The WSJ ran a story in their weekend edition showing how prolific parents are now spending upwards of $1.6 million raising their kids to the age of 17. My first reaction reading the headline was utter horror having one kid and another on the way.
Then as a read the article, I realized it was a bit of hyperbolic fun showing that if parents indulged their kids in every possible indulgence from $2,000 SAT prep classes to $15,000 annual athletic travel budgets to $20,000 a year private school to that ever necessary flat panel tv for the kids bedroom the WSJ could get to $1.6 million. The government estimates that average family spends $276k per child. Paul Kedrosky also was scared but didn’t dive into whether the $1.6 million number was BS.
So let’s take a look. Thinking of my own kids and spending here’s how I think it will break out:
Bigger House – $300k
Food – $500/month/kid x 22 yrs – $264k
Clothing – $1000/year/kid – $44k
Opportunity Cost of Spouse not working – $400k
College (public) – $80k
Parochial School (maybe) $10k total/12 years per- $240k
Misc Activities – $1k per year per kid from age 8 to 18 – $20k
Family Travel – $2k year – $44k
Total – $1.39 million for 2 kids or $695k per kid under a very broad definition of costs associated with them (the house for instance would have come just because my wife and I would have found some excuse to justify it)
Seriously how could a parent spend close to $100,000 per year on a kid? Even more importantly – can you imagine how spoiled that kid would be?
