The Surprising Cost Of Raising A Child

It's widely understood that raising children can cost a lot, but just how much may be a surprise still. From seemingly never-ending clothing purchases (as a result of their constant growth) to the cost of learning opportunities, activities, and memberships, there's always something to pay for with a young one. Parents may not have taken the time to add all these expenses up, however; yet it's a good idea to tally up the entirety of your child-related expenses so you know how much needs to be allocated moving forward.

This can be beneficial as you prepare for big life decisions like a move or career change, and it can also help make sense of the financial demands that may come about should you decide to grow your family. Financial planning needs often dictate major life decisions, with more than half of Americans delaying an important choice as a result of money worries — just one of many unsettling financial statistics that affect Americans.

In 2017, the USDA estimated that a middle-income family of four (two parents and two children) will spend roughly $234,000 raising a child born in 2015. This figure varies slightly by region and other location-specific factors, such as urban versus rural communities, but it stands as an important baseline. The Brookings Institution revised these estimates in 2022, with inflation adjusted figures landing at $310,605 (through 2032), based on a 4% rate after 2020. CreditKarma, meanwhile, offers its own calculation, estimating it would cost a family $307,000 to raise a child born in 2023. Of course, there's more to the story than just a raw number, as housing costs and much more feature heavily in the calculation.

Naturally, the lion's share of these costs can be found in the staples. Housing and food expenditures make up 28% and 18%, respectively, per the USDA, adding up to nearly half of a family's total cost. This is perhaps good news for a couple worrying about how they'll afford children. There's certainly a lifestyle shift that takes place once a child is born, with housing arrangements sitting prominently within this change. Your existing home or apartment might not suit entirely the addition of a young child over the long term. This might result in a higher mortgage or rent bill, but it could also present an opportunity to refocus on the features that matter most and act as a cost-reducing measure via a strategic downsize.

There's no getting around food expenses, though. Formula and baby food can be costly when added up. Estimates, for example, place formula at costing an average of roughly $150 per month. Further, as your child grows, they'll become a fully ravenous member of the dinner table, too, with standard grocery requirements growing by one more individual. And that's just the addition when considering food preparation costs; it only grows from there when you begin to factor in the cost of dining out.

Data collection on the costs associated with raising a child began in 1960. At this time, nuclear families tended to consist of a single wage earner and another stay-at-home parent — generally the mother. Roughly half of American mothers with a child under 18 stayed at home in the late 1960s, a trend that's evaporated in subsequent decades. Going back a little farther, just prior to American engagement in World War II, only about 25% of women total worked outside the house.

Economic and social factors made this arrangement both possible, and a sort of standard layout in family dynamics. With economic realities shifting, as well as new and increasing job opportunities and salary equity for women in the workforce since these early markers, child care costs have risen from almost nonexistent to a persistent and costly necessity in the budgetary math of bringing a child into the home. There's no need to pay for day care when one parent remains at home; however, this requirement rears its head in a significant way when both parents leave for the office every day.

On average, the American family spends between $225 to $320 a week (per child) for day care. In truth, this expense will be personal for everyone raising a child. It might make financial sense for one parent to stop working for a time, or a family may be lucky enough to lean on grandparents or aunts and uncles to pick up much of the daily load of caring for children while parents head to work. (Of course, the rise of remote work is another consideration today as well.)

The direct costs that come along with the welcoming of a new child into your family can be fairly substantial, to be sure. The USDA's estimated figures, and subsequent studies aimed at pinning down even more up-to-date expense tallies are no joke! Even so, parents can take a massively important step when their children are still very young to set them up for the best possible future successes. The cost of going to college has also risen exponentially in the U.S. over recent decades. A 529 plan is a savings strategy that helps parents begin to set aside money to pay for educational expenses later on in life as early as day one. Using one of these plans can drastically reduce the out-of-pocket costs of sending a child to school by taking advantage of the weight of compounding interest over time.

Alternatively, or as yet another supplement, parents might also consider saving a bit of cash every month for their children to use as they see fit when they hit a preplanned age or life milestone. Once again, saving — even without a specific goal in mind on your child's behalf — can make an enormous difference in the(ir) future. More importantly, the earlier you start, the more time your investment in their future has to reach its full potential. On top of the housing costs, clothing, food, and activities your child needs to flourish, saving for the future should also factor into your child-raising budget.