It’s that time again – back to school season – when we have to drive a little slower, watch for flashing yellow signs that signal much higher ticket costs, put down our cell phones, and try to remember the rules on when to stop for school buses (always on your side of the road and, if the bus is facing you, when the road doesn’t have a median).

But those things aren’t scary, they’re just good safety precautions. The worrisome parts are costs and headcount.

College Expenses is What’s So Scary

On the money side, it’s all about college.

I know the mainstream reasons why college is expensive, including higher demand, pay for personnel, easily accessible student loans, etc.

But I think there are other, hidden reasons.

College is expensive in part because we as parents are willing to pay so much to get our kids out of the house. I know this, because I’m living it.

My two older children are out of college by two and three years, respectively. We just have the last one left. The finish line is so close I can see it.

But then, the universe intervenes: Her college career will take an extra year. And it will be expensive.

My daughter transferred universities, adding on the time and moving out of state. The tuition/fees/add-ons total for just the fall semester are $17,035. This is a state school, and definitely in the middle of the pack in terms of cost.

And that doesn’t include books or living expenses, or travel costs.

We prepaid a portion, so we won’t take the full hit, at least not until her extra year, which I didn’t plan for when she was two years old. Silly me.

As for headcount, it’s related to college costs as well as other expenses.

The Rising Cost of Everything

While I’m shelling out what I think of as big bucks for an out-of-state public university, new parents are coughing up $1,000 per month for daycare. Like me, they have a window of expense which ends when the little one goes off to kindergarten, but then they have the looming cost of college just over a dozen years away after that. And Heaven help them if they want to buy a home in between.

If those same young parents took on some of the cost of their higher education with student loans, then chances are they’re making those payments at the same time as having kids and putting down roots.

The entire situation starts to feel like a financial trap, and goes a long way to explain why the birth rate among women of child-bearing age has dropped to an historical low of 1.7 kids, not even enough to replace both parents. U.S. births in 2017 dropped to the lowest number since 1987.

Study Spending Waves

It’s true that much of the drop in births occurred among teenagers, where births fell by more than 8%, but those women are not making up for the lack of kids later in life.

Our headcount is dropping. It’s a problem for the economy, and oddly, it’s mostly about money.

A research piece in the New York Times last year found that four out of the top five reasons people gave for not having, or not expecting to have, their ideal number of children were financial. The reasons ranged from “Child care is too expensive,” to “waited because of financial instability.”

Our work at Dent Research centers on how people spend in predictable ways as they age. Much of that spending is centered on raising families, which puts us on a predictable path of wanting a home, cars, clothes, and then a bigger home, before changing our focus to ourselves when they leave the nest.

Without kids, we don’t have the same need to spend, and certainly don’t have the need to buy big, financed items such as houses.

We can discuss or argue the merits of encouraging couples to have kids, along with ideas like universal childcare or increased child tax credits. I’m not making a case for or against any of it.

I’m pointing out that with fewer kids, our national economic engine will lose some steam, and it will affect all of us, from Social Security to the available labor pool. We either have to find a way to make family life more palatable, or dramatically adjust how we finance and run the economy.

In the time being, I’ll hope that I see more kids at the local bus stop while eagerly await the last college bill, which is still more than a year away.

The content of our articles is based on what we’ve learned as financial journalists. We do not offer personalized investment advice: you should not base investment decisions solely on what you read here. It’s your money and your responsibility. Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments such as futures, options, and currency trading carry large potential rewards but also large potential risk. Don’t trade in these markets with money you can’t afford to lose. Delray Publishing LLC expressly forbids its writers from having a financial interest in their own securities or commodities recommendations to readers.

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