Ted Rossman, Senior Industry Analyst at Bankrate.com, joined Closing Bell to discuss the rising cost of raising children in America, especially as it relates to childcare, and why it disproportionately affects lower-income families.

Closing Bell

The Cost of Raising a Child in the U.S. Has Never Been Higher

Welcome back to cheddar is closing bell. Everybody, I'm Manitoba in for Kristin Schoeller inflation is running at a four decade high and it's taking a toll on americans across the board. It has never cost more to raise a child in the US with lower and middle income families feeling the pressure of the most, the average cost to raise a child through age 17 here in the U. S. Is north of 310,000 dollars. That's according to brookings, that's more than $18,000 a year joining us now. Ted Rossman, senior industry analysis analyst, Scuse me at Bankrate dot com. Ted welcome back the show, Always a pleasure to have you. So we know this prices of everything from baby formula to close to grocery sports equipment all skyrocketing. What kind of pressures does this put on the everyday american family? It does put a lot of pressure for sure. It's worth it. Right, you can see my two little girls here and here. But yeah, there's no doubt that it's expensive and I think that child care costs are a huge thing for families. There's a study from care.com that says that about three quarters of families are spending at least 10% of their incomes on child care, about half Are spending 20% or more. So that's where it really adds up some of the things in this study, I might quibble with a little bit because they're kind of making assumptions that you're going to need a larger house and a larger car and you know, maybe some of that's true, but you might have done some of that stuff anyway. But there's some things that plain and simple, they cost more if you have kids, childcare is a big one. As a parent, young kids myself. I mean, I see people getting creative whether that's sharing a nanny with another nearby family or enlisting help from grandma and grandpa or having flexible work schedules, maybe staggering some work from home with you and your spouse or even having somebody stay home all or at least some of the time and not work or just work part time. Childcare is a huge line item. Lower income families are disproportionately affected here, but if they're already shopping at the cheapest stores when it comes to groceries back to school shopping, whatever is they have, they may may have nothing left to cut back on. Is there anything these families can do to fall back? It's really tough, especially for lower income households because as you said, they have less to cut their budget was basically all necessities anyway. And that's true about inflation in general. These higher gas prices, higher food costs, higher rents. I mean, these are disproportionately hitting lower and also middle income households, but there's no doubt that they're really getting squeezed there. I mean, in terms of what you can do your right, you can only cut so much. I see a lot of creativity there. Besides the things I mentioned about maybe getting help from friends or neighbors or pooling resources, I see a big rise in these buy nothing groups. A lot of people are using these forums on facebook and elsewhere to share gently used clothes and toys and basically recycling them within the community. So you don't need to buy something brand new. You know, sometimes there are programs that can help whether it's at school or local nonprofits, maybe more affordable childcare. Sometimes churches and other religious organizations have some kind of preschool or childcare available. But there's a lot of hard trade offs for sure. Every childhood early childhood is a critical time, but childcare daycare prices are through the roof. They always have been for parents should the US be doing more to help families with childcare and other expenses. Ted there is that push, I know new york city has expanded universal pre k. I really see childcare as something that's increasingly unaffordable for people we talk about for older kids just the tremendous cost of college, but I think that it really runs through that early childhood area as well. And you know, a lot of people are having fewer kids. They're delaying when they have kids. These are some real demographic kind of shifts here and I mean, you don't want to reduce it to a dollars and cents kind of thing because kids can bring a lot of joy to your life. But I think for a lot of people, there is a financial element and they are being really thoughtful about when to have kids, how many kids to have, where they're gonna live. I think the pandemic has been a real reset in the sense that it has shifted the nature of work. Some peop people have moved to the so called zoom towns where you can work remotely and maybe still get a big city salary, maybe your spouse doesn't have to work then or doesn't have to work as much and they can stay home with the kids or you trade in some home equity from a high cost area, move to a cheaper area. I think people are doing all these things. What kind of impact do these rising costs have on the economy in general? I think it's a hidden tax of sorts. We could talk about how things like student loans are kind of a hidden tax and right now we have that payment moratorium of course, but if and when those payments resume, that's something like $400 a month on average that the typical household is going to have to come up with for childcare, it's at least that much and more. I know in some expensive big city metro's, you could be talking about something almost approaching a mortgage payment, especially if you have more than one kid. So this stuff is really expensive. I think it does have ripple effects on where people live, where they work, how much they work. I think you really need to think through all these things and and realize that your budget changes. I mean it's not all negative. Like I said, kids can be our pride and joy and and bring a lot of happiness to our lives, but even there, you know, you you may reassess how you're spending if you're a young, childless 20 something, the way you spend your money on the weekends is probably different than how I the suburban dead in his thirties spends money. So, you know, there are different stages of life and you know, maybe some costs go down when you have kids, but other ones go up for sure. Ted Rossman, senior industry analyst at Bankrate dot com. We really appreciate your time. Ted thank you. Hope to see you soon.