Rising Costs of Raising a Child
Is inflation making American families
have fewer children? According to USDA data and BLS inflation statistics,
raising a child in 2023 could cost an average of $331,933 from birth until the
age of 18. This figure excludes college education costs if parents choose to
contribute. In 2015, this number was $233,610, showing a significant increase
in expenses for daycare, food, and housing. As a result, American families need
an additional $100,000 to support one child through high school compared to
just a few years ago.
Delaying or Forgoing Parenthood
Young families today are not just
delaying parenthood; many are deciding to forgo having children altogether,
with financial considerations at the core of their decisions. The U.S.
birthrate is at a record low, with fewer babies born in 2023 than any year
since 1979. These trends could drastically alter the fabric of American
neighborhoods and create a substantial deficit in the labor force in the coming
decades.
Housing Affordability: A Key Concern
One of the main factors influencing
young voters and their financial readiness to have children is the
affordability of housing. More than 91% of adult Gen Z individuals consider
housing affordability a crucial issue when deciding who to vote for in the upcoming
election. This concern surpasses other significant issues like abortion rights,
gun laws, and foreign conflicts.
The financial challenges young people
face highlight why fewer are choosing to have children and how the rising cost
of living impacts their ability to afford a family. In 1980, the median home
price in the United States was $50,000, while the median income was $25,000.
Today, the median home price has soared to $423,000, while the median income is
about $65,000. This shift means the home price to income ratio has tripled from
2:1 to 6:1 over the past 45 years.
Lifestyle Choices and Financial Pressures
Beyond financial concerns, many Gen Z
individuals are prioritizing personal time, travel, and alternative lifestyles
over starting a family. The DINK (Dual Income No Kids) phenomenon, which began
in the 1980s, has gained popularity on platforms like TikTok and is becoming a
conscious choice for this generation. Some Gen Z individuals also cite climate
change and political instability as non-financial reasons for not wanting to
bring children into the world.
Generational Financial Challenges
As a parent of three children in their
20s, I find it ironic to consider the contrast between my generation's desire
to "get them off payroll" and my children's reluctance to "bring
someone onto payroll." According to the 2024 Bank of America State of Gen
Z's Financial Health report, over 50% of Gen Z adults view the cost of living
as their biggest challenge and greatest barrier to success. This financial
strain fosters doubt about their ability to care for another human being.
The Broader Economic Impact
With credit card debt nearing $1.2
trillion, student debt at $1.7 trillion, and over $1 trillion in outstanding
auto loan debt, addressing the rising cost of inflation will be a critical task
for the next President of the United States. It's not just about managing daily
expenses like fuel, food, and rent but also about instilling confidence in
younger generations that starting a family is both a viable and affordable
option.
Currently, the high cost of living is
driving this generation to prioritize personal financial stability over future
family planning. To reverse this trend, significant economic changes are
necessary to make family life financially feasible for younger generations.
