(Note: This column ran in today’s USA Today)
By Laura Vanderkam
In a tepid economy, people look to save money however they can. One strategy? Not having kids. After hitting a high of 4.3 million in 2007, U.S. births tumbled, according to the Centers for Disease Control and Prevention, to about 4 million in 2010.
It makes sense. Each year, the U.S. Department of Agriculture produces a study calculating how much it costs to raise a child to age 18. In 2010, the price tag was $226,920 — curiously close to the U.S. median house price ($221,800). Given how vexing housing has been, families are understandably wary of adding similarly-priced babies to the mix.
But a closer look at these numbers shows that the real sticker shock happens when you have the first kid — something the vast majority of couples do. After that, the marginal costs decline considerably, to the point where the third kid — the one most families don’t have — is downright cheap. That’s good news for would-be bigger families because, despite vague talk of overpopulation as this planet crossed 7 billion inhabitants in October, Americans tend to undershoot, not overshoot, their preferred family size.
Numbers tell the story
To produce that $226,920 number, researchers survey about 12,000 husband-and-wife households each year. They’ve discovered that families with three kids spend 22% less per child than two-kid families. Single-kid families spend 25% more on their offspring than two-kid families spend on each of theirs.
While 22%-25% doesn’t sound like a huge difference, this is what it means on the margins: An 11-year-old who’s an only child would cost a middle-income family $15,830 per year (a big chunk of that is to house him). According to the USDA tables, though, a family with an 11-year-old and a 16-year-old would spend $26,490 per year. Having a second child added only $10,660 to the tab. After that it gets better. A middle-income family with kids ages 11, 13 and 16 spends $31,070. The third kid costs just $4,580.
So what’s going on? Two things, according to Mark Lino, who writes the USDA report. First, “if you have X amount of income, with more children the income has to be spread over more children,” leaving less for each.
In theory this could shortchange children — except there’s no evidence that folks from three-kid families turn out 22% worse than those in the two-kid norm.
That brings us to the second explanation: “You also start to get economies of scale — the cheaper by the dozen effect,” Lino says. Once you buy the home, for instance, “you can have children share a bedroom — that’s a big cost savings.” Kids use hand-me-down clothes, cribs and toys. Sitters don’t charge three times the rate for three kids vs. one.
Meagan Francis, a Michigan mother of five and author of The Happiest Mom, agrees. “Our family is twice the size of a lot of families we hang out with, but our food bill isn’t twice the size.” They buy in bulk and don’t eat out much, partly because it’s a hassle and partly because staying in “feels like a party.” Indeed, with four built-in playmates, the kids don’t need pricey activities to stave off boredom.
To be sure, some costs don’t decline. Take college (which the USDA doesn’t include in its figures). Sending 3-plus kids to college would be exorbitant. On the other hand, in an era when private tuition, room and board tops $50,000 a year, “most of the people I know with one or two kids don’t think they’re going to be able to put their kids through college,” says Francis. More kids doesn’t change that.
Of course, even if the third kid is cheap — a recession special — each child still requires volts of parental energy. But surveys find that some chunk of Americans would like to tackle more of these projects than they do. Gallup has found that people think 2.5 children is the right amount to have in a family, yet the American birth rate is about two children per woman. Some 33% of adults think that the ideal family would have three or more kids; 29% of women hit this. Perhaps fears of overpopulation figure in, but since almost 80% of Americans plunge into parenthood — with the big outlay for the first kid that entails, and showing, by adding a person to existing billions, that they don’t think the world’s too crowded — it’s strange that people stop just as the economies of scale improve.
Whether to ‘go for it’
So if you want a third, when people talk about the steep cost of kids, know there’s more to the story.
That’s what Brian Schupper decided. He and his wife, who live in Milwaukee, have many friends with two kids who “wished they’d had another,” Schupper says. As they debated the third-kid question, they worried about “the impact on our ability to provide experiences for our other two kids.” But they decided to go for it, and welcomed a third son last year. Thanks to hand-me-downs, help from family, and flexible work arrangements already in place due to the other kids, the costs have been limited. The upside? “A house with more life in it,” he says.
In other words, they’re getting more for their money. With kids — or anything else — that sounds smart.
Laura Vanderkam, author of the forthcoming All the Money in the World (March 1), is a member of USA TODAY’s Board of Contributors.