Raising a child can be an emotionally rewarding experience. But it can also be very costly. Statistics from the Brookings Institution, an economic think tank, show that the average middle-income family with two children will spend $310,605 to raise a child born in 2015 up to age 17. That’s a significant jump from the figure published by the U.S. Department of Agriculture (USDA), which estimated the overall cost to be $233,610 in 2017 (using 2015 dollars).
Brookings, which cited higher inflation for the rise, assumed an inflation rate of 4% from 2021 to 2032 when it calculated the new cost of raising a child.
If starting a family is in your plans, or if you already have kids, understanding the costs can make shaping your financial plan easier. We highlight some of the key costs associated with raising children, including housing (the top cost), food, childcare, and others.
- Middle-income parents will spend an average of $310,605 by the time a child born in 2015 turns 17 years old in 2032.
- The largest expense associated with raising a child is housing, followed by food.
- The cost of childcare varies widely and depends on where you live.
- The good news is that each additional child costs less, thanks to economies of scale.
- The cost of raising a child doesn’t include costs associated with education.
Housing: 32% of Income
The largest expense associated with the cost of raising children is housing. This can easily make up a sizable chunk of a parent’s budget, especially when you factor in mortgage or rent payments, taxes, insurance, repairs, utilities, maintenance, and basic household goods.
According to Consumer Expenditures Data for 2020, the typical household spends a mean amount of $21,409.19 on housing per year. Meanwhile, U.S. Census Bureau data shows that the median household income in the United States was $67,521 in 2020. Going by these numbers, you could assume that families with children spend roughly 32% of their income on housing.
These numbers offer a broad idea of how much families pay for housing. However, it’s important to keep in mind that housing costs can vary based on a number of factors, including:
- Geographic area
- Type of dwelling (single-family home, townhouse, condominium, etc.)
- Whether the family rents or owns their home
- Size of the home as it corresponds to family size (i.e., number of bedrooms required based on the number of children and adults)
- Age of the home
Economic conditions can also influence the cost of housing for families. When housing prices rise, that can make it more expensive for families to purchase a home. Likewise, rising inflation can push up rental prices along with increased prices for other consumer goods.
Housing assistance programs can help by providing money to supplement the cost of rent for eligible lower-income families.
Food: 27% of Income
Sustenance tends to be the next major cost for parents. The amount that a family spends varies. It is based on the number of children in the home, household income, geographic region, and preferred diet.
The USDA offers some perspective on how much families may spend on food. Each month, the USDA issues monthly reports on food costs at four different levels: thrifty, low-cost, moderate-cost, and liberal. These reports consider different household sizes with children of different ages. The reference family consists of a male and a female adult ages 19 to 50 and two children in the 6- to 8-year-old range and the 9- to 11-year-old range.
Here’s how the average food spending numbers for the reference family add up on a monthly basis, as of July 2022:
- Thrifty plan: $951.70
- Low-cost plan: $1,025.90
- Moderate plan: $1,276.90
- Liberal plan: $1,543.40
At the low end, a typical family of four spends about $11,500 per year on food at home. At the high end, they spend more than $18,500 per year on food. That’s around 27% of their income if you’re going by the median household income of $67,521 mentioned earlier.
Spending money on food away from home, including dine-in meals at restaurants, takeout meals, and snacks purchased at convenience stores, can inflate food costs for families.
Childcare: 12% to 29% of Income
Childcare costs can easily take up a sizable part of parents’ budgets each year. The cost of childcare in the U.S. ranges from $5,436 to $24,243 annually, according to 2020 figures from the Economic Policy Institute. How much you pay for childcare can depend on the type of care needed, the number of children who require care, and where your family lives.
For instance, Washington, D.C., residents pay the most. Infant care costs $24,243 annually, which represents about 29% of the median family income for parents in the area. Meanwhile, parents in Mississippi pay the least. Annual childcare amounts to $5,436 for an infant and $4,784 for a 4-year-old in that state. That represents roughly 12% of the median family income for the state.
Day care centers may give a discount if you have more than one child enrolled.
What Else Do Families Spend Money on?
Aside from housing, food, childcare and education, there are other costs associated with raising children that are important to budget for. Some of the most common things that parents may pay for to raise kids include:
- Healthcare and insurance
- Extracurricular activities
- Sports and hobbies
- School fees for field trips, activities, fundraisers, etc.
- Family trips or vacations
Some of these items could be considered necessary, while others may be wants. How much you spend on these things (if you do at all) can depend on the number of kids you have and what your budget allows. It’s important, though, to consider each and every budget item when determining your personal cost of raising children.
The total cost to raise a child born in 2015 to age 17 after you factor in an inflation rate of 4%.
The Good and Bad News
There is some good news when it comes to the cost of raising a child in America. Economies of scale also apply to the number of children you have. The USDA points out that each additional child costs less because siblings can share a bedroom and a family can buy food in larger, more cost-effective quantities. And while your offspring might not necessarily like it, clothing and toys can be handed down, and older siblings can often babysit younger ones.
Now for the bad news: The numbers we mentioned above don’t account for the cost of a college education. Higher education can add to the total for parents who help pay for their children’s college costs. How much you pay for college can depend on whether your child:
- Attends a two- or four-year school
- Goes to a public or private university
- Is charged in-state or out-of-state tuition rates (at public universities)
The average annual cost (in-state) for the 2021–2022 academic year comes in at $22,690 for a public college and $51,690 for a private college, according to the College Board. Keep in mind that these figures include the cost of tuition, fees, and room and board. That means saving early and taking advantage of 529 plans or other investment vehicles to keep kids from graduating with a large amount of debt.
Strategies to Reduce Costs When Having a Child
Raising a child can be an emotional roller coaster. Ask any parent, and they’ll probably tell you that there are ups and downs. We understand that the costs associated with the responsibilities of being a parent and raising a child can be draining. So we’ve highlighted a list of tips that you may want to consider to help you reduce your expenses:
- Plan ahead. It’s important to have a good plan in place. This principle is very important with anything you do that costs you money. If you want to have a child and/or are expecting, it’s important to get your affairs in order sooner rather than later. Good planning can keep you one step ahead of the game.
- Set aside money for your child. Save money in an account meant just for your child in the same way you would for a rainy day, a major purchase, or retirement. It could be a savings account or a long-term investment vehicle. Dip into this fund if and only when the need arises for expenses related to your child. You should also take advantage of special accounts like 529 plans.
- Look for parent-friendly tax credits and deductions that can reduce your tax liability or help you get some money back, like the Child Tax Credit.
- Less is often more. Using some restraint can help you cut down costs, especially in the beginning. After all, babies don’t need much other than food, clothing, and a place to sleep.
- Think about the must-haves for your kids rather than the needs. You can probably do without anything that falls into the latter category. Ask yourself whether your 12-year-old really needs the latest gaming console when the last one works perfectly fine.
- Think sustainably. Consider recycling and secondhand. Consider reaching out to family and friends about any clothing that they’re no longer using. Use cloth diapers rather than disposable ones. This will not only help you save money but also can help you reduce your carbon footprint.
What is the average cost of raising a child in the United States?
While it can vary due to geography and the cost of childcare, $310,605 is the average amount spent on raising a child born in 2015 to age 17. This amount does not include the cost of paying for higher education, which can easily add $80,000 to $100,000+ per child to the total.
How do the expenses of child rearing break down?
Housing is the biggest expense associated with raising kids, followed by paying for food. Following those two categories of expenses, parents spend the most on childcare, transportation, healthcare, clothing, and miscellaneous spending.
What are the major costs of raising a child in the U.S.?
The major cost of raising a child is housing. This is followed by food. However, some of the other key expenses that most parents don’t think about right off the bat include education.
How can I reduce the costs of raising my children?
Some of the best ways to reduce the costs of raising a child or children include proper planning and saving exclusively for the little ones. Other tips include looking for parent-friendly tax benefits and keeping a less-is-more attitude in mind. Parents can also keep a check on their budgets by recycling and using secondhand clothing. And of course, try to do away with the wants and stick with the must-haves, as the former are often dispensable.
Which state has the lowest childcare costs?
According to the Economic Policy Institute, the state with the lowest childcare costs is Mississippi. Parents pay an average of $5,436 for an infant and $4,784 for a 4-year-old in childcare each year.
The Bottom Line
Nobody wants to think of their children as just an expense, but the financial side of child rearing can’t be ignored. Understanding the numbers can help you determine if you can afford to have children if you don’t have them yet. And if you already have kids, being cost-conscious can help you to make smarter financial decisions so that you can stretch every dollar.