Cost of raising a child

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In the US, the average cost of raising a child through the age of 17 is $233,610. This figure is based on data compiled in the most recent Expenditures on Children by Families report completed by the United States Department of Agriculture (USDA). What’s more, the estimated cost of raising a baby is based on a married couple with two children supporting the family on a median income. The report says that a family raising an only child in the same income bracket can expect to pay an average of 27% more than the two-child family. For parents, this creates added pressure to have a dependable income to raise their child or children from a baby to adulthood.

How much does it cost to raise a child?

Many new parents make the mistake of underestimating the expenses required to have a child and raise it to the age of 18 or when they go off to college. Having a baby is worth the cost for most, but the price tag of $233,610 or more to raise a child through their teen years can be jarring.

It is important to be both mentally and financially prepared to have and raise a child. One way to prepare is to consider cutting costs where you can, such as:

  • Make a budget and commit to it.
  • Shop around for insurance (health, car, home, life, etc.) to make sure you are getting the best deal.
  • Purchase life insurance to avoid financial devastation.

One of the most significant expenses you will pay throughout your kids’ lives is insurance. Health insurance is an obvious consideration, and you may want to do a little research to find qualified experts for advice about the best health insurance for families. Car insurance will also become a consideration when your children are old enough to drive. Insuring a young driver or teen can be very costly—adding your 16-year-old to your car insurance policy runs an average of $2,531 per year—but there are some affordable options available.

Another insurance consideration when raising children is life insurance. When you are young and healthy, purchasing life insurance means you can likely get ample coverage at an affordable price. Without life insurance, if one parent passes away, it could have a lasting financial and mental toll on the entire family. Life insurance might be one of the best ways to ensure your family maintains their lifestyle if you were to pass away, whether they depend on your income or you are a stay-at-home parent raising the kids.

Major expenses of raising a child

Though there are many expenses included in raising a child, a few major expenses make up the cost of having and raising a baby to age 18. These significant expenses include housing, food, childcare, insurance, education and transportation.

Housing

Housing is arguably the most significant expense associated with raising a child. In the USDA report, housing costs make up 29% of the overall cost of raising a baby. The cost of housing varies widely by location and the type of housing you choose. Many parents dream of a suburban house with a white picket fence and enough bedrooms for the entire family.

Based on a $250K dwelling coverage amount, the average cost of home insurance is $1,312 per year, according to 2021 Quadrant Information Services data. This is just one factor in the cost of owning a home; you will also have to consider the cost of a mortgage, utilities and maintenance.

Food

The cost of food is the second-largest expense, at 18% of the overall cost of raising a child. Over time, food prices have trended up, with food-at-home pricing increasing 1.2% and food-away-from-home pricing increasing by 2.4% from 2020 to 2021. The USDA expects rising costs for 2021, with increases as high as 2.5% and 3.5%, respectively.

To eat healthy foods, like high-quality meats and fresh fruits and vegetables, food expenses increase even more. In 2021, the costs for all food categories are expected to increase:

  • Meats: +1.5%-2.5%
  • Fresh fruits and vegetables: +2%-3%
  • Eggs: +0.5%-1.5%

Childcare

According to the USDA report, the third largest expenditure for raising a child involves childcare and education at 16%. These costs are highest for a child under six, which can likely be attributed to daycare costs. Childcare and education costs are lowest between the ages of 12-14.

The urban Northeast, West and South have the highest childcare costs, while the urban Midwest and rural areas have 27% lower costs. Of all the areas of the country, rural areas have the lowest costs for housing and childcare.

Other costs of raising a child

Though housing, food and child care are the highest cost categories related to raising a child to age 18, they are not the only ones to consider. The following categories should also be considered when factoring in the costs of having a baby.

Transportation costs account for roughly 15% of the cost of raising a child and are highest when the child is aged 15-17, especially once your child gets their driver’s license and has to be figured into the cost of car insurance. Health care and clothing account for 9% and 6% of the total cost of raising a child to age 18.

Life insurance

Life insurance is crucial for families, especially if your income cannot be easily replaced if the unexpected were to happen. Both parents should consider purchasing adequate life insurance to replace their salary, even a stay-at-home parent. A recent survey completed by Salary.com estimates the annual salary of a stay-at-home parent at $174,00 per year. In addition, life insurance is typically the least expensive when you are young and healthy, especially if you choose term instead of permanent life insurance.

Paying for college

Currently, the average cost of full-time undergraduate tuition ranges from $18,550 to $54,880. Parents who choose to pay for college can take advantage of savings plans like the 529 plan. Starting early in your kids’ lives allows you to leverage time to build up nice savings for your child’s post-high school education.

The bottom line

The cost of raising a child from infancy through the age of 18 is close to a quarter of a million dollars. By preparing mentally and implementing financial planning strategies, parents can be well-equipped to have a baby and raise the child to adulthood, even if they contribute to college costs. Purchasing life insurance can help ensure your family maintains their lifestyle if one or both parents pass away unexpectedly. Given the high and growing costs of raising a child, parents considering having a baby should start early with a budget, living below their means, shopping around for insurance each year for the best deal and purchasing life insurance when they are young and healthy.

Written by
Mandy Sleight
Insurance Contributor
Mandy Sleight has been a licensed insurance agent since 2005. She has three years of experience writing for insurance websites such as Bankrate.com, MoneyGeek and The Simple Dollar. Mandy writes about auto, homeowners, renters, life insurance, disability and supplemental insurance products.
Edited by
Insurance Editor