It’s hard to get a grip on all the costs associated with having a child. Some of them are direct expenses, like the baby food you buy for an infant or the fees for summer camp. Others, such as the cost of a larger house in a better school district, are a bit less obvious but are just as real. As your parents may have reminded you on more than one occasion, they spent a lot of money to raise you, but just how much has the cost of starting a family changed since you were in diapers?
It’s more than fair to say that the cost of raising a child has skyrocketed over the years. In 1983, it cost only about $81,000 to raise a child from birth to age 17. At the same time, the median household earned $24,580, or 3.3 times the total cost of raising a child.In 2023, and following some of the worst inflation in 40 years, the cost of raising a child has soared to $310,605 in that same 0-17 year period.1 Families also earn more in 2023 than in 1983. While the current median household income is $70,784, it is not enough to cover the increased cost. It cost 4.4 times the median household income to raise a child born in 2021, a much bigger chunk of the family budget.2
Having a child can be one of life’s most profound and meaningful experiences, yet it’s also an enormous financial commitment, and a far larger one than it was for your parents. The cost of raising a child may even surprise you if you don’t put enough thoughts into the process. As you consider starting a family, you can prepare yourself by learning about the costs that stretch from your first trip home from the hospital to the day your child packs up for college.
Here are some of the expenses you can expect when you’re no longer expecting:
Prenatal care, childbirth and postpartum care cost an average of $18,865 in the United States.3 Though insurance may cover a large part of those expenses, the average out-of-pocket expenses are around $2,850. New parents pay $500 to $900 for a year’s supply of diapers. Formula costs up to $1,500 in the first year.4 One-time expenses like cribs, car seats, strollers, and playpens can add up to thousands of dollars.
You’ll spend more on groceries with a growing family, from $900 to $1,900 per year more, or roughly 18% of the family income.5 Inflation has pushed food prices up for everyone, especially families with teenagers who eat more than any other age group.
Kids grow fast, and the shoes, pants, coats and shirts that you purchased just a few months ago may no longer fit. Experts estimate that parents spend about 6% of income on clothing for their children, or around $1,000 per year.
The cost of daycare has risen sharply in recent years and now tops $10,000 a year on average. Private school now costs an average of over $12,000 per year nationally, though costs can go much higher for top schools and institutions in expensive locations. Planning to save money by sending your kids to public schools? You’ll be spending an average of $864 per year just on supplies.
Most child-rearing cost estimates don’t include one of the biggest expenses of all: sending your children to college. Average annual tuition and fees range from just under $40,000 at private schools to slightly more than $10,000 at public in-state institutions.6 Room, board, books, and travel can push these totals tens of thousands of dollars higher, and these costs have consistently outpaced inflation. Building college savings into your budget early on can increase your childrens’ options for higher education.
As your family grows, you may need a larger apartment or house. You may want to move into an area with better schools. You may even require a bigger vehicle to fit car seats and eventually take your kids to soccer matches and cheer competitions. All of these improvements can add up to additional expenses on your overall budget.
In addition to the basics, you’ll want to set aside part of your budget for extras like family vacations, movie nights, and trips to local attractions. As your kids develop passions, you may need to spend money on lessons, teams, equipment, and travel to competitions.
Nearly everything about raising a child costs more than it did back in 1983, both in absolute terms and as a percentage of household income. Yet one thing hasn’t changed at all: the way that children change our lives in profound and meaningful ways. Understanding the costs, and having a strategy on how you’ll meet them, can be just as important as picking out the right crib or painting the nursery. It’s critically important to have a clear picture of the financial implications of having a child (or more children) before you make that decision.
1 “It’s Getting More Expensive to Raise Children. And the Government Isn’t Doing Much to Help,” Brookings, 30/08/2023
2 “Income in the United States: 2021,” United States Census Bureau, 13/09/2023
3 “Health Costs Associated with Pregnancy, Childbirth, and Postpartum Care,” Kaiser Family Foundation, 13/07/2022
4 “New Baby Budget: Costs for the First Year,” BECU, 09/09/2023
5 “What Does it Cost to Raise a Child?,” The Washington Post, 13/10/2023
6 “See the Average College Tuition in 2022-23,” U.S. News and World Report, 12/09/2023
This article is provided for general informational purposes only. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
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