March 4, 2007

WSJ Scoop: Rich People Spend More Money On Their Kids


Yes, that's the gist of this article in the Wall Street Journal. Over the course of 17 years, parents with more money spend more money raising their kids. Some people even spend up to--wait for it--one million dollars.

The examples the Journal pulls together are a mish-mash, frankly. Does the Weekend Journal waive the distinction between a capital investment ["swimming pool in backyard: $60,000"], an expense ["Take-out sushi for one child twice a month for five years: $3,900"], and an asset transfer ["529 college savings plan: $120,780"]?

And hello, capitalists, what about the time value of money? When brought back to the present at the t-bill/risk-free rate, r=4.5%, $1 million in outlays ($59,000/yr for 18 years) is really only $700,000 or so. [If anyone has built a seriously geeked out spreadsheet of this kind of stuff, definitely pass it along. Everyone likes a little Excelporn now and then.]

I would've thought this kind of article is just fluff to placate the advertisers, but there's not a single mention of fractional jet ownership--not even the cost of first class travel for four instead of two!--so that's out. Instead, I think article exists because a WSJ editor just found out they're having a kid, and they got stroller sticker shock.

Don't sweat it. The $879 price tag ignores the $500 you can recoup three years later on eBay. And if you're still worried about it, you could always stop buying the kid the $32 deluxe sushi/sashimi combo. Our kid eats sushi several times a month, and we're lucky if she finishes a salmon roll and a cucumber roll. And we split the edamame. Sushi savings for one kid over five years: exactly 3 Bugaboo Units.

The Million Dollar Kid [wsj via dt reader eric]

1 Comment

Excelporn: Buy the book.

[yeow. not what I had in mind, but wow. -ed.]

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