Wednesday, July 1, 2009

Cost of Parenting increases

It looks like I am in the minority this year! I can only think of a couple friends who are pregnant or just had a baby. It seemed like EVERYONE was with child when I had my now 2-year-old. I have no idea how much we spend on the boys each year, but it isn't cheap. At least they can share clothes and hopefully some sporting equipment. However, I have a feeling I will be buying food in huge bulk supplies in the coming years! I do not want the boys living with us after they turn 18 years old. Hopefully we won't be in another recession at that time!

LOS ANGELES - This year, 4.3 million babies will be born in the United States, representing a 0.4 percent decline from 2008. While recessions typically lead to fewer birth rates, the latest research from Los Angeles-based IBISWorld shows that not only does parenting get pricier with time, but the impact of current economic conditions will further exacerbate the financial commitment.

"We can expect to see a surge in the boomerang generation [ages 18-24] returning home and continuing financial dependency on parents due to a scarce and competitive job market," said Toon van Beeck, senior analyst at IBISWorld. "This phenomenon has become more apparent in recent years, with higher costs in tuition and rent making transitioning into adulthood increasingly difficult. Thanks to the recession, many parents will get prolonged time with their kids until their debt is paid off or market conditions improve."

From the moment of conception to age 18, the average cost of raising a child is about $227,862-which translates to an average cost of $12,658 a year:

Relative to average cost, however, is income level. A household yielding an annual income of less than $45,000 will spend roughly $156,469 on their child until they turn 18. Incomes between $45,000 and $75,000 spend $214,829, while households earning $75,000 and above splurge over $312,286 by the time their teen graduate's high school. Afterwards, parents can expect to shell out for college tuition, along with additional financial burdens induced by a stagnant economy.

Also relative to the total average cost spent on a child is location. For instance, those who reside in the west pay the most per child in the nation - 8.1 percent above average - due to higher income levels and cost of living. In eastern regions, such as New England, a child is 4.9 percent more expensive, whereas raising a child in the south meets closest with average figures.
Major financial considerations, such as private school, have not been factored into the average, but count as significant expenses that get even pricier for those living in urban areas. Total expenses used to calculate IBISWorld's estimate on the average total cost of raising a child include:

With housing encompassing the greatest portion (35 percent) of total expenses, expect to see adverse effects brought on by foreclosures and rising unemployment - especially in hard hit states like California and Arizona.

"We have already noticed an influx of middle-income families, particularly from California, relocating out of state in search of more affordable housing and employment opportunities," said van Beeck. "The ability for parents to afford a better quality of life for their child is of utmost importance, and it entails sacrifices."

-NewsAnchorMom Jen

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