The Cost of Raising Children

Posted By Pasadena Family Law Attorney || 10-Aug-2010

Since 1960, the governmental department assigned to provide estimates of expenditures on children from birth through the age of 17 has been the United States Department of Agriculture. Those expenditures consist of the following categories: housing, food, transportation, clothing, health care, child care, education, and miscellaneous expenses. The report only covers through the age of 17, even though everyone will agree that parents do not stop supporting their children once they reach the age of 17. In other words, people should expect that children will actually cost them more than what is set forth by the USDA.

According to the report from the USDA entitled Expenditures on Children by Families, 2013, "In 2013, estimated annual average expenses on the younger child in two-child, husband-wife families increased as income level rose. Depending on age of the child, annual expenses ranged from $9,130 to $10,400 for families with a before-tax income less than $61,530, from $12,800 to $14,970 for families with a before-tax income between $61,530 and $106,540, and from $21,330 to $25,700 for families with a before-tax income more than $106,540. On average, households in the lowest income group spent 25 percent of their before-tax income on a child; those in the middle-income group, 16 percent; and those in the highest group, 12 percent. The range among these percentages would be narrower if after-tax income were considered…. Compared with expenditures for each child in a husband-wife, two-child family, husband-wife households with one child spend an average of 25 percent more on the single child, and those with three or more children spend an average of 22 percent less on each child."

Taking inflation into account, it is estimated that to raise a child born in 2013 to age 17 will cost the lowest income group $218,680, the middle income group $304,480, and the highest income group $506,610. "For husband-wife families with one child, USDA estimates 27 percent of total family expenditures are spent on the child; for two children, 41 percent; and for three children, 47 percent…. In 1960, average expenditures on a child in a middle-income, husband-wife family amounted to $25,229, or $198,560 in 2013 dollars. By 2013, these estimated expenditures climbed 24 percent in real terms to $245,340 (assuming a family had child care and education expenses on a child)."

For those interested, the United States Department of Agriculture has developed a " USDA Cost of Raising a Child Calculator."

Parents almost always tell me that their children mean more to them than anything else. Considering the cost of raising a child, I would certainly hope this statement to be true. However, what parents seem to forget when they are divorcing or their relationship is ending is that children are expensive. Since most parents never used the USDA Calculator, they never really thought about the cost of their children. It is only when the relationship comes to an end that the parents have to deal with the issue of child support. Child support is the payment by one parent to the other for the support of the child[ren] of their relationship. Federal law requires that the amount of child support be determined in accordance with a guideline. Child support calculations take into account the respective gross incomes of the parents, tax deductible expenses and the percentage of time that each parent has the children, among other things.

Reflect upon the following example: (1) father's gross monthly income is $4,500, (2) mother's gross monthly income is $3,500; (3) there are 3 minor children involved, ages 3, 5 and 7; (4) father has the children 25 percent of the time; (5) father files his taxes as single; (6) mother files as her taxes as head of household; and (7) mother spends $600 a month on child care. For this example, no other factors exist for purposes of calculating guideline child support. The father in this case would be ordered to pay the mother guideline child support in the sum of $1,320 per month and he would be left with net spendable income of only $2,051 per month. After taking into account the child support she receives, the mother would have monthly net spendable income of $4,800.

Invariably, father would complain that the laws are unfair and that he cannot afford to pay that amount of child support. He may also be troubled by the fact that the mother is not obligated to account for her use of that money. The father might refuse to purchase clothing and other basic necessities for the children because he is paying child support to the mother. However, what the parents have not considered is that according to the USDA Calculator, the estimated annual cost of those 3 children is $32,300 and he is paying the mother $15,840 per year in child support, which is $16,460 less than the estimated annual cost of raising those children. The child support that he pays to the mother basically equalizes the fact that she has the children 75 percent of the time and therefore incurs 75 percent of their cost. Father still has the children 25 percent of the time and has costs associated with his time with them. Both parents struggle to support the children, one thinking he is paying too much in support and the other that she is receiving too little in support. In reality, the only reason the couple was able to afford the 3 children while still together (assuming that they could afford the 3 children) is because they only had one household to support.

According to the USDA's report, "As a proportion of total child-rearing expenses, housing accounted for the largest share across income groups, comprising 30 to 33 percent of total expenses on a child in a two-child, husband-wife family. For families in the middle-income group, child care/education (for those with the expense) and food were the next largest average expenditures on a child, accounting for 18 and 16 percent of child-rearing expenses, respectively." In determining housing expenses, the USDA takes into account the average cost of additional bedrooms needed to accommodate the children.

In some cases, there may be a dispute over what figures should be used in determining guideline support or how that data should be input. As they say, "garbage in, garbage out." Please note that as long as certain requirements are met, parents may agree on an amount of child support that is either below or above the statewide child support guidelines. However, in order to demonstrate that they made an informed decision in deviating from guideline support, the parents must set forth the guideline amount in their agreement. They must also include the following information: "The parties have been fully informed of their rights concerning child support. Neither party is acting out of duress or coercion. Neither party is receiving public assistance and no application for public assistance is pending. The needs of the children will be adequately met by this agreed upon amount of child support. No change of circumstances will be required to modify this order. The order is in the best interest of the children (specify):"