On average, the cost of raising a child is $12,980 per year for children born in 2015 into a middle-income, two-child family with married parents.
For more context on child-raising costs, take a look at the following table.
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Which State Has the Lowest Childcare Costs?
Where someone lives can impact how much it costs to raise a child. South Dakota residents are lucky to have the lowest average childcare costs at $6,677 per year, representing 23.7% of income. Massachusetts residents aren’t so lucky: They spend $10,000 more each year than South Dakota parents do. The average cost of childcare in Massachusetts is $16,781 per year, accounting for 51.4% of income.
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How Much Does It Cost to Raise a Child?
The average cost of raising a child each year comes to $12,980 for children born in 2015, which leads to an overall cost of $233,610 to raise a child through the age of 17. When adjusted for inflation, the figure rises to $284,570. None of these numbers account for the cost of a college education, which many parents like to budget for far in advance.
For more insight into how much it costs to raise a child, there are free calculators online that can help parents to better estimate their spending based on their particular family needs. You may also be curious to learn how to financially plan for child No. 2.
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Are You Able to Afford a Child?
Whether or not you can afford a child depends on your particular financial circumstances, as well as factors like childcare needs and the cost of living in your area.
There is no one salary figure that means someone is able to afford a child. It’s important to research how having a child will impact housing, food, and healthcare costs, how much of your disposable income will go toward clothing, equipment, childcare and education, even toys. This way, you’ll have a clear idea of how having a child will impact your budget.
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How to Budget for a Baby
Speaking of budgets, these are some expenses parents need to budget for when they plan to have a baby join their family. They can use a budgeting app, spreadsheet, or even good old fashioned pen and paper to create a new budget.
Some examples of baby expenses that should go in a budget include:
- Food
- Medical care
- Housing
- Childcare
- Education
- College savings
- Clothing
- Equipment (high chair, car seat)
- Toys
- Recreational activities
- Care items (diapers, baby wipes, etc.)
Once parents know what their total expenses are, they can subtract that amount from their take-home income to determine how much money is left for fun (like dinners out and vacations) and savings goals. Some parents even like to create an investment plan for their newborn.
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How to Reduce the Costs of Raising a Child
Because raising a child can cost a pretty penny, it can be helpful to think strategically about how to save money while raising kids. Here are some tips that can make it possible to spend less as a parent.
- Buy second-hand clothes. No hand-me-downs at the ready? Shopping second-hand can be a great way to save money on baby and kids’ clothes. Most children grow out of their clothes very quickly, so new or lightly worn clothes are always available at thrift stores.
- Spend less on housing. Even if you can afford to buy a larger house, you may want to consider living below your means. Housing is a major ongoing expense for any family, so saving here can really make an impact.
- Buy generic. When it comes to things like formula and diapers, lower cost generics can get the job done just as well as fancy name brands.
- Head to the library. Looking to keep kids entertained? Don’t forget about the local library. Alongside books, many libraries offer DVD rentals, story time, and tons of free events that can keep little ones active. So cancel those expensive streaming subscriptions and skip the overpriced petting zoos for now.
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Example List of Expenses for Raising a Child
To help parents plan better, below are some common expenses that come with raising a child and the percentage of a parent’s income that goes toward each expense:
- Housing: 29%
- Food: 18%
- Childcare and education: 16%
- Transportation: 15%
- Healthcare: 9%
- Clothing: 6%
- Miscellaneous: 7%
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The Takeaway
The average cost of raising a child in the U.S. is about $13K per year. Knowing this can help families create a budget that makes it easier to reach their savings goals while raising young kids. The biggest child-related expense is for housing, followed by food and childcare or education. Things like clothes and toys will barely make a blip on your budget, if you take advantage of hand-me-downs.
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