How Much Does it Cost to Raise a Child?

Updated: Jul 6, 2020

Financial Obstacles Abound for Today's Parents

As a parent myself, this particular topic hits home. My wife, Emily, and I have two daughters, Baird and Madeline, whom we love and would do anything for. However, like a lot of millennial parents in our generation, a significant amount of consideration went into the timing of when we should have baby #1 (Baird), baby #2 (Madeline), and maybe one #3 (TBD/?).

Sure planning a family has always been a "thing." However, such a decision in today's world is putting a heavier burden on the next generation of young adults than ever before. At least in terms of recent US history. This financial burden that is associated with becoming a parent has caused an evolution of sorts, whereby having children in your 30s (and even 40s) is more normal than having them in your 20s. Consequently, experts believe that millennials face a more difficult financial challenge compared to their parents when it comes to raising children.

It's easy to understand why with unprecedented student debt levels, stagnant wages for the last 20 years, rapidly rising college tuition, healthcare expenses that are spiraling out of control, and daycare expenses that rival a mortgage payment. It's no wonder that in today's society most households need both spouses to produce an income just to make ends-meat.

Yeah, yeah, I hear you baby-boomer. "When I was your age... My friends didn't have destination weddings and bachelor parties in Nashvegas." Yadda, yadda, yadda. Every generation thinks they have it more difficult than the other or that the one before them grew up soft.

Perhaps there are some kernels of truth in those beliefs, depending on how you were raised and your overall perspective. Regardless, we can all agree that today's financial challenges look much different for today's parents. Which begs the question, how much does it cost to be a parent nowadays? According to the US Department of Agriculture, it costs $233,610 to raise a child to the age of 17 for a middle-income family. Note that this does not include the cost of college. Factor that in and you are looking at an average rate for tuition plus room and board of $20,770/year for in-state and $36,420/year for out-of-state students.

So how do the total cost numbers actually break down? Unfortunately, this somewhat arbitrary number, albeit a big one, doesn't help parents when it comes to making well-informed budgetary decisions. To that end, our firm created a detailed guide about the various costs associated with parenthood. It's an idea that came about when my wife and I were planning to have our first. Be sure to check out the backstory at the end if you want to chuckle at my expense.

Before digging into the numbers if you are someone who prefers to get right to it, you can skip the rest of this article and click here to download our free guide. For those who want a deeper understanding of the various costs associated with parenthood and get some context to go along with it, please continue reading further.

Parenthood Costs - Childbirth

Bringing a child into this world comes with a mixture of many emotions. The best one being the unconditional love you feel once that child enters this world. Yet, there's another emotion that most parents don't want to admit or talk about, which is anxiety. In the back of every parent's head, there is a constant and subtle worry about providing the best life possible for your child. At its core what that really means is having enough money to pay for stuff.

Unfortunately, those expenses hit you shortly after the baby is born and you get that first bill back from the hospital. Healthcare expenses are such that a family is wise to know what it costs to deliver a baby, which can run anywhere from $2,600 for natural birth without complications to $14,000 for a C-section with complications.

Don't forget that your stay at the hospital costs money too - using the average hospital stay for mothers the cost generally runs about $3,500. A trend that is picking up is having the baby at home, and it just so happens to be a potentially cheaper alternative at $1,500 on the low end.

Parenthood Costs - Infancy Stage

Most parents love changing poopy diapers because 1) who doesn't like cleaning up nasty runny weird-smelling things, 2) it seems to be the only thing you ever do when your child is at that infancy stage, and 3) the volume of diaper changes is a drain on your cash. All kidding aside, the average parent should budget about $60/month for diapers, cream, and wipes.

$720 a year may not seem like much. However, when you factor in other less obvious expenses like immunizations ($1,170/year) and food ($5,000/year), you begin to feel like all of your money is pouring into this little tiny thing that you brought home from the hospital.

Then there is the big one... Daycare. The average parent in the state of Florida pays $835/month to have their baby cared for while they earn a living. With two or three kids, daycare expenses often exceed a family's mortgage payment. I know it does for our family. When this happens, some families will choose to have one of the spouses stay at home with the kids because it makes more financial sense. What's the point of working if all/most of one of the parent's wages are being used up to pay daycare?

Parenthood Costs - Post Infancy Stage & Sports

Unfortunately, once your child is out of daycare you more often than not trade one expense for another. If only a kid's school day aligned with the average parent's workday. Because of this many households with two working parents are forced to pay for programs like aftercare, which can cost as much as $500/month. Don't forget your kid's healthcare expenses. Braces anyone? At the post-infancy stage, be sure to plan for another $500/month per kid for things like healthcare.

Then there are all of those activities after school -- band, sports, music lessons, etc. Over the last few decades sports, both professionally and at the youth level, have exploded into a big business. I know when my parents grew up as kids they didn't have multiple travel teams to stress their parents out with. You went to the ballpark and you played pick up games with friends.

Nowadays, parents are spending thousands a year so that their kid can become the next Tom Brady or Serena Williams. Or really what a good number of parents are hoping for is that their kid gets an athletic scholarship for college. The reality is that only 2% of high-school athletes will be offered an athletic scholarship.

So what does it cost to live vicariously through your kid and train them to excel at your favorite sport? One of the more popular choices, soccer, can range anywhere from $1,475/year to $5,000/year. On the expensive side, there's lacrosse which can cost $7,960/year - $17,500/year. Camps, travel teams, equipment, private coaches/lessons, and other factors can play a huge role in what you end up paying. For budget estimates with other sports like baseball, tennis, football, and hockey you can refer to pages 3-6 of our Cost of Parenthood Benchmarking Guide.

Backstory About the Parenthood Guide

Emily actually deserves the credit, as she was the one who asked me the laundry list of questions before Baird was born. Typical costs like:

  • How much should we budget for diapers and baby formula every month?

  • Do we have a limit on what we are willing to spend on daycare?

  • Should we get the "best" car seat (i.e. most expensive one) or something more reasonable?

Apparently, as a financial expert, she thought I would just magically have all the answers. Being the good financial planner/devoted husband that I am, I did my homework and then informed my wife that these added costs meant that we were going to need to sell our house and move in with her parents.

Sadly I'm only semi-kidding. I was actually starting a business (Mellen Money Management) and we were moving from Columbus, OH to Jacksonville, FL, where my in-laws lived. They were gracious enough to offer us a place to stay. So we lived with Emily's parents for several months to take some pressure off from all the transitions we were handling in our life. More importantly, we were adamant about saving money while I built a financial planning practice that could eventually contribute to our normal standard of living.

Anyway, the concept of a parenthood benchmarking cost guide came about because money was tight and the margin for error was razor-thin. Therefore, we wanted to know how the additional expenses of having a child were going to impact our ability to live on our own again one day -- roughly 8 months after launching a business and eventually owning a house in our new home state, Florida.

Our circumstances then got me thinking that there are probably a lot of other responsible parents like my wife who worry about the same things. Yes, you can Google a lot of this stuff... But surprisingly we couldn't find the data we wanted all in one place. So there you have it.

If you have further questions:

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