Children actually SAVE parents money in the long run

About 120 women are suing drug company Endo because an alleged packaging error they say resulted in unplanned pregnancies ... and, along with that, the expense of raising children.

The class action lawsuit was filed in Pennsylvania last week. The class members hail from 26 states, and it is unclear at the time of writing if a Texan is among them. According to the suit, the birth control pill manufacturer distributed pills (see full list at the bottom of this post) in 2011 with incorrect markings and packaging -- resulting in 113 unforeseen pregnancies in 26 states. Fully 94 of the women carried the babies to term. Other state courts have rejected similar lawsuits.

The class is reportedly seeking millions in damages, including, in a few cases, the costs of raising children through adulthood (allegedly because of the birth control goof-up). While many prestigious sources put the cost-estimate of raising a child from 0 to adulthood at $200,000 to $250,000, that's not a universally held figure.

According to one source we found, a money management site called TheSimpleDollar.com, children can actually bring in money at certain points along the way. Here's the breakdown from author Trent Hamm, based on a working husband and working wife with two children in Iowa at the onset of the Obama Administration (costs have certainly gone up since then, but bear with us!). His comments are in italics below and are worth a read (full article).

$183,600

Base, estimated cost of raising a child

Combined, we spent about $11,000 on child care for the two children this year. After that, costs went down quickly – we estimate that all other expenses combined (food, health care, toys, clothing, and so on) were roughly $7,000 for both children combined. Add onto that $1,200 per child put away for their college education (and I’ll ignore the tax benefits of this, as we don’t have to pay state taxes on contributions) and you have a total of $20,400 spent on both children this year – or $10,200 per child. So, if those costs continued as they are over the next eighteen years, we would spend $183,600 per child during their childhood – not too far from those estimates.

-$6,000

Child care tax credit

$6,000 of that $10,200 is. It’s our child care tax credit, and it knocks roughly $1,800 (assuming a 30% overall tax rate) off of our total tax bill – or $900 per child. So, boom, we’re quickly down to $9,300 per child.

-$2,250 

Per child tax credit

At $3,750 a pop, our two children shave $7,500 off of our taxable income. Assuming that same 30% tax rate, we quickly shave $2,250 off of our tax bill, so we’re down to $7,050 per child.

-$6,500

Entertainment budget savings

How much did this actually save us? This is something that’s very difficult for me to estimate, as I didn’t actually do any sort of budgeting or number-crunching during the year prior to our having children. However, based on what I can estimate from that year, we cut our entertainment and food spending (from 2004 to 2008) by $6,500 a year. That’s a drop of $3,250 per child, bringing our per-child expenses down to $3,800 per child.

-$4,200

Once the children are in school and child care costs are greatly reduced.

Obviously, as the child grows, we’ll begin to accrue more non-child-care expenses for them: education costs, growing entertainment costs, and so on. I’ll actually increase our expense per child at $500 per year after age six. So, for the first five years, we spend $3,800 a year. At year six, we actually gain $400. Each year after that, we spend $500 more per child than the year before, culminating with an overall after-tax and after-savings cost of $5,600 during their eighteenth year.

This brings the total cost to $52,800 per child -- far from the $250,000 figure currently bandied about.

Deviating from the scope of Mr. Hamm's point, let's consider what children give back as their parents age. In previous generations, it was up to children to provide for the care of aging parents and grandparents. "You reap what you sow" was the rule then -- so you had better raise your kids right if you expect to be cared for in old age. And bigger families made more sense for this and many other reasons. But today, much of that burden is thrown on the Social Security system and private-sector pensions and retirement plans. However, there's still a great savings to be considered when grown children are available to provide the geriatric care to their parents that would otherwise accumulate to much more than $250,000 per elderly parent.

Bottom line: Children are simply not an economic drain in the long run. Rather, as traditional wisdom tells us, "children are an inheritance from the Lord."

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In case you're curious, the types of pills named in the suit are: Cyclafem 1/35, Cyclafem 7/7/7, Emoquette, Gildess FE 1.5/30, Gildess FE 1/20, Orsythia, Previfem, and Tri-Previfem. They were produced under the Endo subsidiary brand Qualitest.