Want an easy way to save a fortune? Don't have kids.
Children will cost you roughly one-quarter of a million dollars before they turn age 18. If you send them to college, you could spend twice as much, according to a new report by the U.S. Department of Agriculture. Offspring are also far more costly, even on an inflation-adjusted basis, than they used to be, the agency found. In 1960, children in the baby boom generation cost their parents 23 percent less to raise than kids do today. That amounts to a total of $195,690 in inflation-adjusted dollars, versus today's average of $241,080.
The biggest factor behind the rising cost of child-rearing is out-of-pocket health payments and child care expenses, which have both more than doubled. The USDA partly attributes the spiraling cost of child care to the fact that there are far more two-income families in 2013 than there were in 1960. That means more families are reporting day-care expenses.
Of course, if a couple opts to have one spouse stay home to raise the kids, that's a cost, too. But the USDA didn't account for the so-called opportunity cost of wages that went unearned by a stay-at-home spouse in 1960. Even today it ignores the half of U.S. households that say they have no day care or education expenses.
Theoretically, if the researchers had used the same formula used in 1960, the disparity would be less severe. Still, where child care and education accounted for just 2 percent of the cost of having children in 1960 -- a total of $3,914, or roughly $301 annually (through age 13) -- it now commands 18 percent of the cost, an average annual expense of $3,338.
No matter how you slice it, in short, the cost or raising children is far higher in 2013 than half a century ago.
Meanwhile, even at $241,080, this estimate of the cost of having kids is likely to be conservative. The government's exhaustive explanation of how it figures the numbers notes that the cost of housing your child is figured based on the incremental cost of buying a house with an additional bedroom. It doesn't account for those who might move to a more costly neighborhood to get the benefit of better schools or a safer environment.
The estimates also assume some economies of scale that come with having more than one child, such as being able to use hand-me-down clothing and shared babysitters. If you have just one child, you'll spend comparatively more.
But the USDA rightly notes that the amount you spend on a child - like the amount you spend on yourself -- will vary based on household income. The lowest-income group studied -- those earning less than $60,640 -- will spend an average of $216,910 on their youngest child by the time he or she reaches the age of 18. Those earning the most -- $105,000 or more -- will spend upwards of $500,000.