Kids aren’t cheap. That’s the consensus among both the government and parents, but exactly how much they cost is up for debate.
The U.S. Department of Agriculture used to publish an annual report that calculated the average cost of raising a child to adulthood, not including college expenses. It was last published in 2017 and found the cost of raising a child born in 2015 was $233,610, assuming the child was born to a middle-income, married couple.
However, costs can vary depending on a number of factors, including where you live and your lifestyle. For instance, the USDA found parents in the urban Northeast spend an average of $264,090 while rural parents across the country had average expenses of $193,020. Lower income, single-parent households spend an average of $172,200.
“When you break it down per year, perhaps it’s not insurmountable,” says Jean Chatzky, CEO and founder of HerMoney Media. The USDA figure for a middle-income couple raising a child to adulthood equals out to nearly $13,000 a year, or $1,081 per month.
The government numbers aren’t necessarily reflective of all families’ experiences though. There are a number of circumstances and choices that can increase or decrease the cost of child rearing.
How Much Does It Cost to Raise a Child?
The USDA comes to its figure by using data from the annual Consumer Expenditures Survey. When factored for inflation, the number jumps to more than $284,000 today, says Anthony Paul, managing director and co-founder of The Hamilton Group, a financial planning firm in Greenwood Village, Colorado.
For children born in 2015, average spending is expected to break down into the following percentages, according to the USDA:
— Housing — 29%
— Food — 18%
— Child care and education — 16%
— Transportation — 15%
— Health care — 9%
— Miscellaneous — 7%
— Clothing — 6%
Those percentages can vary significantly depending on a child’s age and the family’s lifestyle. In 2019, LendEDU, an online marketplace for financial products, surveyed 1,000 parents who had a child between the ages of 1 and 3. They found parents spent an average of $13,186 per year raising their child, although the median cost was only $6,000.
Baby items such as diapers, toys and strollers made up 30% of the expenses reported by parents to LendEDU. Meanwhile, health care accounted for 17% of costs and child care absorbed 13% of spending.
While publishing average costs can be helpful for budgeting purposes, they can also paint an overly bleak picture of parenting. Many parents can and do spend significantly less. “If the (COVID-19) pandemic has taught us anything, it’s that a lot of needs, or things we thought were needs, are actually wants,” Chatzky says.
Factors That Influence Child Raising Costs
While cost estimates can be a helpful benchmark for parents, they may overstate certain costs while ignoring others. “Cost of living and family support are things you have to consider,” Paul says.
Grandparents nearby who are willing to babysit for free can all but wipe out child care expenses. Meanwhile, monthly mortgage and rent payments may be lower for those living in states with affordable housing, such as South Dakota and Michigan.
However, there are trade-offs to living in some states with a lower cost of living. For instance, Michigan parents need to buy clothing appropriate for four seasons, says Michael Foguth, a father of six and founder of Foguth Financial Group in Brighton, Michigan. “With kids, you have to buy winter boots and coats every year,” he notes.
As kids age, they may have added expenses for school activities, sports teams and electronic devices. One way to minimize these costs is to ask teens to find a job and pay for their own discretionary expenses, Paul suggests.
[Read: Ways to Teach Kids About Money.]
Are You Able to Afford a Child?
While couples often discuss whether they can afford children, Foguth doesn’t think parenthood should be reduced to a financial decision. Rather than asking if you can afford children, a better question may be whether you are willing to shift money away from your current expenses in order to accommodate the needs of a child. “Are you willing to make financial sacrifices for someone else?” Foguth asks.
Chatzky has a similar philosophy. “It’s really a matter of what you as a family prioritize,” she says. The financial expert recalls her mother saying that if she had waited until she could afford children, she never would have had any.
There are immediate costs associated with the birth or adoption of a child that couples can anticipate. However, after that, parents usually have significant flexibility in how much or how little they spend on their kids.
Having multiple children can raise costs but perhaps not as much as parents expect. “The cost per child does go down because some of the upfront costs will be covered,” says Trina Patel, financial advice manager for Albert, a financial service app.
The USDA notes that married couples with one child have expenditures that are 27% greater than what married couples with two children spend per child. Meanwhile, those with three or more children spend 24% less per child compared to two-child households.
Parents may already have a home and vehicle large enough to accommodate multiple children. Child care providers may also offer sibling discounts. Plus, clothes and toys can be passed down to younger siblings, and food that is purchased in bulk can result in a lower per-serving cost.
Budgeting for Baby
For would-be parents, the various numbers come with bad news and good news. The bad news is that the savings they have prepared in anticipation of a baby might not be enough. However, the good news is there is a wide variation in the cost estimates because so many expenses can be optional.
Rather than buying expensive gadgets, upsizing the house for more space and insisting on new items, parents can keep costs down by making due with what they have already. Paul, who has three daughters, encourages people to consider buying secondhand, maximizing the use of grocery savings apps and rethinking expensive family vacations.
Rather than fill your house with toys, he recommends asking relatives to donate to a child’s college fund instead. “(Toys are) literally a vacuum for your wallet,” Paul quips.
“If you can automate any of your savings, that’s really powerful,” Patel says. Directly depositing money from your paycheck to savings or setting up automatic transfers to a 529 plan for college can make it easier for parents to prepare for future expenses.
Kids don’t have to be as expensive as the numbers suggest. Couples should honestly evaluate not only their finances but also their commitment to sacrificing creature comforts for the sake of raising children. For those who make the leap to parenthood, they may find there is ultimately only one word to describe the cost of kids: priceless.
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Update 09/28/20: This story was published at an earlier date and has been updated with new information.