baby registry: First Steps: Cost of kids grows faster than they do

By Sean Mussenden
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Sean Mussenden's "First $teps" blog offers personal finance advice for 20- to 30-year olds at firststeps.mgblogs.com. You can also read Mussenden's Sunday column every two weeks in the Winston-Salem Journal.

Got a personal finance question? Comment? Sean Mussenden can be reached at smussenden@mediageneral.com, 202-662-7668 or join in discussions at his blog.

First Steps Columns
June 4, 2006
Cost of kids grows faster than they do


A buddy of mine just became a dad. Exciting stuff. I found out in an e-mail that came with a link to his Amazon.com baby registry, featuring a crib-bedding set for $179.99.

Seriously, almost 200 bucks for six pieces of cloth. The baby-industrial complex knows newborns sleep on mattresses the size of postage stamps, right?

If you're about 25, you're at the age when the average mother has her first kid. Maybe you're thinking about having one. Maybe your parents are pressuring you to give them a grandkid already.

It's a very big decision. Lots of prospective young parents ask themselves if they're emotionally ready, but too few figure out if they're financially ready.

As my friend's baby registry illustrates, kids are expensive. It may take nothing but love (or too many bottles of Chianti) to make a kid, but it takes serious coin to raise one.

The costs of kids

How much? The federal government, which seems to keep statistics on everything, surveys thousands of parents every year to estimate how much it costs to raise a child from birth to age 18.

Here's what it costs a year, according to the feds, keeping in mind that richer families, as you'd expect, spend more than poorer families:

Families making less than $42,000 a year spend about $9,050 for one kid or $14,600 for two. Families making more than $70,000 spend $18,835 for one or $30,380 for two. Families in the middle spend $12,670 for one or $20,440 for two. One perk of multiple babies: Two or more kids is more cost effective than having just one.

Do the math. The total a husband and wife will spend on two kids born today until age 18 will run a family at the top $732,000; a family in the middle $501,000; a family at the bottom, $366,000, according to the feds.

These figures do not include college. At current tuition inflation rates, it will take $240,000 to put a kid born today through a four-year public school, double that for a private school.

Ouch. That's the bad news.

There's plenty of good news, which I'll discuss in future columns. Babies bring tax breaks. Lots of kids get scholarships. Baby registries help pass startup costs to friends and families.

Most important, millions of people successfully rearrange their finances to have cute lil' bundles of joy. It's not impossible.

The first step is to take a look at your current budget. Have an extra $10,000 a year to throw around? If so, great. If not, look for ways to make room for a new member of the household. Then, have an honest discussion with your significant other about whether you can afford a kid now, or you'd be better holding off for a few years.

It's a conversation worth having. Before you uncork the Chianti.

Come blog with me

Do you remember the first time your grandma said bling, and you realized you could never use that word again? And then your grandma and 27 million other people got a blog, and you decided it was time the whole bloggin' blogosphere died a quiet, mainstream death.

I bring this up because, um, we're rolling out a First Steps blog today. You can find it on this newspaper's Web site. Before you scoff, we promise this one will be useful.

We'll stick to personal-finance issues, instead of rambling from the NBA Draft to the war in Iraq. We'll offer tools and resources to go with the columns, all of which will be archived by topic on the site.

• Got a personal finance question? Comment? Sean Mussenden can be reached at smussenden@mediageneral.com, 202-662-7668 or join in discussions at his blog at http://firststeps.mgblogs.com.

In two weeks: Time is running out to save on student loans.