The Cost of Raising a Child Has Ballooned to Over $300,000
Brookings’ Jump Scare
Brookings Institution, one of oldest think tanks in the U.S., evaluated the cost of raising a child. The analysis indicated that a married couple with two kids, earning a mid-range income, would on average spend $18,271 annually to raise their youngest child born in 2015 through age 17. The total cost to provide financial support until adulthood came in at a whopping $310,605.
Given that this total doesn’t even include the college years, costs could have some rethinking their family planning. Others may feel motivated to sharpen their pencils as they review budget priorities.
Raising a child has never been cheap. There are many foreseen — and unforeseen — expenses including new clothes, school supplies, and other items to support their learning, development, and safety. Housing, healthcare, child care, and food costs expand along with a growing family. As they get older, participation in sports and other activities can add another dent to the family budget.
This recent study reveals an external force causing the rate at which these expenses rise to accelerate: inflation. The Brookings estimate reflects a 9% increase from two years ago, indicating the impact of price increases that are currently near 40-year highs.
Americans Weigh Tradeoffs
While the news may prompt some Americans to reconsider expanding or starting a family, others may resort to a more ruthless paring of budget line items.
Meanwhile, the Fed is working to tame inflation through the series of rate hikes it initiated in March. The July inflation reading showed their efforts may be paying off. Inflation moderated a bit, but at 8.5% was still high above the central bank’s 2% target.
As Americans weigh the tradeoffs of growing their family, maintaining a long-term perspective may help lessen the anxiety surrounding the current rising costs of raising children.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.