Kids Or Cash: The Modern Marriage Dilemma

For prospective parents, weighing the decision to have children has not gotten any easier. According to a 2004 study by the United States Department of Agriculture (USDA), parents who grossed at least $70,200 a year spend a total $269,520 to raise a child to the age of 18.

In the U.K., the cost of raising a child to the age of 21 outside of expensive London is estimated to be about £166,000 (about US$286,000), according to a survey by the Liverpool Victoria Society. The financial dilemma, therefore, is similar for many developed countries. If household incomes were unlimited, the decision to raise children might be a strictly personal choice. In reality, however, the decision to have children is also a financial one. In this article, we'll provide some food for thought from the financial side of the equation.

The Expenditures
If $269,520 sounds like a lot of money to you, consider that the statistics cited in the study are actually lower than the cost of raising a child because they are based on the cost of raising the younger child in a household that consists of two adults and two children. To estimate the cost of raising an only child, all expenses should be multiplied by 1.24. (For further reading, see Don't Forget The Kids: Save For Their Education And Retirement and Investing In Your Child's Education.)

Family Income	Family with Two Children	Only Child
Up to $41,700	$134,370	$166,619
$41,700 to $70,200	$184,320	$228,557
Over $70,200	$269,520	$334,205

Figure 1 - The cost of raising a child to the age of 18 for different income classes. Source: Expenditures On Children By Families (2004), USDA.

Figure 2 shows the breakdown of the average expenses for a two-child family earning more than $70,200 per year. Where does all the money go? These are the major expenses cited in the USDA study:

Housing	$100,080
Food	$39,570
Transportation	$34,860
Clothing	$12,810
Healthcare	$15,870
Childcare and Education	$33,870
Miscellaneous	$32,460
Total	$269,520

Figure 2 - A breakdown of the average child-raising expenses for the younger child of a two-child family with a yearly pre-tax income of more than $70,200. Source: Expenditures On Children By Families (2004), USDA.

Of course, the old adage "the more you make, the more you spend" certainly applies to child rearing. Families earning a pre-tax income of between $41,700 and $70,200 spend considerably less - only $184,320 - to raise a child to age 18. Lower-income families spend less to raise their children because they are financially unable to offer them the same amenities available to higher-income earners. The breakdown of their expenditures is shown in Figure 3:

Housing	$61,650
Food	$31,770
Transportation	$25,980
Clothing	$9,930
Healthcare	$13,830
Childcare and Education	$21,180
Miscellaneous	$19,980
Total	$184,320

Figure 3 - A breakdown of the average child-raising expenses for the younger child of a two-child family with a yearly pre-tax income between $41,700 and $70,200. Source: Expenditures On Children By Families (2004), USDA.

Families earning less than $41,700 per year can expect to spend just $134,370, as shown in Figure 4:

Housing	$44,580
Food	$26,490
Transportation	$18,660
Clothing	$8,490
Healthcare	$10,680
Childcare and Education	$12,090
Miscellaneous	$13,380
Total	$134,370

Figure 4 - A breakdown of the average child-raising expenses for the younger child of a two-child family with a yearly pre-tax income of less than $41,700. Source: Expenditures On Children By Families (2004), USDA.

The Joy of DINKS
Families that consist of two working adults and no children (also known as dual income with no kids, or DINKS) are sometimes stereotyped as hedonists or are decried by child-rearing families as shirking their moral imperative to procreate. Righteous indignation aside, a quick reality check will help us focus strictly on the economic aspects of the child/no child decision.

According to the U.S. Census Bureau, traditional families - defined as a married couple with children under age 18 - represented 26.3% of the U.S. population in 1990. By 2002, that number had declined to 23.6%. Similarly, married couples without children under age 18 represented 29.8% of the population in 1990, a figure that had declined to 28.3% by 2002. A similar trend can be seen in England and elsewhere in the industrialized world. Australia's 2001 census, for example, indicated a marked decline in the number of families with only one working parent - down to 19.7% from 30.1% in 1996. These statistics suggest that the traditional family unit may be on the decline.

Decline of the Traditional Family Unit
Economics quite obviously plays a role in the decline of traditional families. People are waiting longer to get married and are having fewer children, in part because life is becoming increasingly expensive. (To read more about weddings, see Revealing The Hidden Costs Of Weddings.)

Adding to the challenge is the lack of job stability in modern capitalist economies, a notion supported by the U.S. Bureau of Labor Statistics, which has found that most professionals change careers more than half a dozen times in the course of a lifetime. Young couples also face the financial challenges of paying off student loans while paying for other living expenses such as rent/mortgage, car payments, food, clothing, utilities, etc. And let's not forget about trying to find money to save for retirement in a nation where pension plans are on their way to becoming an endangered species. Simply put, for young couples today, kids are an expensive addition to an already difficult equation. (See Delay In Savings Raises Payments Later On and The Indiana Jones Guide To Getting Ahead.)

No Kids? Why Get Married?
Love and affection aside, marriage provides greater financial stability than going it alone. When both spouses work, all but the most foolhardy of married couples enjoy significantly greater financial benefits than other families. Smart couples leverage marriage to increase income and decrease expenses. Instead of making two rent or mortgage payments, these couples make one. Likewise, most utility bills have a minimum payment that would be higher if the couple was living apart than the incremental increase in living together. The most financially savvy couples live on one income and save the rest. They usually have two employers from which to choose health plans and won't have to worry about bankruptcy if one income earner is temporarily unemployed.

Economically speaking, the absence of children results in lower fixed expenses. It also results in more money to spend. Regardless of your feelings about children, the bottom line is that you can do a lot of nice things for yourself, your spouse and your finances with the quarter of a million dollars that it takes to raise a child to age 18.

Conclusion - Kids or No Kids?
Economic reality forces tough choices. The decision to have children is a politically sensitive topic; those who have children abhor the cold economic reality that DINKS factor into their equation, while some DINKS maintain the view that unchecked population growth contributes to environmental strain. In the end, having children is still a deeply personal and challenging choice - just remember to add the financial implications of raising children into the equation. You need to review your personal situation and make the choices that are right for you and your family, whether it will consist of two people or 10.

by James E. McWhinney, (Contact Author | Biography)

James McWhinney has been a professional writer for nearly two decades. He has worked for many of the nation's top mutual fund providers and banks in addition to numerous magazines, websites and other publications. He specializes in financial services and travel.