It’s hard to quantify the cost to raise a child, but several researchers have done just that. According to the USDA’s 2015 findings, the cost to raise a child from birth through high school graduation is, on average, $233,610 in the United States. This number does not include college. If you plan on paying for your child’s college education, you can add more to that total.
Seeing this high number should not detract you from having a child, though. What it can do, however, is motivate you to run the numbers yourself as you add a bundle of joy to your family.
Some families will spend far less than the number above, while others will spend considerably more. It all depends on your priorities, your income, and your lifestyle goals for your family. Even so, there are a few costs every family will have to consider. Here are some examples.
I categorize basic needs as shelter, food, and clothing. As a financial educator and a mom of twins, I regularly point to these three categories as areas families can look to save. How much families spend in these categories will determine whether they’ll be below the average cost to raise a child or way above it.
A good rule of thumb is to identify your priorities and focus your spending on those. Every family will have different ones. For example, I don’t spend a lot on my children’s clothing, because it’s not a big priority for me. However, I have friends who absolutely love shopping for nice clothes for their kids, and they get sincere joy out of it.
Ultimately, how much you spend on basic needs will also depend on your income, your debt load, and the cost of living in your area.
Childcare is undoubtedly the biggest expense many families will have during the first few years of their child’s life. The Economic Policy Institute has a great tool you can use to see the average cost of childcare in your state. This can help you get an idea on the average cost of childcare where you live.
Again, every family’s situation will be different. If you have grandparents willing to provide childcare for free, that can save you thousands of dollars in childcare costs and drastically reduce your overall cost to raise a child. However, if you live far away from family, like I do, you’ll have to consider other options.
I became self-employed right before I gave birth to my twins. For many months, I tried to balance building a business with taking care of my children, but I quickly got overwhelmed. At the time, what we could afford was paying a mother’s helper to come in the afternoons to help with our infants. As my business income grew, we were slowly able to add more and more childcare hours until we had a part-time nanny help us 25 hours a week until the kids started school.
Because I was able to work from home and manage a large portion of my twin’s childcare duties, I was able to save considerably on childcare costs. That said, my choice to do so also resulted in slower business growth in the beginning, so that was one tradeoff I chose to make.
Medical costs are another variable expense that can be hard to calculate, because it really depends on your health insurance and your child’s needs. Some people will have health insurance that covers most of their birth experience; others won’t. That’s why it’s so important to call your health insurance company and speak with whoever is providing your maternal care to determine the cost of your birth experience ahead of time.
Our twins were born prematurely and spent time in the NICU. It was a really difficult time for us, and I was grateful we saved $10,000 in a baby fund ahead of their birth to take care of their needs. Their NICU stay led us to hit our out-of-pocket max with our health insurance, though, and other costs associated with caring for them drained that savings account very quickly. We thought the $10,000 would help us throughout their first year, but it was gone within a few months of their birth.
There are other medical costs that can pop up as your children grow up, depending on their needs. Some children might require different therapies or regular visits to the doctor. Then, there are those pricey, random ER visits parents know all too well (myself included).
Again, medical costs should not detract you from having a child, but this is a very important category to consider when starting a family. It’s crucial to understand your health insurance, know what it covers, and what you’re responsible for in case of an emergency.
Sure, it’s important to feed and clothe your child in addition to making sure they have medical care and childcare. But what about fun? What I’ve learned as a parent is that fun doesn’t really have to cost anything. My twins spend so much time playing together, making up games, and being silly. They can have fun anywhere, especially if they’re together.
I’ve learned they don’t really need expensive toys or pricey trips to have a full life. I’ve had this philosophy ever since they were babies, and, so far, it’s going well. I was such a minimalist when I was a new mom that I hardly bought any baby gadgets at all. My neighbor had to force me to take a baby bouncer from her, because she said I needed to be able to put one baby down sometimes (she was right!).
Really, each family will have a different idea of fun. For some, it means affordable camping trips. For others, it means buying season tickets for professional sports teams for the whole family.
You get to decide how much to spend on fun expenses as you raise your children. Maybe you do something extravagant every weekend or perhaps you’ll have a handful of nice experiences that are very memorable. Either way, deciding on your priorities and making sure they are in your budget is a good way to plan for the fun along the way.
Parenting costs are about priorities.
There’s no right or wrong way to spend your money raising your children. What’s important is you identify your priorities and place your focus on that. Whether it’s your home, your children’s education, vacations, or something else, spending your money on what you value is a good way to bring you happiness and make you more confident in your money choices.
These days, I have a higher income than I had when my twins were born, but I’m still cost-conscious. I regularly review my financial priorities for my kids and discuss them with my husband. In other words, knowing what type of life you want to provide for your children is the crux of understanding what your total cost will be to raise a child.
A research study can tell you the average most families spend to raise their kids, but there are no rules here. You get to decide how much of your money to allot to raising your kids. As parents, you set the tone for what your family values.
For our family, we choose to spend more on our children’s education but less when it comes to their clothes, our home, and our cars. It’s all about balance, knowing what you want your lifestyle to be like, and spending accordingly.
Plan and save.
Once you identify your priorities and values, take the next step and plan. If family vacations are important to you, consider saving money every month towards that goal in an Ally Bank Online Savings Account. You can also save for sports, summer camps, holiday spending, birthday parties, etc. You can even use a feature I love called buckets to organize your different financial goals and monitor how much you have saved for each of them.
I also recommend having additional money saved for any potential surprises or emergencies.
There will always be unexpected costs and financial surprises when it comes to having kids (Hello! Twins!). However, if you can be disciplined with your money, make it a habit to save regularly, and stay true to your priorities, the rest will follow.
Catherine Alford is a nationally recognized financial educator who partners with top brands to encourage, educate, and inspire people to take on a more active financial role in their families. She is also the founder of CatherineAlford.com, an award-winning personal finance blog that she created in 2010. Follow her on Instagram @CatherineCAlford.
The views, information, or opinions expressed are solely those of the individuals involved and do not represent those of Ally Bank.