How much does it really cost to have kids?

While money should never be your only concern in deciding whether or not to have children, it should at least be a part of the discussion.  More and more young couples are waiting later and later to start a family.

For the second year in a row, women in their thirties bore more babies than those in their twenties, says Statistics Canada. 10 years ago, the highest fertility rate was between ages 25 to 29, now it’s 30 to 34.

And, as existing parents balance shrinking budgets with growing families, many of them are also struggling with the idea of taking care of another child.

And who can blame them? On a purely economic basis, having kids makes little sense. In fact, in our non-agrarian society, they provide almost no payback, particularly when you consider that student debt and high housing costs often force them to live at home well into their twenties and thirties.

Of course, you already knew that having kids would be expensive, but for the most part you’ve probably thought about it in general terms: food, shelter, clothing and tuition expenses — spread over 20 years or so.

But when you tally the actual costs, the numbers may surprise you.

A middle-income family can expect to spend roughly $221,000 to raise a child born in 2008 to adulthood, according the United States Department of Agriculture (USDA). The Canadian numbers seem to be a bit lower though since Americans shoulder more direct health care costs than we do.

Which means the current cost of a child on this side of the border is somewhere closer to $193,000, according to research from the economics section of Manitoba Agriculture — and that’s assuming that you never give them another cent after they turn 18.

Not surprisingly, the first year is the most expensive at over $11,000 while a 12 year old is supposed to cost the least, somewhere around $7,700. Of course, these numbers don’t include private school, swimming lessons or having a few kids in hockey.

And then there’s college.

It already costs more than $5,000 for a year’s worth of tuition at the average Canadian university, a number that’s watered down by the fact that Quebec residents pay just $1,968 — less than half the average tuition in the rest of the country.

And don’t forget to factor in as much as $10,000 per year for residence, meals and other expenses. Assuming someone starts university in 2027 and you factor in inflation, you could be looking at as much as $90,000 price tag for a four-year degree.

Families with more income spend more money on child-related costs, the USDA says. A two-parent family that earns less than $57,000 annually will spend about $160,000 on a child from birth through high school. It’s only those with an income between $57,000 and $99,000 that are likely to spend the full $221,000.

There is a bit of a bulk discount available, however. Families with only one child spend 25 per cent more per child than families with two. And, by the time you have three or more, you end up spending about 20 per cent less on each one.

And the Canadian experience is somewhat similar. On average, a family in Canada with one child spends 24 per cent, and those with two children 36 per cent, of its total income on raising the kids.

The Canadian estimates — which are used to set child-support costs during divorce proceedings — are calculated per child in a household with two children and are categorized by the age of the child using different family income levels.

Housing accounts for one-third of expenditures on children and food accounts for 16 per cent, the same as child care and education. Your family’s numbers, of course, could easily be even higher still, depending on how much you spend on those higher-end discretionary items.

In many case though it’s the little things that count. Using disposable diapers instead of cloth diapers, for instance, can raise young parents’ costs by more than $1,500 over a baby’s first two-and a-half years. And choosing soccer over hockey will mean thousands less in sports costs.

Still doesn’t sound right when you look at your own budget? Here’s an easy-to-use tool to see how things might work in your particular circumstances.

These numbers, of course, don’t take into account all the money you’ll leave on the table if one of you stops working to care for children during the early years.

Nor do they factor in lost benefits, which, particularly in the States, can be huge. Each additional child means that much more in monthly health insurance premiums to add them to the family’s coverage, for instance.

Taken together, perks such as paid time off, medical and dental plans, disability and life insurance and, in some cases, pension plans can add 25 to 30 per cent to your annual cash compensation – in other words, real money that you won’t be available to spend.

All of which suggest to me that the real cost per child in Canada is more likely in excess of $250,000.

Is it all worth it? Well, as the father of three university students, I’d say absolutely – as long as you really understand what you’re signing up for.

By Gordon Powers, September-29-09

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