Thursday, August 6, 2009

Expensive Little Buggers!

Having spent too much of my life in the news biz, I have a pretty fair sense of skepticism about most things. When I saw the story earlier this week that the government says it will cost a middle-income family $221,000 to raise a child through age 17, the “reporter radar “ went on.

My college debate coach always preached that we must define terms. What’s “middle-income”? Well, according to this story, a middle-income family has an income between 57 and 99 thousand dollars a year. And, not surprisingly, the government figured that the higher your household income is, the more you’re likely to spend, raising you children.

Higher-income families, and the only definition I could find for that is families that have an income of six figures a year or more, will likely spend an average of $367,000 raising each of their children to age 17. But averages and numbers can be deceiving, so caution is advised.

I got out the calculator and fired up the internet. Since my wife and I have already “raised” our children, both in their mid-20’s, I noted the cutoff point of age 17 doesn’t include any college expenses - unless they’re figuring that during their first 17 years, you’re “spending” money on a college fund for the kids.

For those of you who haven’t had the pleasure, the cost of sending one kid to UW-Madison for a year is about 15 grand. And, a word to the wise - if you don’t have a college fund started for your potential Badger, you’d better hope little Johnny or Jane can find a REAL good part-time job in school. And you’d better get ready to fill out those pesky FAFSA forms. For those not familiar, that’s “Free Application for Federal Student Aid”, and the only thing “Free” about it is the application.

Back to the math. 221 grand over 17 years averages out to 13 grand a year, or $1,083 a month. Per kid. Wait a minute….is the government telling me that if I had a grandchild born last year, my kid will spend over a thousand bucks a month, on the average, raising that child to age 17? I sure hope my kids are reading this. No grandkids yet, and none on the immediate horizon.

Just for grins, I made a set of assumptions about a potential grandchild, and then did some quick research about present-day costs. The study said housing was the biggest cost - which is probably bogus, because you need housing whether you have kids or not, and the costs are not incremental. So I’m still wondering how the government estimated the cost at over a grand a month.

Two jobs…both parents working…means day-care, and a quick trip to the US Labor Department’s website said the national average for day-care cost is now $611 a month - per kid. Madison, I quickly determined, is right in that ball-park for cost. You can spend a lot more, and spend a lot less getting day-care in Madison.

Throw in groceries, clothes, school fees, and all of a sudden I’m not so skeptical about that $1,083 a month figure. And, come to think of it, my wife and I did get a nice “raise” when our kids became fully independent.

As far as I’m concerned, whatever money we spent raising those two wonderful young adults is the best money we ever spent. Just don’t ask me to really add it up!

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