I got my paycheck today, and for a minute I couldn’t figure out why it was less money than I usually get. Once I looked at the kick in the pants that is my HMO payment, now that the kid is on my insurance, it all made sense.
The Wall Street Journal had this article today saying how much it costs to raise a child from birth to 17 years old.A US Dept of Agriculture study says it costs, on average, $279,450 total over 17 years, with another $134,693 for college tuition after that.Knowing that they don’t take into account the opportunity cost of the money, I decided to see how much it really costs – what you’re really giving up.
I split the $279k into equal annual payments, tacked on another 4 years for college living expenses, added the tuition payments in annual increments, and compounded the annual amounts by an 8% rate of return (assuming the payment would go into equities at 10%, decremented by a 2% inflation rate).
At the end of the day, your real opportunity cost of having that kid is $981,017 – that’s what you would have, in real dollars, at the end of 21 years instead of a kid.
So I hope you’re telling your kids they’re worth a million bucks to you… because that’s what you’re paying for each one