The U.S. Department of Agriculture has estimated the average cost of raising a child through age 17 at $233,610. But many affluent families spend more.
And the spending often continues after the kids turn 18 and even after college. Excluding inheritance, affluent parents anticipated spending $711,000, on average, over their child’s lifetime, according to a report by the hybrid digital wealth management firm Personal Capital.
Parents in the Northeast estimated this figure would be significantly higher at $996,000. This compared with estimates of $667,000 by parents in the Midwest, $581,000 in the South and $579,000 in the West.
The report was based on the findings of an online study conducted by Engine early in the fourth quarter among 500 parents who had total household investable assets of $500,000 or more.
Higher education was a top priority for affluent families in the study. Seven in 10 respondents said they had paid or planned to pay for their child’s college, while only 36% said they had not or did not plan to spend anything to fund their child’s K–12 schooling.
Of those who said they had or planned to spend on their child’s grade school education, affluent parents in the Northeast cited a figure of $96,800, on average, versus $64,200 in the West and $57,400 in the Midwest.
“Affluent parents are trying to best prepare for their children’s futures by financing higher education, helping them get their first jobs and tackling important money conversations,” Michelle Brownstein, vice president of private client services at Personal Capital, said in a statement.
“Fortunately, these individuals are starting to cut the purse strings on their adult children to prioritize their own retirement saving and spending.”
Half of affluent parents reported that they had stopped or planned to stop supporting their children following college graduation. Before doing so, however, 39% said they had or would help their child get a first post-graduate job — which jumped to 86% for affluent millennial parents.