How Much Does It Cost to Raise a Child?

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pregnant woman wondering how much does it cost to raise a child?

For many Americans, starting a family is an important life milestone. While a recent study found that about one quarter of respondents weren’t interested in having children, it’s still the norm to want to raise a kid. Many women even commit to spending tens of thousands of dollars on In Vitro Fertilization with the hopes of being able to have a child. But whether you intend to help pay for your child’s college education or not, raising a child comes with some overwhelming costs. Based on data from 2015, the USDA estimates that the total cost to raise a child from birth to age 17 is about $233,610, or $12,980 annually. But where does the money go, and how do expenditures vary by family income level?

Childcare and Education

Parents are expected to spend an average of about $37,378 on childcare and education costs over the course of their child’s life, or 16 percent of their total budget for child-rearing. This includes day care tuition and supplies, elementary and high school tuition, fees, supplies, and books, and babysitting costs. Low-income couples and single parents are less likely to pay for childcare, according to the Consumer Expenditures Survey. Only 26 percent of low-income married couples and 30 percent of low-income single parents reported the expense in 2015, compared to 52 percent of high-income couples and 41 percent of high-income single parents. Expenditures on childcare and education also vary by the child’s age and the location of the services.

Childcare Costs by State

Here are the average monthly costs of infant care and care for a four-year-old in each state, according to the Economic Policy Institute.

State Average Annual Cost of Infant Care Average Annual Cost of Care for a 4-Year-Old
Alabama $500 $432
Alaska $1,010 $841
Arizona $912 $712
Arkansas $574 $457
California $1,412 $956
Colorado $1,277 $1,032
Connecticut $1,292 $1,061
Washington, DC $2,020 $1,593
Delaware $918 $740
Florida $770 $607
Georgia $711 $609
Hawaii $1,144 $745
Idaho $623 $538
Illinois $1,150 $864
Indiana $1,051 $796
Iowa $865 $719
Kansas $935 $733
Kentucky $534 $534
Louisiana $644 $576
Maine $787 $691
Maryland $1,278 $855
Massachusetts $1,743 $1,258
Michigan $905 $741
Minnesota $1,341 $1,021
Mississippi $453 $399
Missouri $837 $584
Montana $793 $698
Nebraska $1,048 $952
Nevada $951 $754
New Hampshire $1,066 $862
New Jersey $1,082 $905
New Mexico $718 $634
New York $1,283 $1,030
North Carolina $790 $676
North Dakota $758 $685
Ohio $808 $658
Oklahoma $715 $550
Oregon $1,135 $838
Pennsylvania $987 $814
Rhode Island $1,141 $891
South Carolina $584 $500
South Dakota $543 $529
Tennessee $728 $622
Texas $777 $589
Utah $829 $637
Vermont $1,068 $976
Virginia $1,172 $906
Washington $1,213 $921
West Virginia $728 $637
Wisconsin $1,047 $850
Wyoming $887 $751

Healthcare Expenses

Health insurance premiums for families can be costly. According to research from Kaiser Family Foundation, the average premium for family coverage in 2020 was $21,342 per year. In addition to paying for insurance coverage, families spend money on medical and dental visits not covered by insurance, medications, and supplies related to children’s physical and mental health. Of course, some families will pay more than others, depending on their child’s health needs. The average cost of disability-associated healthcare, for example, is $17,431 annually for each person with a disability. If those costs sound unaffordable based on your family’s income, you might want to check into your eligibility for The Children’s Health Insurance Program (CHIP). Benefits vary by state, but the program typically covers check-ups, doctor visits, immunizations, dental, vision, inpatient and outpatient hospital care, emergency care, and x-rays and labs. Routine doctor and dental visits are free, and while there may be copays with other services, you’ll never pay more than 5 percent of your family’s annual income.

Housing Expenses

For a middle-income family, housing was the greatest child-rearing expense, accounting for 29 percent of parents’ annual spending on their kids. This includes mortgage or rent payments, property tax and insurance, maintenance and repairs, utilities, and furniture and appliances. Keep in mind that as you welcome additional children into your family, the expense per child decreases. For example, married couples with only one child spent 27 percent more per child than married couples with two children. That’s partly because children often share a bedroom, and clothing and toys are handed down.

Food Expenses

While food prices have declined over the years, feeding your kids will still set you back. Food represented 18 percent of families’ annual expenses in the USDA report. These costs included food and drinks purchased at grocery/convenience stores (including purchases made with SNAP benefits), school meals, and dining out. Low-income families may be able to receive assistance purchasing food through SNAP. Requirements vary by state but are based on income and resources that are updated annually. If you’re found eligible, you can get an Electronic Benefits Card to use to pay for food at authorized retailers. Visit the SNAP state directory for more details.

Transportation Expenses

A U.S. Department of Transportation Study found that family-related activities account for about 75 percent of a family’s total transportation. Driving to and from school, extracurriculars, friends’ houses, and commuting for family vacations all add to a parent’s transportation costs. The USDA estimates that about 19 percent of total transportation costs are attributed just to the child. Based on the Consumer Expenditures Survey for 2020, that would amount to about $1,867 per year.

Clothing Expenses

This category includes items like shirts, pants, dresses, coats, suits, footwear, and diapers and training pants. Across income groups, clothing accounted for five to seven percent of the average family’s total expenses. And while children’s apparel can often be handed down to siblings or other family members, the cost of diapers can’t be avoided. Families spend an average of $80 per child per month on diapers, and one in three households with children age three or younger struggle with the cost.

Other Expenses

Families spent six to nine percent of their total child-rearing budgets on miscellaneous expenses, which included everything from haircuts to toothbrushes to entertainment and reading materials.

Planning for College

Though a rising number of parents are expecting their children to foot the bill for their college education, many parents are still using savings or even borrowing to help fund their children’s education. Parent PLUS loans are becoming increasingly popular among families, and these loans can lead to inescapable debt due to higher interest rates and fees. And unlike student loans, income-driven repayment options are difficult to come by. Estimates show that more than one in eight borrowers will default on Parent PLUS loans. To avoid going into debt for your child, you’ll need to have a savings plan. It’s best to start saving early with one of the following tax-advantaged savings vehicles:
  • 529 Plan: With a 529 plan, you don’t have to worry about contribution limits, your money grows tax free, and you won’t need to pay federal income tax on withdrawals. Be warned that your savings will impact your child’s eligibility for need-based aid, however.
  • Coverdell ESA: A Coverdell ESA has income limits, and you can only contribute up to $2,000 per year for each child under 18. Distributions aren’t taxed as long as they don’t exceed the cost of your child’s education.
  • Roth IRA: Typically intended for retirement savings, a Roth IRA is a great investment vehicle for older parents. The maximum contribution is $6,000 annually or $7,000 if you’re over 50. You can withdraw your contributions tax-free at any time, and once you reach 59 ½ and have been contributing for at least five years, you’ll be able to withdraw your entire earnings without being taxed.
You’ll also want to guide your child to apply for scholarships and choose an institution and degree program that will likely result in a positive return on investment. You can get a sense of which degree programs are the best value using the Department of Education’s College Scorecard. Deter your child from applying to a for-profit college, where tuition costs are higher than at public universities or community colleges, but earnings after graduation are less.

Can You Afford to Have a Child?

Most families who want children can find a way to afford the expense, but it will take strict budgeting and saving. While the average annual expenditure of $12,980 is a good starting point, you’ll want to estimate the total annual cost in your area as well. Next, take a look at your current budget and see if you can make adjustments that will free up enough income to raise a child. If the cost of raising a child would put such strain on your income that you can’t afford basic necessities for your family, you’ll need to save some money ahead of time or find another source of income. You should feel confident that you can meet your child’s needs before you grow your family.

Frequently Asked Questions

Do Expenses Grow With Your Child’s Age?

Yes. Teenagers have much higher food and transportation costs — the cost of car insurance for a teen driver is particularly steep. Annual expenses averaged about $900 more for teens and about $300 less for children under the age of three, according to the USDA.

Where Are Child-Rearing Services the Most Expensive?

Parents in the urban Northeast have the highest child-rearing costs, followed by the urban West. Lower housing and childcare costs in rural areas mean that rural families spend about 27 percent less to raise a child than families in the urban Northeast.

How Do Child-Rearing Costs Vary By Income Level?

Parents earning more than $107,400 per year spent more than twice as much money on expenses for their child than parents earning less than $59,200. But the low-income group spent the greatest percentage of their income, devoting 27 percent of their pre-tax earnings to raising a child. Parents in the highest income group spent only 11 percent of their before-tax income on child-rearing costs, by comparison.

How Can I Save Money on Childcare Costs?

Do your research and compare the costs of different options, including a nanny share with other families or a babysitting cooperative among a large group of parents. Low-income families may also qualify for childcare subsidies — each state has different requirements. If you’re planning to start a family and live in an area with a high cost of living, you might also consider moving to an area with lower housing and childcare costs.

How Much Do Low-Income Families Spend to Raise a Child?

Single parents earning less than $59,200 in 2015 dollars spent an average of $172,200 over the course of the child’s life, while low-income married couples spent an average of $174,690. That’s nearly three times their annual salary.

Should I Save for Retirement or My Kid’s College Education?

Though 74 percent of parents prioritize saving for their child’s college education over their own retirement savings, financial experts generally recommend the opposite. If you run out of money during retirement and expect help from your children, that could put an even greater burden on them than their own student loans. That doesn’t mean you shouldn’t save for college, but you’ll want to make sure you’re contributing enough to a retirement account first.

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