Library Index :: Social Issues & Debate Topics :: Teens Children and Money - Family Income, Children In Poverty, Forms Of Aid To Children, Child Support, The Cost Of Raising A Child
 

Teens Children and Money - The Cost Of Raising A Child

USDA Estimates

Since the 1960s the Family Economics Research Group of the U.S. Department of Agriculture (USDA) has provided estimates on the cost of rearing a child. The estimates are calculated per child in a household with two children and are categorized by the age of the child using different family income levels. (See Table 4.7 and Table 4.8.) Attorneys and judges use these estimates in determining child-support awards in divorce cases as well as cases involving the wrongful death of a parent. Public officials use the estimates to determine payments for the support of children in foster care and for subsidies to adoptive families. Financial planners and consumer educators use them in helping people determine their life insurance needs.

Income Levels

Estimated annual family expenditures for a child vary widely depending upon the income level of the household. The estimated amount a family will spend on a child also

FIGURE 4.4

tends to increase as the child ages. The USDA estimates that in 2003 married-couple households earning less than $40,700 a year spent between $6,820 on very young children and $7,770 on fifteen- to seventeen-year-olds. (See Table 4.7.) Estimates for middle-income, married-couple families range from $9,510 for infants and young toddlers to $10,560 for fifteen- to seventeen-year-olds. Estimates for married-couple families with incomes above $68,400 ranged from $14,140 to $15,350, depending on the age of the child.

Estimated annual expenditures for single-parent families earning less than $40,700 a year were slightly less than those of two-parent families, most likely because their average incomes were lower ($17,000 for single-parent families and $25,400 for two-parent families). The USDA estimates that in 2003 these single parents will spend an annual average of $5,770 to $7,960, depending on the age of the child. (See Table 4.8.) The USDA estimates that those single-parent families earning $40,700 or more will spend $13,060 to $15,620 per child, slightly more than the middle-income, two-parent families.

Although the USDA projected that in 2003 the highest-income households would spend about twice the amount on their children than the lowest-income households, this difference varies by the type of expense. For example, the estimated food expenditure for children ages fifteen to seventeen in the highest-income husband-wife families was $2,630, compared with $1,850 in the lowest-income group. (See Table 4.7.) However, the estimated annual expense for education and child care for children ages fifteen to seventeen in these high-income families ($1,670) was almost four times that for a child the same age in the lowest-income families ($450). These variations among income groups by type of expense held true for single-parent households as well. (See Table 4.8.)

Age of Child

The 2003 estimates of family expenditures on a child generally increased with the child's age, except for housing, education, and child care. (See Table 4.7 and Table 4.8.) Households with young children are more likely to have recently purchased homes at higher prices and, until recently, with higher interest rates, explaining the higher housing estimates. Estimates for education, child care, and related expenses were also highest for preschoolers (under the age of six) in all income groups. Many women with

TABLE 4.6

Average income and child support received by custodial parents, by selected characteristics, 2001
(In 2001 dollars)
Supposed to receive child support in 2001
Received payments Did not receive payments Child support not awarded
Total money income Child support income Total money income
SOURCE: Adapted from Timothy S. Grall, "Table 5. Mean Total Money Income of People and Child Support Received by Custodial Parents by Selected Characteristics and Sex: 2001," in Custodial Mothers and Fathers and Their Child Support: 2001, Current Population Reports, U.S. Census Bureau, 2003, http://www.census.gov/hhes/www/childsupport/chldsu01.pdf (accessed August 24, 2004)
Custodial parents 29,008 4,274 23,571 24,055
Custodial mothers 28,258 4,274 21,835 19,339
Custodial fathers 36,255 4,273 35,348 39,396
Custodial parents below poverty 7,571 3,041 6,832 6,113
Custodial mothers below poverty 7,604 3,078 6,755 6,089
Custodial fathers below poverty 7,189 2,622 7,492 6,287

TABLE 4.7

Estimated annual expenditures on a child by husband–wife families, 2003
Age of child Total Housing Food Transportation Clothing Health care Child care and education Miscellaneous*
Notes: Estimates are based on 1990–92 Consumer Expenditure Survey data updated to 2003 dollars using the Consumer Price Index. For each age category, the expense estimates represent average child-rearing expenditures for each age (e.g., the expense for the 3–5 age category, on average, applies to the 3-year-old, the 4-year-old, or the 5-year-old). The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.24. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.77. For expenses on all children in a family, these totals should be summed.
*Miscellaneous expenses include personal care items, entertainment, and reading materials.
SOURCE: Mark Lino, "Table ES1. Estimate Annual Expenditures on a Child by Husband-Wife Families, Overall United States, 2003," in Expenditures on Children by Families, 2003 Annual Report, Miscellaneous Publication No. 1528-2003, Center for Nutrition Policy and Promotion, U.S. Department of Agriculture, 2004, http://www.usda.gov/cnpp/Crc/crc2003.pdf (accessed August 24, 2004)
Before-tax income: Less than $40,700 (average=$25,400)
0–2 $6,820 $2,620 $950 $800 $350 $500 $950 $650
3–5 6,970 2,580 1,050 770 340 480 1,080 670
6–8 7,040 2,500 1,360 900 380 550 640 710
9–11 6,990 2,250 1,620 970 420 600 390 740
12–14 7,840 2,510 1,710 1,100 710 610 270 930
15–17 7,770 2,030 1,850 1,480 630 650 450 680
Total $130,290 $43,470 $25,620 $18,060 $8,490 $10,170 $11,340 $13,140
Before-tax income: $40,700 to $68,400 (average=$54,100)
0–2 $9,510 $3,540 $1,130 $1,190 $410 $660 $1,570 $1,010
3–5 9,780 3,510 1,310 1,160 400 630 1,740 1,030
6–8 9,730 3,420 1,670 1,290 450 720 1,110 1,070
9–11 9,600 3,180 1,960 1,360 490 780 730 1,100
12–14 10,350 3,440 1,980 1,490 830 790 530 1,290
15–17 10,560 2,950 2,200 1,880 740 830 920 1,040
Total $178,590 $60,120 $30,750 $25,110 $9,960 $13,230 $19,800 $19,620
Before-tax income: More than $68,400 (average=$102,400)
0–2 $14,140 $5,620 $1,500 $1,660 $540 $760 $2,370 $1,690
3–5 14,470 5,590 1,700 1,630 530 730 2,580 1,710
6–8 14,240 5,500 2,050 1,760 580 830 1,770 1,750
9–11 14,040 5,260 2,380 1,840 630 900 1,240 1,790
12–14 14,850 5,520 2,500 1,960 1,050 900 950 1,970
15–17 15,350 5,040 2,630 2,380 950 950 1,670 1,730
Total $261,270 $97,590 $38,280 $33,690 $12,840 $15,210 $31,740 $31,920

children this age are in the labor force and must pay for child care. Once the child enters school, the cost decreases. And as a school-age child grows up, the need for after-school and summer care also decreases. The estimates do not include expenses related to college attendance, which typically do not occur until the child is at least eighteen.

Future Costs

The USDA also estimated the cost of raising a child born in 2003 who will reach the age of seventeen in the year 2020, incorporating an average annual inflation rate of 3.1% (the average annual inflation rate over the previous twenty years). Total family expenses for raising a

TABLE 4.8

Estimated annual expenditures on a child by single-parent families, 2003
Age of child Total Housing Food Transportation Clothing Health care Child care and education Miscellaneous*
Notes: Estimates are based on 1990–92 Consumer Expenditure Survey data updated to 2003 dollars using the Consumer Price Index. For each age category, the expense estimates represent average child-rearing expenditures for each age (e.g., the expense for the 3–5 age category, on average, applies to the 3-year-old, the 4-year-old, or the 5-year-old). The figures represent estimated expenses on the younger child in a single-parent, two-child family. For estimated expenses on the older child, multiply the total expense for the appropriate age category by 0.93. To estimate expenses for two children, the expenses on the younger child and older child after adjusting the expense on the older child downward should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.35. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.72 after adjusting the expenses on the older children downward. For expenses on all children in a family, these totals should be summed.
*Miscellaneous expenses include personal care items, entertainment, and reading materials.
SOURCE: Mark Lino,"Table 7. Estimated Annual Expenditures on a Child by Single-Parent Families, Overall United States, 2003," in Expenditures on Children by Families, 2003 Annual Report, Miscellaneous Publication No. 1528-2003, Center for Nutrition Policy and Promotion, U.S. Department of Agriculture, 2004, http://www.usda.gov/cnpp/Crc/crc2003.pdf (accessed August 24, 2004)
Before-tax income: Less than $40,700 (average=$17,000)
0–2 $5,700 $2,350 $1,050 $740 $320 $240 $600 $400
3–5 6,440 2,670 1,100 650 330 360 810 520
6–8 7,230 2,830 1,390 760 390 420 740 700
9–11 6,710 2,720 1,610 540 400 530 350 560
12–14 7,210 2,730 1,620 630 670 570 450 540
15–17 7,960 2,890 1,760 990 790 560 340 630
Total $123,750 $48,570 $25,590 $12,930 $8,700 $8,040 $9,870 $10,050
Before-tax income: $40,700 or more (average=$61,700)
0–2 $13,060 $5,050 $1,620 $2,270 $450 $560 $1,470 $1,640
3–5 14,080 5,370 1,710 2,180 470 750 1,840 1,760
6–8 14,930 5,540 2,050 2,280 540 860 1,720 1,940
9–11 14,350 5,430 2,470 2,070 550 1,030 1,000 1,800
12–14 15,210 5,430 2,420 2,160 900 1,090 1,430 1,780
15–17 15,620 5,600 2,560 2,330 1,030 1,070 1,160 1,870
Total $261,750 $97,260 $38,490 $39,870 $11,820 $16,080 $25,860 $32,370

child through the age of seventeen years are estimated to be $172,370 for the lowest-income group, $235,670 for the middle-income group, and $344,250 for highest-income group. (See Table 4.9.)

Teens Children and Money - Teens As Consumers [next] [back] Teens Children and Money - Child Support

User Comments Add a comment…