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HDFS 201 Extra Credit: What Does it Cost to Raise a Child for 18 Years?

Here is a link to a website that you will be using. http://www.extension.umn.edu/family/personal-finance/spending-and-saving/cost-of-raising-children/

If you have trouble connecting to it, just do a search using the phrase “The cost of raising children.” You want the one posted by the University of Minnesota’s Extension office.

In doing this assignment, you will be figuring out the separate cost of raising a child – theoretically the extra money one adult who is a parent would spend on raising their one child whereas another adult, who is not a parent, would have that same amount of money to save for retirement or spend on themselves or on others.

You will be using Tables 1-7 (Ignore Tables 8 & 9) which represent seven categories of expenses (housing, food, transportation, clothing, health care, child care & education, and misc.). Each table is broken down by one-parent or two-parent families and then further by income categories of lower, middle, and upper.

Here is what you are going to do. I want you to calculate and then compare the cost of raising one child in two different family types from birth to age 18. You can select either parental category for the two children, just be sure to do two different income brackets. For example, you could do one child living with two parents who are in the lower income bracket and one child living with two parents who are in the upper income bracket, or one child living with two parents who are in the lower income bracket and one child living with one parent who is in the upper income bracket. The reason I want you to do two different calculations is because I think it is important for you to see how children who grow up in different social classes have parents who spend different amounts of money on them. Not only will this activity illustrate the different childhood experiences had by individuals raised in different socioeconomic families, but it also will illustrate that the more money a child has available to them, the more opportunities they will have available to them as well.

To help you make sure you are doing the assignment correctly, I’ve calculated below the 18-year cost of housing (using Table 1) for a child growing up in a household with two parents whose combined income falls into the lower income bracket:

Age 0 – 2 = $248/month x 36 months (the number of months from 0 – 2) = $8,928

Age 3 – 5 = $244/month x 36 months (the number of months from 3 – 5) = $8,784

Age 6 – 8 = $236/month x 36 months (the number of months from 6 – 8) = $8,496

Age 9 – 11 = $213/month x 36 months (the number of months from 9 – 11) = $7,668

Age 12 – 14 = $238/month x 36 months (the number of months from 12 – 14) = $8,568

Age 15 – 17 = $192/month x 36 months (the number of months from 15 – 17) = $6,912

18-year housing cost $49,356

Now go through this same process for all seven categories of expenses for one child each whose parent(s) fall into two different income brackets. SHOW YOUR CALCULATIONS like I did above. You can either type it out like I did above, or use Excel (my recommendation).

After you have calculated annual costs for all seven categories for the two different children, I want you to summarize those costs and show a total cost for 18 years for both children. For example, do this:

Child #1: Two-parent family, lower income bracket

Housing $49,356

Transportation $

Food $

Clothing $

Health Care $

Child Care $

Misc. $

TOTAL COST:

Child #2: Two-parent family, upper income bracket

Housing $

Transportation $

Food $

Clothing $

Health Care $

Child Care $

Misc. $

TOTAL COST:

Lastly, I want you to reflect on what you now know after having calculated the costs for each child. Put some thought into this.

1. Were you surprised at the costs (any one specific cost or the total cost)? Why or why not?

2. Give an example of a specific experience you think each child might have based upon the amount of money that was available for one particular category (i.e. transportation or clothing.) Maybe think in terms of comparing the quality of things each child receives and what experience may go along with a particular level of quality.

3. Now that you have done this assignment, do you think there are new issues you may think about in the future when you consider having a child? If so, what sorts of issues may come up?

4. Was there anything you didn’t understand or had a question about?

1. Submit ALL of your calculations as well as your answers to the four questions.