parents, that parent is going to become a full-time caretaker. Families are also considering what they need as opposed to what they have. Luxuries such as gym memberships or cable are being eliminated to help make ends meet and offer some kind of safety net in savings.

The number, though it appears staggering at first is not very scary when you consider that families are faring better than those forty years ago and are actually able to consider quality education and college as part of their children’s upbringing. In fact, this is the largest increase in the monetary projections. In the 1960s, the last time a study like this was done, education accounted for only 2% of the estimated cost of raising a child. At eighteen percent that estimate is considerably higher.

Believe it or not, even your location accounts for a differential in the cost of children. People in the urban northeast will spend more money that those in the rural areas of the country. Presumably this occurs because those in the city are thought to have two incomes and therefore more money to spend on education. Those in rural areas dedicate the greatest percentage of their income to food and clothing, the necessities.

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