Why Families are Feeling the Squeeze

A couple of weeks ago, the Los Angeles Times business section ran a short article on the cost of raising children, Children Don’t Come Cheap. Grand total for middle class family from birth to 17 was $222,360, which doesn’t include college tuition. “That’s 22% higher than the 1960 cost – adjusted for inflation – of $182,857,” the article reported.

Where’s all that extra money going? The common narrative implies that parents are throwing away “extra” money on gadgets and fancy clothes and big houses and even organic groceries or dining out more. Not so. The data continues to confirm what I wrote about in my book This is Not How I Thought It Would Be and in this blog post, Busting Stereotypes about Families and Money, using information from Harvard professor Elizabeth Warren.

It’s the increase in fixed costs that are eating up families budgets these days and making them feel like failures because they can’t get ahead.

  • “the report called child care and education expense ‘the most striking change in child-rearing expenses over time.’ Those expenses grew from 2 percent of total child-rearing expenses to 17 percent.”
  • “Housing was the most expensive expenditure in both time periods in the USDA report, and it increased in real terms over time.”
  • “A child’s health care expenses doubled as a percentage of total child-rearing costs from 1960 to 2009. It also climbed in real terms.”

It’s that triple threat of child care/education, housing and healthcare that is eating up family budgets.  Even two-income families today have LESS left over after fixed expenses than their parents did a generation ago. As a result, families feel even more pressure to get their children a good education to ensure their children’s economic future and in the process driving up the cost of housing near good schools and the cost of private childcare and education.

Food and clothing costs have gone down over time.

  • “Changes in agriculture over the past 50 years have resulted in family food budgets being a lower percentage of household income”
  • “a child’s clothing and miscellaneous expenses decreased as a percentage and in real terms from 1960 to 2009, due partly to ‘globalization.'”

How about you? Do you feel these pressures on your budget? Do you compare your family to previous generations and wonder why you can’t get ahead?

Advertisements

2 Comments

Filed under Economy, Healthcare, Money

2 responses to “Why Families are Feeling the Squeeze

  1. Hey, Kristin, great post, thank you so much for “doing the math” and showing that it’s not a kid’s cell phone that’s busting the budget, it’s the huge intractable things like health care and housing.

    just one thing to add: if, like a lot of educated families, you’re trying to eat local/sustainable/organic/cruelty-free/chem-free, food costs have probably risen, perhaps by a lot.

    I know that’s true in my household, but since it’s a priority for us health- and eco-wise, we try to make the budget for it.

  2. Pingback: This is NOT Progress: Americans Now Think 40 hrs is “Part-Time” | Kristin Maschka's Blog

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s