In 2017, the USDA Expenditures On Children By Families Report projected families would spend $233,610 to raise a child born in 2015 through age 17. That was nearly $12,000 LESS than their estimate two years earlier of what was needed to raise a child born in 2013. Times certainly have changed.
A recent analysis by the Brookings Institute recalculated the 2015 number to reflect actual inflation (versus the inflation assumed in the 2017 USDA report) and found that the actual cost to raise a child born in 2015 will likely be closer to $310,605 – roughly a third higher!
A recent article by Insurance News Net pulled together cost estimates across categories and listed the most (Washington D.C.) and least (Idaho) expensive states in the U.S. to raise a child. While this may be helpful information for advisors to know and share with their clients, it also may prompt advisors to revisit any cost assumptions they use in family planning models.
In recent weeks, we’ve seen prices of household staples like gasoline and food items decline, but inflation and its lasting impact remain high – especially for families with young children. This alone may be enough motivation to warrant revisiting a broader financial planning conversation – especially with clients approaching, in, or just past their child-bearing years.
As Ben Franklin reminded us in 1789, “in this world, nothing is certain but death and taxes.” Perhaps today, he might add the sizable expense associated with raising children. Having lost his four-year-old son to smallpox, it is likely that Franklin would agree that as expensive as raising a child might be, there is no greater personal undertaking. The ability of advisors to help families plan for and navigate that undertaking is a tremendous responsibility and gift.
Christy Charise, Founder & CEO of Strategic Advisor