This financial burden is not limited to just the basic necessities of raising a child. The cost of extracurricular activities, such as sports teams, music lessons, and dance classes, has also skyrocketed in recent years. Many parents feel pressured to provide their children with these opportunities for personal growth and development, but the high costs can be overwhelming.
Furthermore, the rising cost of healthcare has added to the financial burden of raising a child. Medical expenses, including doctor visits, vaccinations, and prescription medications, can quickly add up. In fact, a study by the Kaiser Family Foundation found that the average annual cost of healthcare for a child in the United States is over $5,000.
In addition to these ongoing expenses, there are also unexpected costs that can arise throughout a child’s life. From emergency room visits to car repairs, parents must be prepared for the unexpected financial challenges that come with raising a child.
All of these expenses can have a significant impact on a family’s financial well-being. Parents may find themselves having to make difficult choices and sacrifices in order to provide for their children. This can include cutting back on personal expenses, taking on additional jobs or side gigs, or even delaying their own retirement plans.
It is clear that the financial burden of raising a child extends far beyond just college tuition. Parents must now consider the rising costs of childcare, teenage independence, extracurricular activities, healthcare, and unexpected expenses. As a society, we must recognize and address these challenges in order to support families and ensure that every child has the opportunity to thrive.
According to Matt Schulz, the chief credit analyst at LendingTree, it would be ideal to limit childcare expenses to 10% or less of one’s overall income. However, this objective is unfeasible for millions of Americans and can be considered a source of amusement.
How expensive is childcare?
NetCredit conducted an analysis of the mean yearly fees paid for public in-state college tuition and the average expenses incurred for childcare in each state. The difference between these two costs was then computed. Subsequently, the affordability of childcare and in-state college tuition in each state was determined by comparing these costs to the local average salaries.
According to the findings, childcare expenses exceed in-state tuition fees in 28 of the 50 states. Hawaii exhibits the most significant disparity, with annual childcare costs exceeding tuition fees by a substantial $15,995. New York follows closely behind, with a $15,951 gap between childcare and college expenses.
According to NetCredit, Vermont’s yearly expenses for childcare were $5,423 lower than the tuition fees for in-state public colleges, representing the opposite end of the spectrum. South Carolina came in second place, with childcare costs $3,679 less than annual tuition, albeit at a considerable distance.
How expensive is it for a teenager to own a car?
According to Jerry, the annual cost for a teenager to own and operate a new vehicle is $11,378, which exceeds the average yearly in-state tuition fee of a four-year public university, estimated at $10,940. This calculation was derived using AAA’s driving costs calculator, which factored in the difference in insurance expenses between drivers under 19 years old and those over 19 years old, amounting to $829. The calculator assumed an annual mileage of 10,000, which is the closest approximation to the average 7,200 miles driven by teenagers, as reported by the U.S. Federal Highway Administration.
To compare the increase in tuition fees with the cost of car ownership, Jerry juxtaposed the College Board’s tuition fees for the 2017-18 academic year with those projected for the 2022-23 academic year, alongside the expenses of owning a car from the end of 2018 until July 2023.
It is not a universal truth that every adolescent is privileged enough to acquire a new vehicle. However, even possessing a pre-owned car can result in significant expenses. According to Jerry, the annual cost of owning a 5-year-old Toyota Camry, which amounts to $10,276, surpasses the in-state tuition fees of the flagship public university in 13 states and is only $664 less than the average cost of attending a four-year public university.
Jerry further stated that a teenager earning the average hourly wage of $14.08, which is applicable to fast food workers, lifeguards, retail salespeople, and amusement and recreation attendants, would have to work for 49 hours per week over a 15-week summer or 14 hours every week for a year to cover the expenses of owning and operating a 2018 Toyota, assuming it is financed.
Henry Hoenig, in Jerry’s report, stated that it is not surprising that some studies have concluded that the difference in attitudes towards driving and car ownership among Millennials and Gen Z can be attributed to shifting economics.
Why are childcare costs surging?
The St. Louis Federal Reserve has reported that the demand for childcare has increased over the past few decades in correlation with the rise of two-income households. In 2019, the Center for American Progress, a public policy nonprofit, stated that approximately half of children in the United States spend some time in a licensed childcare facility.
The COVID-19 pandemic has further exacerbated this trend, resulting in a sudden surge in wages for childcare workers as centers sought to attract and retain employees, similar to other businesses. As of October 2021, the average hourly earnings for childcare workers had increased by 10.4% to $16.44 from the previous year, in addition to an already above-average wage growth of 4.3% between September 2019 and September 2020. This growth is significantly higher than the 5.8% wage growth for other workers.
According to the Bureau of Labor Statistics, annual childcare costs in July 2021 had risen by 6% from the previous year, which is twice the pace of overall inflation of 3.2%.
Why are car ownership costs climbing?
The escalating costs of auto insurance, maintenance, car repairs, vehicle prices, parts, and gasoline can be attributed to the significant increase in prices. According to Jerry, these expenses have risen at a rate that is at least three times faster than the tuition fees at four-year state universities since 2018.
Unfortunately, there is little hope for a decrease in car ownership expenses in the near future. Greg Brannon, the director of automotive research at AAA, warns that the ongoing rise in interest rates will further burden consumers when purchasing their next vehicle. The Federal Reserve has projected that it will raise its benchmark, short-term fed funds rate by a quarter point, resulting in a range of 5.5% to 5.75% by the end of this year.