Monday, April 24, 2006

Which Costs More: Your Child or Your House?

Author: Nick
Category: Money
Topics: , , ,

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Our friend Stacie, who is a Registered Dietitian and nutrition consultant, pointed me to some USDA data regarding the various expenses of raising a child. You can read all the scary details for yourself at this site…

Expenditures on Children by Families

…but I’ll summarize some of the more interesting facts here.

  • Last year, the average American child cost $10,000-11,000 for food, housing, transportation, clothing, health and child care, education, and all other expenses. Below-average income families spent $8,000 a year per child, while above-average income families dished out over $15,000 for each of theirs.
  • The most expensive cost category for children was housing; it typically equaled a third of the total annual cost of a child.
  • The least expensive cost category was clothing. It’s worth noting, however, that clothing costs climbed higher for older children than any other category; a typical 12-year-old’s clothes cost double that of a 2-year-old.
  • Child care, education, and housing were the only costs to go down as a child got older. All other cost categories were higher for teenagers than for younger children.
  • Surprisingly, if you take into account the total annual costs for a child, teenagers were only $1,000 more expensive than younger children.

And for all those aspiring parents out there, keep this in mind regarding the total cost of raising a child: If you have a baby today, you will spend over $250,000 on him or her by the time he or she turns 18 in the year 2024. Considering the national median housing price is sitting around $210,000 right now, each of your children is likely to cost more than the price of your house to take care of… and that’s without putting a single penny toward college!

Friday, April 7, 2006

Shocking News: Teens Aren’t Financial Geniuses

Author: Nick
Category: Money
Topics: ,

I wish I could get paid to perform surveys with obvious results. One group responsible for such a survey came out with its annual report on Wednesday. Please suspend your disbelief as I reveal a surprising fact about America’s youth: they can’t tell the difference between a credit card and a minting press.

Seriously, if children are having a hard enough time learning the stuff that’s being taught to them in class, how are they supposed to learn financial concepts that neither their parents nor their schools are teaching them? I bet those students who scored comparatively high on their financial surveys just got lucky and caught a glimpse of a few passing economic news headlines on the internet.

Some startling statistics on the wrong answers given by teens:

  • 55.8% didn’t know they could be held liable for up to $50 of a timely-reported fraudulent credit card charge.
  • 81.4% said state-issued bonds were insured by the federal government.
  • Almost 59% confused social security and 401(k)s with pensions. (…though maybe we shouldn’t be teaching kids to expect social security when they retire.)
  • Over 50% didn’t know that savings account interest is taxable.
  • 44.8% thought a savings bond offered better long-term growth over stocks! Wow!

Of course, I’m a pot calling these kettles black because I certainly received little in the way of financial education growing up. Most of what I know about money I’ve taught myself in the last five years (and keep in mind I’m 23). Other than making sure my own kids get the personal finance instruction I never had, I guess all I can do is feel sorry for another generation that will soon be struggling with credit card debt, uncontrollable spending, and likely prospects of bankruptcy.