Why Young Families Are Always Broke?
Married, with children: These are the real heroes among us. Mercifully, we're clueless about the financial implications when we take our wedding vows.
In case you haven't figured it out, the reason you always feel broke is that you are married, with children.
It's that simple.
Yes, you probably put too much on your Visa bill. And, yes, it's incriminating that you know the exact price of a Starbucks Grande Mocha. But when push comes to shove, such indulgences are minor compared to the real cause.
Children.
For better or worse, we're clueless about the financial commitment we make when we take our wedding vows.
The sad, sad numbers
You can understand exactly why it's difficult to make your paycheck cover your expenses if you'll spend a few minutes thinking about a tool once used by the Department of Labor. It's called the "Revised Equivalence Scale," and it is one of the many devices that have been used to sort out the differences in cost of living for households of different age, size and composition. While academics continue to debate the best tools, a revised equivalence scale that's more than 20 years old tells the story.
Let's say that the cost of living for a young married couple without children gets an index number of 100. From there, the revised equivalence scale has an index to represent the cost of living for each size and age of family composition.
A young single person, for instance, would get an index of 71.
The arrival of a first child takes the index to 127.
The arrival of a second child moves the index to 147.
The index continues to climb as the children age. It reaches 204 when the older child is 6 to 15 years old and peaks at 231 when the older child is 16 to 17. (The index is apparently unaware that some children go to college.)
By Scott Burns
http://moneycentral.msn.com/
