The Stresses of Parenthood Take a Heavy Toll On Your Wallet
The average cost of raising a child, from birth to the age of 18, has nearly eclipsed the quarter-of-a-million-dollars mark. According to cost estimates released last year by the U.S. Department of Agriculture, raising a child now adds up to $245,000 on average, without including any higher-education costs. That’s no paltry amount — not by a long shot. And there’s still another cost looming that has yet to be accounted for until recently.
It’s the cost of your sanity, in a sense.
That’s right, parents, the additional stress caused by having children will end up costing you tens of thousands of dollars per child, according to a new working paper published by the National Bureau of Economic Research and explored by FiveThirtyEight. The research shows that each child can tack on an additional $66,000 in stress-related expenses, which may include medical costs, expenses for vacations, or maybe even a few beers.
That number, all on its own, is enough to induce a panic attack in many parents, or prospective parents. But it’s important to dig into the numbers a little bit. The research took into account parents’ self-reported stresses, both in financial terms after having a child, and in terms of time — or how overwhelmed parents felt. While the economists conducting the research found small but manageable jumps in financial stress, the resources needed to handle the amount of ‘time stress’ were far more than expected.
That $66,000 figure did come from Australian data, which tended to be a bit high. For comparison, German data found that the extra stress costs amounted to $55,000. It’s also important to keep in mind that these numbers are just estimates, as The Huffington Post points out, but the overall message remains clear: having children is going to cost you a whole heap of money, and there will be hidden costs everywhere you look.
With this new-found information at hand, the question becomes what, if anything, are people going to do with it. There are many parts of the world that are seeing birth rates drop for a host of reasons — and when prospective parents are faced with a balance sheet of the costs they’re facing when planning to have a family, the simple dollars and cents may alter decision making.
For example, if we take the initial $245,000 figure and add an additional $66,000 to it, we end up with the total cost of one child, without paying for college, topping $300,000. Now, if you wanted a somewhat large family, say even three children, you’re looking at roughly $1 million in expenses. If you were planning a family, how would being faced with those costs change your plans?
There’s plenty of evidence that economic factors are playing a bigger role in family planning than ever before, even before the added costs of stress were added in. Between 2007 and 2012, birthrates for women in their 20s dropped a dramatic 15%, according to a report issued by the Urban Institute. This comes in stark contrast to previous generations, where having large families was rather commonplace in many communities.
“We calculate that in 2012, women in their twenties had births at a pace that would lead to 948 births per 1,000 women, by far the slowest pace of any generation of young women in U.S. history,” the report said.
A look at the average annual incomes of millennials — many of whom are in their 20s and 30s now — shows that there’s little wonder why that’s happening. Average earnings for the U.S. as a whole, according to Business Insider, are only $35,000 for males, and a bit more than $31,000 for females. At that rate, it would cost a decade’s worth of one parents’ earnings to pay for one child, excluding literally everything else.
This, right here, is what makes the price of child-rearing so important. The economy depends on people having kids to supply fresh, young talent, and replace older workers. In fact, everyone is better off when there is a healthy, steady birth rate.
But given the current economic conditions, and the fact that we’re discovering ever more costs associated with children (like stress), things could become interesting. If we don’t find a way to make having a family more affordable, the economy will suffer — and many prospective moms and dads may give up their hopes simply to keep their heads above water.