The poor and indebted have it tough. They may have the right to buy a gun, but they can't get much else. They can't afford down payments, so they're not able to buy homes anymore. And since they can't afford to live in a good neighborhood, their kids aren't allowed to go to the best schools. And we've all heard how they can't afford adequate health insurance.
It raises the question: if they can't afford it, should the poor be allowed to have children?
So what does it really cost to raise a child? The USDA Center for Nutrition Promotion & Policy publishes an annual report that tries to answer just that. I analyzed this data to determine whether a lower-income family could afford to have a baby.
After a parent has taken care of their own personal expenses, housing, and savings, he or she would need an additional $1,000 per month (before taxes) to raise the average child from a lower income family. This assumes that extra money beyond monthly expenses are invested at a rate 2-3% higher than inflation. Regardless, it's an enormous bite out of the average low income earner's paycheck.
The good news is that if the family puts away about $60 extra per month, it amounts to a large amount of money over 18 years and can pay the majority of tuition at a public four-year university.
But $1,000 is the minimum. They'd need more if they lived in the Northeast or West Coast, more if they lived in a city, and more if they want to raise their child like their middle income counterparts. And way more if their employer doesn't provide family health insurance.
In other words, unless you can pony up at least an additional $1,000 a month for the next 20 years, you'll end up falling into a debt trap or depriving your child of the minimum needs to compete in the real world.
So should there be a childbearing policy? In India, they want to reduce the birthrate by promoting television. A British study recently showed how contraception is the cheapest way to cut carbon emissions. Last year, a Louisiana legislator actually proposed sterilizing poor women.
Here in America, could we better protect the environment, reduce crime, and increase school performance if the poor had fewer children? Maybe.
But, regulating childbearing for the poor seems wrong (and probably a little racist), even if economists can prove it's "efficient." Before we start telling people they can't have kids, let's consider other strategies to make everyone better equipped to tackle the financial challenges of raising a family. Here are a few:
Automatic Savings Account Enrollment. The last thing on the minds of new moms and dads is dealing with excessive paperwork related to pre-tax savings accounts. We should automatically enroll children in college and health savings accounts with contributions deducted from their parents' paychecks. Often parents discover these benefits far later than they should.
Credit Card Debt Warnings. Parents should receive warnings about excessive credit card debt and its potential to jeopardize their child's future opportunities. Financing a family with credit cards is rarely a good idea.
Better Baby Showers. Instead of registering for a $1,000 baby stroller, the laws should allow a reasonable amount of gift-giving to a child's educational savings account. Friends and family spend a lot on toys and clothes -- let's give them new options to invest in something more meaningful.
Prenatal Financial Counseling. Nonprofits and health care providers should partner to provide counseling for expectant parents so that they can understand how the finances will change, including the potential need for disability and life insurance. Unfortunately, lower income people often don't take advantage of dependent care and other tax-advantaged plans. Better information can help fix this.
The bottom line is that having a child is expensive. Instead of denying people the chance to be a parent, let's do everything we can to help people better plan their new family's financial future.
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