Having children is a thought many couples are thrilled to share. They picture their wonderful family, fully equipped with 2.5 children and a Labrador or Golden retriever, and a nice home in a quiet neighborhood. Unfortunately, that aspect of the American dream isn’t as picture-perfect as it once was â’ nor is it as easy to afford.
The cost of living has risen dramatically over the last decade while wages have remained stagnant. For many couples planning to have children, it may no longer be financially possible, as the average cost of raising a child through age 18 is upwards of $250,000 today.
However, if you still intend to have children in spite of the staggering economy, consider the following to determine whether or not you will actually be able to afford yourself and your prospective children.
Lacking Healthcare
Due to the poor economy, many employers have scaled back or altogether abandoned their healthcare plans, leaving the financial responsibility of such plans in the hands of families. Healthcare plans don’t come cheap, and not having a plan can be just as costly should a family member have to enter the hospital. Even the cost of having a child alone is outrageous with the average hospital child birth costing around $7,500 for a 24 hour stay. Even if you have insurance, you will likely have a deductible, co-pay, or co-insurance to pay, which could still mean you’re on the hook for thousands even if insurance picks up the bulk of the tab.
Increased Transportation Costs
Rides to and from school, soccer, dance, and whatever other extracurricular activities your children may become involved in will definitely require gas, and the price of a gallon of gas will only continue to rise. While this may be a cost that you don’t consider to be a big one, consider how much you spend on gas alone only going to and from work â’ that amount will definitely double with kids, especially when you trade in your coupe or small sedan for a larger vehicle.
Increased Food Costs
Every aspect of the food industry has increased in price. The higher the cost of food, the more expensive it will be to feed additional mouths at the dinner table. If you already find yourself appalled by the amount you spend on food solely for you and your significant other, you may want to consider what  having children will bring to the table. Not only do they eat a lot, but in their teen years they can become downright bottomless pits.
Lower Household Incomes
The average household income has decreased by nearly 7 percent over the last decade meaning that more households are having to get by with less money although everything around them is costing more. Even though your income may drop, the costs of raising a child don’t.
High Child Care Costs
Child care expenses are the biggest complaints amongst parents as many can spend as much as 20 to 30 percent of their salary on child care alone. The necessity of having dual incomes for many families means finding care is a requirement. Not only does the expense of child care make some parents feel as though they are working solely to keep their children in day care, but it also puts a huge drain on a working couple’s dual-income. Instead of preparing for retirement or taking the occasional vacation, couples instead have to funnel their extra income into childcare.
In addition to the above costs, birthdays and annual holidays also bring up additional expenses as kids want the latest and greatest gadgets and toys. If you think you can go without a little yourself from time to time – such as downgrading that 4G smart phone plan to one of the cheaper prepaid phone plans – affording children may not be so difficult. However, the cost to raise a child is still astonishingly high.
For those interested in having children, the financial prospects don’t look good. Unless you either have a high salary or are willing to forgo your retirement fund, which you should never do, having children may not be a financially sound option in today’s economy. However, having children is a highly rewarding experience and it is far more than a financial decision. While children can create a financial burden, the joy they add to your life is often priceless. Even so, having a child is a major decision and it should not be taken lightly. If you take the time to plan accordingly you can also make sure it’s a good financial decision as well.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.
