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Family Expenditures on Children

In previous issues of this eNewsletter, we have reported on the relationship between total family away-from-home food spending and out-of-home entertainment expenditures as they relate to family income and parents' educational level. Now we will take a look at data on how much families spend on their children.

The U.S. Department of Agriculture researched family expenditures for 2002 on children for both husband-wife and single-parent families. We will look at the spending in two categories:

1. Food, which includes both meals at home and away from home
2. Miscellaneous, which includes personal care items, entertainment and reading materials

Data on husband-wife family expenditures was divided into three equal size (by number of families) annual income groups: income less than $39,700, income between $39,700 and $66,900 and income more than $66,900. Income had a direct relationship on expenditures in all categories. The higher the family income grouping, the greater the expenditure per child. Expenditures on food increased with the age of the child, while miscellaneous expenditures were almost constant for all ages of children.

The following chart shows the indexed annual spending on food per child by a husband-wife family with two children. Because the spending by the lowest family income group for 0-2 year olds was the lowest amount, spending for a 0-2-year-old child by married-couple families with incomes below $39,700 was set as the benchmark index of 100. Spending in all other categories of age and income shows the relationship of spending to that benchmark. For example, spending by families in the mid-income range for 6-8 year olds shows an index of 175. That means they spend 175% as much (an index of 100 compared to an index of 175) on a 6-8 year old as families with incomes below $39,700 do on 0-2 year olds.

Indexed Expenditures on Food per Child
by Husband-Wife Families with 2 Children

As you can see from the chart, the highest income group of families spends about 50% more on each child than does the lowest income group.

The chart below shows spending for the miscellaneous category, which includes entertainment. Again, spending by the lower income group for 0-2 year olds was set as the benchmark index of 100.

Indexed Expenditures on Miscellaneous per Child
by Husband-Wife Families with 2 Children

Here, spending increases for older children do not grow as fast as for food expenditures. For the highest income families, spending per child is only 16% greater for the oldest child than for the youngest child. However, spending per child for higher income families is much greater than it is for low income families. With food expenditures, the highest income family group spent only about 50% more per child than did the lowest family income group. For miscellaneous expenditures, the highest income family group spent about 150% more per child than did the lowest income group.

This data demonstrates that family income has a significant impact on family expenditures per child for both food away from home as well as all categories of entertainment. This is why looking at only population size or number of children within a market area is not a good determinant of feasibility and spending revenues for an LBE. The income of families with children becomes a significant determining factor and must be carefully examined.

The above data was for each child in a two-child husband-wife family. We'll now take a look at how per-child spending varies for married couples with one to three children and for single-parent families.

Compared with expenditures for each child in a husband-wife family with two children, married couples spend an average of 24% more on a single child. Those families with three or more children spend an average of 23% less on each child.

For single-parent households with incomes below $39,700, spending per child is only about 5% less than for the same income group of married-couple families. However, whereas 33% of husband-wife families have incomes below $39,700, 83% of single-parent households do. For the lower income group of single-parent families with two children, spending on food was the same as for the lower income group of husband-wife families. However, when it comes to miscellaneous expenditures, which include entertainment, the lower income group of single-parent families spent only three-quarters as much as the lower income husband-wife families. The higher income group of single-parent families, who make up only 17% of single-parent families, spent the same on food and miscellaneous per child as married-couple families in the highest income group.

The following chart shows the index of spending per child by single-parent households compared with the lowest and highest income groups of married-couple families. For example, the chart shows an index of 102 for 6-8 year olds for the lowest income single-parent families. That means single-parent families spend 102% as much per child as husband-wife families in that income group do on 6-8 year olds. The two columns for incomes more than $39,700 use the highest income group of husband-wife families, those with incomes exceeding $66,900, as the benchmark to compute the index.

Indexed Expenditures per Child by Single-Partens
Compared with Married-Couple Families

There are several other differences in spending between married-couple families and single-parent families. Whereas married-couple families spend the same on children of different ages, single parents spend 7% less on the older child than the younger child. Single parents spend an average of 35% more on a single child versus 24% for married couples and 28% less on each child with three or more children versus 23% less by married couples.

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