What It Costs to Raise a Child

by Aaron Crowe on 7 May 2013 13 comments

Raising children can be invaluable and something a parent will cherish forever. The cost of those memories, however, is much more than time spent, diapers changed, toys picked up, and tears shed. (See also: 7 Things to Consider Before Becoming a Stay-at-Home Parent)

As any parent will tell you, there are financial costs to raising children, though they probably don't closely track them. The federal government does, however.

Average Annual Cost Per Kid

The latest figures from the U.S. Department of Agriculture [PDF] put the annual cost of raising a child from $12,290 to $14,320 in a two-child, married couple, middle-income family.

Child-rearing costs through age 17 vary by family income level. The total costs range from $212,370 to $490,830, with the average middle-income family spending $295,560 to raise a child through age 17. These expenses don't include college.

The USDA also offers a child cost calculator, which can be a fun form of birth control for would-be parents who have a few seconds to spare online. The calculator asks for the number and age of children, how many parents live in the household, where you live, and before-tax annual household income.

Zip Code Influences Kid Cost...

Some areas of the country are more expensive to live in than others, which might be an incentive to move. Child-rearing expenses were highest in the urban Northeast, followed by the urban West and urban Midwest. They were lowest in the urban South and rural areas. The costs of housing, child care, and education had the most regional differences.

...and So Does Your Kid's Age

Expenses increased as children age, the report finds, with food, transportation, clothing, and health care expenses rising the most as a child eats more and starts driving.

Where Your Kid Money Goes

Where does the money go? About where you'd expect.

  • Housing: 30%
  • Child care and education: 18%
  • Food: 16%
  • Transportation: 14%
  • Healthcare: 8%
  • Clothing: 6%

Another 8% went to miscellaneous expenditures, which can quickly drain a parent's pockets. These include:

  • Personal care items and services such as haircuts and toothbrushes
  • Entertainment such as portable media players, sports equipment, and computers
  • Reading materials such as nonschool books and magazines
  • Admission fees such as paying to go to a movie, baseball game, or amusement park

Those costs seem to add up fast during summer when a child is bored.

College Is Extra

A big expense that isn't included is the cost of sending a kid to college, although parents might be taking on that expense if they're saving for a child's college education before the child turns 18.

The USDA report cites statistics from the College Board that in 2012 the annual average tuition and fees at a four-year public college with in-state tuition was $8,244, and was $28,500 at a four-year private college. Annual room and board was $8,887 at a public college and $10,089 at a private college. That adds up to about $33,000 to attend a public college for four years, or $114,000 for four years at a private college.

Maybe those priceless pieces of school-made art from kindergarten can be sold at auction.

Kids Cost Opportunity, Too

Along with the cost of raising children, the USDA had other bad news for parents — they're likely to earn less money as they spend their time with their children instead of in the workforce. Current earnings and future career opportunities may be diminished because of job choice or reduced time in the labor force for one or both parents. If a parent has to stay home and take care of children, that parent won't earn as much money as they would otherwise.

But at least the report gets to the point of child-rearing that only parents can understand and appreciate — the rewards are priceless, no matter what the cost.

Or, as the USDA bluntly puts it, "The direct and indirect costs of raising children are considerable, absorbing a major share of the household budget. On the other hand, these costs may be outweighed by the benefits of children."

Where do your child-rearing dollars seem to go? Are you getting your money's worth?

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Guest's picture

That isn't what it cost--it's what people spend. Big difference! It can cost far, far less than that.

Aaron Crowe's picture

Semantics. While it can cost less than the numbers cited by the government, the figures cited are what the average family is spending on their kids. The report breaks it down by family income, with high income families spending much more than low income families.

Guest's picture

I never had children. While I can't comment from personal experience, I can comment based on years of observation. Here are three things that come to mind immediately:

- Investing in raising a family isn't so much a matter of to have or not to have...people who want to have a child should. Hopefully they'll figure out how to manage the cost and sites like this help a lot.
- Don't get caught up in throwing extravagant birthday parties because you'll feel compelled to out do yourself every year. This post on ManVsDebt.com has some great ideas: http://buff.ly/18SDIll
- Put yourself first when it comes to saving. Save early for their education if you can. But don't put your retirement funds or home at risk to finance your child's education. If you do, you are walking a dangerous road. You may even be putting pressure on your children later in life to take care of you. Best to let your child carry the financial burden of their education and help them as you can. Don't take on their debt, hock your home or cash in retirement savings. Please.

Ree ~ I blog at EscapingDodge.com

Aaron Crowe's picture

Thanks for the comments. While I find it funny to hear advice from people without kids on how to raise them, I think your tips are on the mark. Especially funding retirement before college education for a child.

A kid can work, save or get college loans if their parents don't save to get them through college. But coming up with more money in retirement because you spent that extra money on a college fund can be a lot more difficult for a retiree.

Guest's picture
Olivia

The cost figures you cited relate to survey data on annual household incomes between $59,410 and $102,870. With the average US household income running $50,502 pretax per year for the same time period, the amounts you listed have nothing to do with the average family. According to your numbers, if you had two children, nearly half your income would be spoken for. The USDA figures for “under $59,410" incomes actually run between $8760 and $9960 per child.

If the USDA were to survey actual average income households ($50,502 year), instead of sampling above average households and extrapolating data, I suspect the differences would be even more pronounced. As noted in the survey, public policy is based on these unrealistic USDA figures.

The college costs you cited don't include common offsets either - scholarships, AP class credits, transferred credits from community colleges, work study, etc. What graduate do you know from average means actually paid sticker price for their degree?

I'd be curious to see what other Wisebreaders think.

Aaron Crowe's picture

True, the numbers cited in the story were for the mid-level incomes. The lower income level of less than $59,410 had lower child expenses. I pointed out the mid-level because it's for a two-person household with two children, and seemed a reasonable pre-tax income for two working adults. The USDA report has much more information and statistics in it than I could get to in the story, and I think it's worth reading by itself.

Guest's picture

The dollar values here would not have influenced my choices, even if my husband and I had known them. The financial impact could not outweigh the emotional benefits.

- Angela Wellsmith Find me at angelawellsmith.com

Aaron Crowe's picture

Angela:
That's the best point here: The benefits outweigh the costs. It's a simple equation to make.

Guest's picture
Olivia

I looked at the study you cited.

You missed my point entirely. I'll try to explain again.

The child-rearing costs cited in your article are not based on "average" incomes or "average" expenses at all. They were taken from households that earn between $59,410 to $102,870 a year.

According to the Census Bureau, http://www.census.gov/prod/2012pubs/acsbr11-02.pdf, median household, the one smack dab in the middle, income in the US in 2011, was only $50,502.

The average household did not earn any where near $59,410 to $102,870 a year no matter what sampling brackets the USDA used. Consequently, the income range you used to support child rearing costs does not give an accurate idea of how most people live or the amount of money actually spent to raise children.

To get valid specs, the USDA should survey households with average incomes. Instead they weighted their data towards those who make considerably more.

Guest's picture
Alexa

I agree with Ree! Money shouldn't hold you back from having a child if you are ready to have one! Sacrificing your desires for financial reasons really diminishes quality of life. I recommend saving early! People who plan to have kids should begin saving money as soon as they're married, especially since at that point it could happen at any time. There are helpful tools online for saving money automatically, and at your own discretion. I recommend SavedPlus.

Aaron Crowe's picture

Alexa:

I agree. Saving money as soon as you know you want to have kids is a great idea. It can not only help to save up for the initial expenses of having a newborn, but saving enough money so each parent doesn't have to work for a few months (if not longer) can be a smart way to be ahead financially when the baby arrives.

Guest's picture
Guest

These college costs seem low... Makes more sense to site average public vs average private college costs. Does this number include assumed average scholarships and grants?

Guest's picture

So $200,000 is a bargain when it comes to raising a child? Yikes! No wonder parents get so many tax breaks, they deserve it if they're shelling out that much for each child. I'm going to give my mom a check for $100 right now.