“I just ask my parents for money, and once I get it, I go and spend it on something,” she says.

In fact, almost everything Emily owns – the car, her clothes and even her makeup – was paid for by her parents.

“Yeah, it’s just sort of all handed to me; I don’t really have to work for it I guess,” she says.

How much have the Segrests spent on their daughter? Emily’s mother says she’s never done the math, but the U.S. Department of Agriculture has.

The average middle-income family spends more than $10,000 a year on a teen – a total of $173,000 per child before college!

“It’s scary,” says Deborah Segrest, Emily’s mother. “It would scare me, I think, to think about all the money that we spend on them.”

But experts say the problem isn’t how much parents spend on their children but that spending is often the only thing the child sees.

“What kids grow up with is watching their parents put things on credit cards, watching their parents take money out of the ATM. But how often does the child or teenager look at the parent putting money into the bank? Paying off those bills?” says William Buchanan, a psychologist.

That’s one reason why one in five college students today has more than $6,000 in credit card debt. These teens have not learned how manage a budget or how much it costs to live.

“If people wait until their child is a teenager before they start teaching them about money … they’re about five years too late,” Buchanan says.

Emily is just now beginning to think about her financial future.

“I’m a little concerned about how I’ll be able to handle it. Like once I get a real job, if I’ll have enough money or not,” she says.

A new study from the U.S. Department of Agriculture shows just how expensive raising a child can be in the 21st century. For their study, researchers used data from the U.S. Department of Labor’s Consumer Expenditure Survey, conducted from 1990-1992, and updated to 2002 dollars with the Consumer Price Index. Recording childhood expenditures for housing, food, transportation, clothing, health care, child care/education and miscellaneous up until age 18, they logged the following totals for raising a child:

Income up to $39,700
Dual-parent family: $127,080
Single-parent family: $120,720

Income of $39,700 to $66,900
Dual-parent family: $173,880

Income of $66,900 and up
Dual-parent family: $254,400

Although kids are expensive, you can take several steps to shave off a few bucks here and there to make a difference in your budget. The experts at Parents’ Source offer the following tips for stretching your budget:

• Cut and trade coupons. By clipping just $10 worth of coupons a week on products you typically buy, you save $520.00 a year.
• Buy and sell used items. Yard sales, flea markets and consignment shops are great places to get those “dream toys” for your child for a fraction of the retail cost.
• Get the most out of your computer. Print greeting cards, use online encyclopedias and magazines, download maps and games, comparative shop and communicate regularly with out-of-state family for free.
• Invest your time in your child and save money. Often, saving money requires spending time, and what better solution for family money management than planning to spend productive time with your child? Kids love spending time with moms and dads gardening, cooking, sewing and crafting. Not only can you save money on groceries and clothes, but you can also enjoy quality time with your child, which is the best investment of all!
• Save on entertainment. Museums, schools, community groups and recreation departments offer quality family activities at little or no cost. The public library is another great resource, offering best-selling books, videotapes, online computers and monthly programs at most locations.
• Make the most of your bargains. Try to keep a little extra cash in your wallet for when you discover a real bargain, then buy in bulk and stock up on items you know you will need in the future.
• Use credit cards wisely. Many people see credit cards as being evil, but if you use them wisely, you don’t need to throw your credit cards away. Save on finance charges by paying off outstanding balances, then look for a program that can earn money for you. Some credit cards offer cash back or incentive programs – be sure to read the terms carefully. For example, the Toys R Us Visa offers a 1% rebate in the form of store gift certificates.
• Start saving early for college. One of the biggest challenges of raising children on a shoestring budget is saving for college. If one of the money-saving ideas above nets you some extra cash this year, you can invest that now for college and earn significant interest. Scheduling time with a financial planner to set financial goals and a plan for achieving them can also be well worth the time and money.

It is important to understand that your child learns much of his or her money management skills by watching how you manage money at home. You can help your child or teen learn the value of money by following these strategies from the Institute of Consumer Financial Education:

• As soon as your child can count, introduce him or her to money. Take an active role because repetition and observing others are the two methods by which he or she learns.
• Communicate with your child, as he or she grows, about your values concerning money and how to save it, make it grow and most importantly, how to spend it wisely.
• Help your child learn the difference between needs, wants and wishes. This will prepare him or her for making good spending decisions in the future.
• Indoctrinate your child to accumulation (or savings) instead of spending (or consumption). Explain and demonstrate the concept of earning interest income on savings. Consider paying interest on money saved at home. Have your child help calculate the interest so he or she can learn and see how fast money accumulates through the magic power of compound interest.
• When giving your child an allowance or income, give the money in denominations that encourages saving. For example, if the amount is $5, give out five $1 bills and encourage at least one be set aside in savings.
• Take your child with you to the store, explaining how to plan purchases in advance and make unit price comparisons and also checking for value, quality, reparability, warranty, etc. Spending money can be fun and very productive when spending is planned.
• Allow your child to make spending decisions, both good and poor, and then encourage a discussion of pros and cons before more spending takes place. Encourage him or her to employ common sense when buying. That means research before making major purchases, waiting for the right time to buy and employing the spending-by-choice technique, which is selecting at least three other items money could be spent on, once it has been decided to make a purchase.
• Show your child how to evaluate ads on television, radio and in print. Will the product really perform and do what the commercials say? Is it really a sale price? Do alternative products exist that will do a better job, perhaps for less cost? Just because something looks expensive doesn’t mean it represents the best value. Remind your child that if something sounds too good to be true, it usually is.
• Be cautious about making credit cards available to your older child, even when he or she is entering college. Credit cards have a message: “SPEND!” Some students report using the cards for cash advances and also to meet everyday needs instead of an emergency (as originally planned). Many students in that group also report having to cut back on classes to fit in a part-time job just to pay for their credit card purchases.

Institute of Consumer Financial Education
Parents’ Source
U.S. Department of Agriculture