Million Dollar Babies: What It Really Costs to Raise a Child

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Last week, the Department of Agriculture announced that the cost of raising a child is now estimated to be $234,900. The fact that this figure represents an all-time high probably set some new and expectant parents into a panic. So moms and dads out there should sit down before hearing about how this figure is probably a gross underestimate of the costs related to bringing up baby.

There are many reasons why the $235K number doesn’t represent the full expenditure of having a kid. First off, the USDA’s statistics are based on the cost of raising a child only through the age of 17. Unless your child is the rarest of prodigies, he or she won’t have a college degree by then. So obviously, college costs aren’t included in the figure. And college costs, which have already hobbled a generation of new grads, will only be more burdensome down the line. Many private colleges already charge over $40,000 per year just in tuition, and tuition at public universities rose by 15% from 2008 to 2010—and several will increase by over 40% this year alone.

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What’s more, the $235K figure is what a middle-income family, with annual income between $59,410 and $102,870, is expected to spend. Families that earn over that range can anticipate spending an average of $389,670 from the birth of their child through age 18. Again, that doesn’t include college. If college is factored in, you can probably double either figure for a better idea of what parents will spend to raise their kids.

But, as the Wall Street Journal’s “Numbers Guy” column points out, even incorporating anticipated college costs won’t result in the full tally.

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A better real-world estimate would also include a figure accounting for what parents miss while raising their kids, specifically, missed income and career sacrifices due to childrearing:

“The real costs of raising a child for a moderate-income family”—including forgone income, college for those who attend, and the so-called opportunity cost of not investing the money—”would be closer to $900,000 to age 22 than the reported $300,000 expenditures to age 18,” says John Ward, an economist and the president of John Ward Economics, based in Prairie Village, Kan., which consults on legal disputes for plaintiffs and defendants.

Another estimate, calculated in 2009, puts the true dollar amount for raising a child from birth through undergrad years at a whopping $1.1 million.

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Perhaps even these numbers are underestimating the cost of having a child. Increasingly, it takes years after graduating from college for young adults to become truly financially independent. Many new and recent grads don’t live on their own either, due to unemployment, underemployment, crippling student loan debt, simple comfort moving back into Mom & Dad’s B&B, or some combination therein. If the current trend continues, there’s a good chance kids will keep on living with their parents well into their 20s and even their early 30s.

Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.