Will Having Children Bankrupt You?
What Is The Cost Of Raising A Child Today? Have An Extra Quarter Million Laying Around?
By John G. Merna
Surprisingly, it is the U.S. Department of Agriculture that maintains the statistics on the cost of raising a child and this week they said … well, it costs a heck of a lot. In their report,Expenditures on Children by Families, 2012, the federal government confirmed what many parents already know, it is not cheap to raise children.
But the real question to explore is are they driving some families into bankruptcy. Let’s face it. When I meet with a client who has two three children and high credit card debt and an average wage they often have an excuse for consulting me. But I have never had a single client say “I can’t afford my children”.
The truth, I believe, is we make choices to have families. Sometimes those choices are ill timed or not thought out at all. Sometime it is not the timing or planning that it is poor, it is our ability to control a very natural inclination to want to give our child as much opportunity as possible. This may be a survival instinct bred into us. Whatever the origin, it seems counter intuitive that many of our poorest neighbors can raise large families and not file bankruptcy. Oh, no doubt they struggle financially but they opt to do without.
I practiced bankruptcy in Los Angeles for eight years prior to relocating closing to family in Virginia to raise my two daughters. I bring up Los Angeles because there was an obvious phenomenon that existed in my clientele in that city where wealth was ostentatious, they felt like they had to keep up with the movie stars. This pressure to live way above one’s means was very clear. This was not confined to families. My only conclusion was that the environment has a lot to do with our spending decisions.
At our offices in Virginia Beach, Newport News & Richmond, we do not see people trying to live movie star lives. We meet and consult with people on a daily basis who are trying to halt foreclosure, stop a garnishment, recover a repossessed vehicle, or just simple find an option to exit the heavy debt they have found themselves in. Most of the time the twist of fate is due to divorce, illness, job loss or some other misfortune not considered to be in their control.
But back to the issues of the cost of raising children… the good news is that when adjusted for inflation the cost has only climbed a little since 1960. The other good news is that you can raise a larger family on less per child. So they “hand-it-down” theory of savings is alive and well. The statistics also seem to confirm what a lot of parents know that the cost of a child is fairly consistent until the age of 9 or 10 then … well, my simple explanation is “electronics”. Yes, folks. The cost starts increasing. I say electronics is the reason but I am half joking. But cellphones, vehicles, more expensive clothes, more expensive holidays and birthday…well just more expensive everything for a teenager.
In my credit recovery program one of the first financial tips I introduce is the financial power of saying “No”. It may not solve what government scientist are claiming is a trend but it may help you avoid filing bankruptcy because of your children.
If you have children or are planning children look at the study at the link above. It might help you be better prepared and avoid a visit to my office in the future. However, I am also one of those parents that believes if the choice was between struggling financially and having children and not struggling financial by not having children … well, I’m not turning mine in today. Ask me again tomorrow. They are teenagers. The answer may be different.
God bless you and your family.
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