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How much does it cost to raise a child?

Young Girl Helping Her Mother Feeding Food To Toddler Sister

If you’ve been wondering how much it costs to have a baby and raise them, a 2015 study by the USDA found that it costs an estimated $233,610 to raise a child from birth to age 17. That figure, adjusted for inflation, is just over a quarter of a million dollars at $286,000. Shouldering the expense of having a kid can be an additional pressure on parents, especially as costs continue to rise. Here’s what you need to know.

What’s the average cost of raising a child?

The journey of parenthood is filled with joys, challenges and significant financial commitments. From the moment of arrival, the cost of nurturing a child is a continuous investment in their future and potential parents should be prepared for this financial commitment. We’ll help break down the various expenses parents can expect to get a better glimpse on how much it costs to have a child.

How much does it cost to have a baby?

The arrival of a new baby is an unforgettable milestone, yet it comes paired with notable financial implications. Beginning with hospital delivery costs, families can anticipate an average expense of around $18,865, covering the entirety of pregnancy to postpartum care. Alternatives such as home births may offer a less pricey initial sum of around $1,500 to $5,000; however, this route is typically not covered by insurance, translating to significant out-of-pocket charges.

Once the hospital bills are settled, nutrition for the baby is another vital aspect you’ll have to consider. Parents who choose formula feeding might encounter substantial monthly costs, potentially surging to $800. As for other necessities, new parents could spend up to $936 annually on disposable diapers, given that babies typically require six to 12 diapers per day. Then there’s the gear — from strollers to car seats to playpens — which could amount to anywhere between $425 to nearly $3,000.

How much does it cost to raise a child?

As a child grows, so do the expenses. A significant cost that parents might face during the child’s early years revolves around childcare. The U.S. Treasury Department’s data indicates that the annual cost for center-based care averages about $10,000 per child for infants to four-year-olds. Alternatively, home-based care could amount to around $8,000. If your family opts for a nanny, you might expect to pay $736 per week on average, which is up 56 percent from 2013.

How much do school expenses cost?

The educational journey, beginning with preschool and extending through high school, is one of the most substantial investments in raising a child. Early on, preschool sets the financial tone, costing parents around $10,000 each year. As children grow and if private schooling is preferred, annual tuition hovers around $12,350. Factor in textbooks, technology and other essentials, and the figure can escalate to approximately $16,050 annually.

On the other hand, while public schools offer tuition-free education, they’re not without expenses. Extracurriculars, such as sports or arts, may have associated costs. To illustrate, a study from the University of Michigan revealed that parents might spend $302 on sports or $218 on arts-related activities per student.

Paying for college

Currently, the average cost of full-time undergraduate tuition for a public university ranges from $10,940 for in-state students and $28,240 for out-of-state students. If your child chooses to go to a private college, those tuition fees could jump up to $39,400 per year. Parents who choose to pay for college can take advantage of savings plans like the 529 plan. Starting early in your kids’ lives allows you to leverage time to build up savings for your child’s post-high school education.

The school that your child attends matters, too. While they may pay less in tuition for attending an in-state public school, they may choose to go somewhere out of state instead. Below are the most expensive and cheapest states for out-of-state students attending a four-year public university for 2023–2024:

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5 cheapest states for out-of-state students attending a 4-year public university
  • South Dakota: $12,650 per year
  • North Dakota: $14,750 per year
  • Mississippi: $21,220 per year
  • New York: $21,570 per year
  • Florida: $22,000 per year
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5 most expensive states for out-of-state students attending a 4-year public university
  • Delaware: $36,470 per year
  • Oregon: $37,380 per year
  • Virginia: $38,320 per year
  • Michigan: $40,450 per year
  • Vermont: $41,000 per year

Other costs of raising a child

Though housing, food and child care are the highest cost categories related to raising a child to age 18, they are not the only expenses to consider. Other necessities like clothing, education and health care can be expensive, too. All of these categories should also be considered when factoring in the costs of having and raising a child.

As your child gets older and earns their driver’s license, for instance, this could be a significant expense. Bankrate’s research found that adding a 16-year-old to their married parents’ insurance policy runs an average of $4,392 per year.

Read more: Cheap car insurance for teens

Housing

Housing is arguably the most significant expense associated with raising a child. In the USDA report, housing costs make up 29 percent of the overall cost of raising a baby. The cost of housing varies widely by location and the type of housing you choose. Many parents dream of a suburban house with a white picket fence and enough bedrooms for the entire family.

The average cost of home insurance is $1,428 per year for $250K in dwelling coverage, according to data from Quadrant Information Services. This is just one factor in the cost of owning a home; you will also have to consider the cost of a mortgage, utilities and maintenance.

Food

Food remains a pivotal component in the average cost of raising a child, second only to housing. Between August 2023 and September 2023, the consumer price index for all food experienced a moderate increase, with food prices 3.7 percent higher than they were in September 2022. When we break these numbers down:

  • Food at home increased by 0.1 percent, marking a 2.4 percent rise compared to September 2022.
  • Food away from home saw a 0.4 percent rise and was 6 percent higher than the previous year.

Even as food-related inflation shows signs of slowing down, its growth rate remains above historical averages. In 2023, the USDA anticipates:

  • All food prices could potentially increase by around 5.8 percent.
  • Groceries might see an uptick of approximately 5.1 percent.
  • Dining out costs could experience an increase of close to 7.1 percent.

Looking further ahead to 2024, the general consensus suggests a modest growth of about 2.1 percent in overall food prices. Groceries could go up one percent while eating out might observe a rise of around 4.4 percent.

Life insurance

Life insurance can be crucial for families, especially if your income cannot be easily replaced if the unexpected were to happen. Funeral costs, living and education expenses and more can quickly add up — even for those who budget carefully. Because of this, it’s also important to have a plan in the event that you or your partner are no longer able to financially support your children. Some parents look to life insurance so that, if they were to pass away, their family would be able to maintain their lifestyle and have some financial cushion for the future.

Both parents may want to consider purchasing adequate life insurance to replace their salary. But even if one parent stays home with the kids, life insurance could be beneficial. A recent survey by Salary.com estimates the annual worth of a stay-at-home parent at $184,820 per year.

The bottom line

Raising children is both a joy and a significant financial commitment with the average cost of raising a child to 18 being undeniably substantial. Parents may find themselves investing a quarter of a million dollars or more in their child’s upbringing. However, with forethought and strategic financial planning, it’s possible to navigate these expenses even within a budget.

Parents or those contemplating starting a family should consider key steps like crafting a budget, living modestly, saving as much as possible and securing life insurance while young and in good health.

Frequently asked questions

    • A study conducted by the USDA in 2015 highlighted that for a middle-income, two-parent family with two children, the average cost of raising a child from birth until 18 was estimated at $233,610. When adjusted for inflation, that amount surges to roughly $286,000. Given the continuous upward trend in expenses, raising a child to 18 in 2023 and beyond is likely to exceed this figure. It’s essential for parents and those considering starting a family to be aware of these costs, ensuring they’re equipped to manage the financial implications of such a long-term commitment.
    • The annual estimated cost of raising a child varies based on numerous factors including the family’s location, income level and lifestyle choices. Based on a study by the USDA, it was found that a middle-income, two-parent family would spend approximately $13,742 per year to raise a child from birth until age 18. However, it’s important to note that these costs can be higher or lower and may vary considerably by year, especially when factoring in inflation, child life stages and the ever-evolving economic landscape. Parents should also consider additional expenses such as extracurricular activities, health care and education when estimating their annual child-rearing costs.
    • Among the various costs associated with bringing up a child, housing consistently emerges as one of the primary expenses. This includes not only the price of the home itself but also related costs such as utilities, maintenance and location-related premiums, like being close to reputable schools. While factors like food, education and child care also contribute significantly to the overall cost, housing generally demands a larger share of a family’s budget throughout the child’s life. For those pondering how much it costs to raise a child, it’s crucial to factor in these housing-related expenses and plan accordingly.
    • While several states in the U.S. come with hefty price tags for raising children, California, Washington, D.C. and Massachusetts frequently rank among the most expensive locations, based on data from the Economic Policy Institute. Factors like housing, education, child care and the overall cost of living contribute to these elevated costs.

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