When we talk about “family planning,” it’s easy to focus on the physical ability for couples to attain their desired number of children. While that is undoubtedly important, it’s equally crucial to plan for the financial costs of raising a child.
According to the U.S. Department of Agriculture, if you were to give birth in 2022 and provide for the child until age 18, your financial expense would be approximately $272,049 – or $15,113.83 per year. And those figures are just per child.
Today, we’re seeing later and later pregnancies. In fact, the average age of a first-time mother is 26.3 years old, which is 5 years older than just a few decades ago. For first-time fathers, the average age is 31 compared to the previous benchmark of 27.
Why the increase?
If you’ve been on any dating app, then you know how challenging it is to find a partner in today’s times. The reality is people are settling down later than they used to, which partially explains the increase. Another factor is that higher education is more accessible, so people who would have otherwise started a family are focused on starting their careers instead. Finally, people are questioning if they even want to have children – and having a realistic expectation of the financial commitment is a large factor.
So that raises the question: what’s the real cost of raising a child from birth?
Let’s break it down below.
The Cost of Childbirth or Adoption: $4,500 to $43,000
The average cost for maternity care is $4,500, but patients without insurance can expect to pay anywhere from $30,000 to $50,000 for childbirth.
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Prior to getting pregnant, be sure to make sure that you have adequate insurance through your employer or spouse’s employer. If you don’t have insurance through work, then you’ll want to check the ACA marketplace to see the options available to you. Even if you miss the open enrollment period, you may still be eligible for a limited number of plans or the special enrollment period.
Below are the average costs for family planning:
- Sperm donations: $500
- Adoption through a private agency: $43,000
- Surrogacy: $75,000
These costs are part of the reason why young families are waiting later and later to begin having children. For example, if you know that you’ll want to adopt or find a surrogate parent, then you’ll want to begin saving in advance so you can cover the costs.
I personally like saving in a high-yield savings account such as CIT Bank’s Savings Builder, which offers 8 times the national average APR so that you can reach your savings goals quicker.
Housing: $3,764 Per Year
As your family grows, you will need more space. This results in a higher mortgage (or rent payment) as well as higher insurance costs, as you have more property to insure.
According to the USDA, couples with 1 child pay an average of $3,764 more in housing costs per year compared to their childless counterparts.
Of course, your exact housing costs will vary based on where you live. The average housing cost in the urban northeast, for example, comes in at $264,090 compared to just $193,020 for rural areas with fewer than 2,500 people.
For most families, housing is the single largest cost for raising a child, ranging anywhere from 29% to 32% of the total cost.
Food: $2,794 Per Year
The exact cost of food is going to depend on your lifestyle, especially once your baby is off of baby formula and old enough to begin eating solid foods. For example, a family that eats out multiple times a week is going to spend more on food than families that cook at home and prioritize eating leftovers in subsequent meals.
Economic analysts say that the most minimal plan (“thrifty plan”) will cost families $182 a month compared to the “liberal plan” of 327 per month.
Furthermore, these costs tend to accelerate as children age. Babies eat less than teenagers, for instance. Gender also has an impact, as boys tend to eat more than girls. Specifically, boys between the ages of 8-10 eat 1,300 calories at lunchtime compared to just 900 among girls. Again, this difference becomes more pronounced after puberty.
Childcare: $5,436 to $24,243 Per Year
Depending on how many hours you work outside of the home, childcare can add up quickly. According to the U.S. Department of Agriculture, parents who work full time and earn the median income of $50,000 will spend approximately $1,890 per month on childcare. Another study by the National Partnership for Women & Families says the average cost of childcare for one child ranges from $6,000 to $14,000 per year, depending on whether you use daycare centers, nannies, or both.
Fortunately, more and more parents have the ability to work from home, which is helping many families save more on childcare. Additionally, if you have your parents or siblings, they can help you watch your children, and your kids will enjoy getting to know their grandparents, aunts, and uncles better!
Education: $0 to $14,648 Per Year
Even if you send your kids to public schools, you'll be responsible for giving them money for school lunch as well as purchasing basic supplies like pencils, paper, calculators, markers, and highlighters.
If you choose to enroll your child in private school, know that the average cost of private school is $14,648, though the final cost can vary wildly by state. If you decide to homeschool, it's likely you'll spend even more, since you'll need to buy books, computers, and other educational materials.
Transportation: $3,906 to $12,743 Per Year
This includes gas, car insurance, maintenance, and repairs.
Similar to housing, kids will have an impact on the amount that you have to drive. In addition to your regular driving, you'll have to factor in driving your kids to school, piano lessons, the pediatrician, play dates with friends, and more.
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The immediate increase in cost will be gas, but over time, the additional wear and tear on your car results in more frequent oil changes, tire changes, and the need to replace your vehicle.
What Are Other Costs of Raising a Child?
When combined together, the costs of childbirth, housing, food, and childcare are over 65-70% of the total cost of raising a child.
Other costs you can expect include:
- Clothing. If you have multiple children, hand-me-downs are an excellent way to save on clothing costs, especially since young ones grow out of their sizes so quickly.
- Toys. Again, you can pass down toys as your older children grow up. Colloquially, this is known as the “cheaper by the dozen” effect.
- Gifts. From throwing birthday parties to making sure that Santa Claus stops by during the holidays, don’t forget to factor gifts into your budget.
- Entertainment. When your kids aren’t at school, what are they going to do to keep themselves entertained over the summer? Summer camps and family vacations can quickly add up!
- Dental, eye, and healthcare. Part of raising healthy children includes making sure that they’re physically and mentally healthy. Even if you have insurance, you’ll likely have to pay for co-pays or for medication.
How to Financially Prepare for Raising a Child
Keep in mind that the above figures are general numbers. The exact cost will depend on where you live, your lifestyle, and whether you have family nearby to help you start your family.
Regardless of your income and job, it’s important to have a solid budget when starting a family.
Whether you want to learn about budgeting, saving more, frugal living, or eliminating debt, my finance articles will help you get a solid understanding and grasp on your finances.
Finally, if you’d like to connect with people who’ve been where you are in their family planning process, I encourage you to join the TBM Family on Facebook. It’s a great community to find support, encouragement, resources, and learn from other people’s financial journeys. I hope to see you there!