OREGON STATE UNIVERSITY

NEW COSTS FOR RAISING A CHILD RELEASED

07/09/1996

CORVALLIS - If you think it's expensive to raise a child in the western United States, you're right. According to estimates of child-related spending by families in 1995, it costs more to raise a child in the urban West than elsewhere in the country.

A middle income family ($33,500-$56,400 a year) living in the urban West will spend an estimated $157,000 to raise a child born in 1995 to age 18.

A similar family in the Midwest, where child rearing costs are the lowest in the country, will spend about $137,000, the study shows. Costs in urban areas of the Northeast and South fall between the two extremes.

The estimates are contained in a report, "Expenditures on Children by Families," issued annually by the U.S. Department of Agriculture, according to Alice Mills Morrow, Oregon State University Extension family economics specialist.

The USDA report provides estimates of expenditures on children from birth through age 17, Morrow said. This year's figures are based on the 1990 Consumer Expenditure Survey updated to 1995 dollars using the Consumer Price Index.

The estimates include direct spending for housing, food, transportation, clothing, health care, child care and education, and miscellaneous expenses. They do not include costs related to pregnancy and college savings. Nor do they include the indirect costs of lost earnings and career opportunities when one or both parents take time away from work to care for their children.

Why is it more expensive to raise a child in the West? Housing, which accounts for about one-third of child rearing costs, is the main reason, says Morrow. Housing is more expensive in the West than other areas of the country.

Food is the second largest expense, accounting for 15-20 percent of child-rearing costs. The amount spent on food goes up each year as the child grows older.

"The USDA estimates can't be used to predict what a particular family will spend because they are based on averages. But the estimates do show useful trends," Morrow said.

For instance, couples with higher incomes spend more on their children than lower income families. But lower income families spend a larger percentage of their earnings on their children.

For families with children, the trends in spending demonstrate the importance of financial planning and budgeting, according to Morrow.

"The estimates show that the cost increases as a child gets older," Morrow said. "The only cost that will go down is for child care, which is more than offset by increased costs in other categories. So anything parents can do to improve their earning power should be given serious consideration. And parents should review the adequacy of their life insurance."

To receive a copy of the 1995 estimates of raising a child, send a stamped, self-addressed envelope to Morrow at OSU, 161 Milam Hall, Corvallis 97331-5106.