Friday, November 1st, 2013
In a study that is surprising many parents who worry about their children’s financial common sense, researchers have found “no compelling evidence” that young people are “bad borrowers” or at elevated risk for having credit problems. More from Today.com:
The key findings:
- Credit cardholders under the age of 21 are substantially less likely to experience a serious delinquency (90 days or more past due) or default than those who get one later in life.
- Someone age 40-44 is 12 percent more likely to have a serious default than a 19-year-old.
- Those who get a credit card in their teen years are also more likely to get a mortgage while young.
“There are some big benefits to getting a credit card early, so parents don’t need to freak out about it,” said study co-author Andra Ghent, assistant professor in the W.P. Carey School of Business at Arizona State. “They may well be able to manage it just fine.”
The authors reached that conclusion after studying nationwide credit card data collected by the New York Federal Reserve Bank for 2005 to 2008. To examine the cardholder’s behavior without the influence of a parent or guardian, anyone with a cosigned card was excluded from the analysis.
The data did show that young people are more likely to experience minor delinquencies (30 to 60 days past due) than older cardholders. But, as they learn from their mistakes and figure out how to make payments on time – such as setting up automatic bill pay – the frequency of these minor delinquencies drops.
Prof. Ghent believes making small mistakes with credit early in life can prevent major ones later on.
Plus: Curious about what career your child may have? Find out with our fun quiz!
Image: Teen with credit card, via Shutterstock
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Friday, August 16th, 2013
The average American family will spend more than $240,000 to raise a single child for 18 years, according to a new report released by the US Department of Agriculture. The costs of day care, food, transportation, clothing, and education are climbing, having risen 3 percent since 2011, and the new numbers don’t even reflect the cost of college. CNN Money reports on the finding, which is worrying to families who are continuing to struggle in economically tenuous times:
At the same time, wages aren’t keeping up. The country’s median annual household income has fallen by more than $4,000 since 2000, after adjusting for inflation, and many of the jobs lost during the recent recession have been replaced with lower-wage positions.
The USDA’s latest estimates include expenses for housing, food, transportation, clothing, health care, education and child care, as well as miscellaneous expenses, such as toys and computers.
The biggest price tag is for families in the urban Northeast earning $105,360 or more. They will spend $446,100, much more than the national average, according to the report. Meanwhile, families earning less than $61,590 a year in rural areas will spend the least, at $143,160.
While expenses in all categories rose in 2012, health care, education and child care spending increased the most.
Health care spending made up around $20,000, or around 8%, of the USDA’s estimated child-rearing expenses for a child born in 2012. Meanwhile, child care and education expenses represented nearly 18% of the total costs for middle-income parents.
Since 2000, the cost of child care has increased twice as fast as the median income of families with children, according to the most recent report from Child Care Aware of America. In 2011, the average cost of full-time center-based care for an infant ranged from about $4,600 a year in Mississippi to more than $15,000 in Massachusetts.
“Many families are priced out of licensed child care services,” said Lynette Fraga, executive director of the nonprofit group. “If they are priced out, then the health and safety of those children are at risk.”
Image: Money, via Shutterstock
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Tuesday, July 30th, 2013
Thirty percent of US women have had a time when they had trouble paying for the diapers they needed for their children, a new study published in the journal Pediatrics has found. The cost of diapers, the study found, is one of the most stressful items in the lives of low-income families, and especially single mothers. More from NBC News:
Thirty percent of the women interviewed for a new study published Monday in the journal Pediatrics said they’d experienced a time when they could not afford to buy the diapers their kids needed. And a full 8 percent reported that they would “stretch” the diapers they had when their supply was running short by leaving a wet diaper on their child or partially cleaning the diaper and reusing it.
In fact, worry over how to pay for diapers is now among the top stressors for low-income parents, next to concerns about food and housing, researchers say.
The concerns come as Americans continue to grapple with the effects of the deep recession and weak recovery, which has left many families scrambling to keep up with rising bills. The nation’s median household income declined to $50,054 in 2011. After adjusting for inflation, that’s nearly 9 percent lower than the peak in 1999.
The problem is especially acute for single moms, who tend to already be among the most economically vulnerable. The overall poverty rate was 15 percent in 2011, according to the most recent data available from the U.S. Census Bureau. But nearly 41 percent of female-headed households with children under age 18 were living below the poverty line, according to the Census Bureau. That compares to a little less than 9 percent of married-couple families with kids under 18.
Image: Diapers, via Shutterstock
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Thursday, April 4th, 2013
The costs of child care have nearly doubled in the last 25 years, according to a new report based on census data. More from a release by the U.S. Census Bureau:
“Perhaps the most critical decision parents make in balancing their work and home life is choosing the type of care to provide for their children while they work,” said report author Lynda Laughlin, a family demographer in the Census Bureau’s Fertility and Family Statistics Branch. “Child care arrangements and the financial burden they impose on families are important issues for policymakers and anyone concerned about the welfare of children. This report is unique in that it is not only the sole study from the Census Bureau on this topic, but also provides a consistent time-series on trends going back to the mid-1980s.”
Families with an employed mother and children younger than 15 (see chart) paid an average of $143 per week for child care in 2011, up from $84 in 1985 (in constant 2011 dollars).
The median wage for a full-time child care worker did not increase over the last 20 years. The median wage for a child care worker in 2011 was $19,098, not different from $19,680 in 1990 (in constant 2011 dollars).
The percent of families who reported they made a cash payment for child care for at least one of their children declined from 42 percent to 32 percent between 1997 and 2011.
Since 1997, the use of organized day care centers and father-provided care for preschoolers has increased, while the proportion of children cared for by nonrelatives in the provider’s home has declined. (There was a change in the data collection methodology in the mid-1990s; 1997 was the first year of data that was affected by this change.)
Image: Girl in day care, via Shutterstock
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Tuesday, August 14th, 2012
Parents shopping for clothes and supplies for their kids to take into the new school year may be approaching the task with less enthusiasm–and less willingness to spend–than in past years. Reuters reports that though national trends actually indicate increased spending on back-to-school, the timing and expense of it is changing for many families:
With parts of the country such as Atlanta already sending children back to class, the back-to-school season is in full swing and retailers remain hopeful that shoppers will turn out heading into the final stretch.
Kohl’s Corp. Chief Executive Kevin Mansell said the back-to-school season “has been more and more bridging August and September” based on his chain’s research and other data.
“We used to see people starting in late July, and I don’t see that as much anymore,” said Maureen Bausch, executive vice president of business development at the Mall of America, in Bloomington, Minnesota.
She expects people to finish their back-to-school shopping in September once kids see what is cool in the classroom.
Total back-to-college spending is expected to reach $53.5 billion this year, while total spending by families with children in kindergarten through 12th grade is expected to be $30.3 billion, the National Retail Federation said.
While the trade group expects the average American family to spend $688.62 on back-to-school shopping this year, a 14.1 percent increase from 2011, conversations with about a dozen shoppers across the country indicate a different story.
Image: Short pencil, via Shutterstock.
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