Canada Markets closed

How much does it cost to raise a kid in Canada? Experts can't seem to agree

[She’s totally bored from hearing about how much it costs to raise her/Tech Insider]

Everyone knows that raising a child can be expensive. However, pinpointing how much it truly costs to raise a kid in Canada has been something experts have disagreed on for years.

Most recently, a new study by anti-poverty group Campaign 2000 has brought the issue back into the forefront.

In a recent report, Canadian Press says the study claims that not even the federal government truly understands what it costs to raise a child. That has caused concern that social policy changes — such as the introduction of the new, income-tested Canada Child Benefit — are being made with political and ideological views in mind opposed to what parents truly need.

The difference between the estimates to raise a child can be staggering, which can lead to confusion determining how much financial support parents need to raise their child.

In 2011, a MoneySense article put the cost of raising a child to 18 at $243,660, which itself was a dramatically higher number than the nearly $167,000 an often-cited 2004 Manitoba Agriculture study arrived at.

However, a 2013 Fraser Institute report said it costs $3,000 to $4,500 a year to raise a child, which they say is a figure that could even be lower by bargain hunting and other saving strategies. It’s an estimate that sparked the new Campaign 2000 report, which derided the figure as “implausibly low.”

In the Fraser Institute report, author Christopher Sarlo said the more common estimates in Canada and the U.S. of $10,000 to $15,000 a year, “have a distinct middle class bias and do not reflect the reality of raising children in lower income and newer immigrant households.”

Sarlo adds,“There is a concern that such estimates send a clear message to lower income families that they really cannot afford children and, perhaps, shouldn’t have any.”

Part of the wide disparity between the Manitoba Agriculture, MoneySense and Fraser Institute numbers is in part due to location. Manitoba Agriculture’s number only looked at Winnipeg, while MoneySense’s figures took into consideration the entire country. Similarly, Fraser Institute says its range of $3,000 to $4,500 per year is in part due to where the child lives and how old he or she may be.

However, Fraser Institute’s numbers also excluded the costs of daycare and extracurricular activities, which can both be costly. Housing and transportation was also deliberately left out because they could be costs that may have already been a factor in the children’s parents’ lives.

“If we lump in costs that were going to be there anyway… I think it’s inappropriate to put that on the children,” Sarlo explained in a 2013 Canadian Press interview. “That’s not a cost that’s necessarily unique to children. It’s going to be there whether the family has children or not.”

With the widely varying estimates of the cost to raise a child and the different beliefs of what constitutes as child-related expenses, Campaign 2000 says that “poorly derived figures” of the cost to raise children can be problematic, but adds that while it is difficult to arrive at a good estimate of what it costs to raise a child, it is important to ensure that we do have an accurate figure.

“Pursuing evidence-based, state-of-the-art practices to arrive at the true cost of raising a child is a societal imperative,” their report says. “Inaction will mean that public policy decisions will continue to be under-informed with potentially detrimental effects on families, the backbone of our Canadian society.”