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Cost of raising a child

Young Girl Helping Her Mother Feeding Food To Toddler Sister
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How much does it cost to have a baby and raise them? A 2015 study done by the USDA found that it cost an estimated $233,610 to raise two children from birth to age 17 in a middle-income family with two parents. That figure, adjusted for inflation, is just over a quarter of a million dollars at $286,000 in 2022. Shouldering the cost of raising children can be an additional pressure on parents, especially as costs continue to rise. Here’s what you need to know.

How much does it cost to have a baby?

Having a child is an undeniably major life change. Women and families today may be more anxious to understand how life and their financial situation might change with a baby, whether anticipated or unplanned. Here are just some of the expected costs related to having and raising a baby:

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  • The average cost of powdered formula is around $400-$800 per month for babies who are exclusively fed on formula. This cost could be different depending on your situation, such as if your baby needs special formula, if there is a formula shortage or recall or if your baby is also fed breast milk. (Babycenter.com)
  • A study by the Kaiser Family Foundation found that the total costs associated with being pregnant, experiencing childbirth and postpartum care averaged $18,865. (Kaiser Family Foundation)
  • That same study found that average vaginal deliveries cost $14,768, with $2,655 paid out of pocket, while the average cesarean section cost $26,280, with $3,214 paid out of pocket.(Kaiser Family Foundation)
  • A home birth could cost between $1,500 to $5,000, but typically isn’t covered by health insurance. (Healthline)
  • Adoption and in vitro fertilization (IVF) costs can also vary. One cycle of IVF could range between $4,900 to $30,000 depending how the procedure is performed, while private adoption fees could be between $20,000 to $45,000. (Healthline)
  • The annual cost of childcare for infants to four years old averages about $10,000 per child for center-based care and $8,000 for home-based care. (S. Treasury Department)
  • A survey from CNBC found that the weekly cost of a nanny for a single child in 2021 was $694, up from $565 in 2019. An after school sitter in 2021 was $261, slightly higher than the 2019 figure of $243. (CNBC)
  • That same study found that parents reported spending more than 20% of their household income on childcare, although 72% reported spending 10% or more. (CNBC)
  • With babies going through 6-12 diapers per day, this could mean up to $936 per year, or $18 a week, spent on disposable diapers. (Healthline)
  • Getting all the necessary gear for a baby, like strollers, car seats, play pens and carriers, can cost anywhere from $425 to nearly $3,000. (The Bump)

How much do school expenses cost?

A major expense when it comes to raising children is the cost of education. Starting with preschool, the average cost per year of tuition can range from $4,460 to $13,158 per year, or about $372-$1,100 per month.

When it comes to kindergarten through high school, parents can choose between public and private schools. For private schools, the Education Data Initiative estimated that tuition costs an average of $12,350 per year. Associated costs, like technology, textbooks, back-to-school supplies and more, could bring that up to $16,050. For a child to be in private school from kindergarten through eighth grade, the estimated cost could be around $208,650.

Public schools don’t charge a tuition fee like private schools, but that doesn’t mean there aren’t costs as well. In 2016, the University of Michigan estimated that it cost $302 per student to play sports, $218 for arts like music, theater or yearbook, and $124 for other clubs. These figures included costs like participation fees, equipment and travel, and may have been increased since due to inflation.

Paying for college

Currently, the average cost of full-time undergraduate tuition for a public university ranges from $10,740 for in-state students and $27,560 for out-of-state students. 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 savings for your child’s post-high school education.

The school that your child attends matters, too. While they may receive a lower tuition for attending an in-state public school, they may want to go out-of-state as well. Below are the most expensive and cheapest states for out-of-state students attending a 4-year public university:

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Five cheapest states for out-of-state students attending a 4-year public university
  • Florida: $4,463 per year
  • Wyoming: $4,747 per year
  • District of Columbia: $6,020 per year
  • Nevada: $6,023 per year
  • Utah: $6,700 per year
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Five most expensive states for out-of-state students attending a 4-year public university
  • New Jersey: $14,360 per year
  • Illinois: $14,455 per year
  • Pennsylvania: $15,565 per year
  • New Hampshire: $16,679 per year
  • Vermont: $17,083 per year

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 expenses to consider. Other necessities like clothing, education and health care can be expensive. All of these categories should also be considered when factoring in the costs of having and raising a child.

As your child gets older and earns their driver’s license, for instance, this could be a significant expense — Bankrate’s research found that adding your 16-year-old to your car insurance policy runs an average of $2,531 per year, although there are some relatively affordable car insurance options available for teens.

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 $1,383 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 12.1% and food-away-from-home pricing increasing by 7.7% from June 2021 to July 2022. The USDA expects rising costs for 2022, with increases as high as 10.0% and 7.5%, respectively.

To eat healthy foods, like high-quality meats and fresh fruits and vegetables, food expenses increase even more. In 2022, the costs for all food categories are expected to increase:

  • Meats: +9.0%-10.0%
  • Processed fruits and vegetables: +8.5%-9.5%
  • Cereals and bakery products:0%-13.0%

Life insurance

Life insurance is crucial for families, especially if your income cannot be easily replaced if the unexpected were to happen. Funeral costs, living and education expenses and more can quickly add up even for those who budget carefully. Because of this, it’s also important to have a plan in the event that you or your partner are no longer able to financially support your children. Some parents rely on life insurance to ensure that, if they were to pass away, their family would be able to maintain their lifestyle and have some financial cushion for the future.

Both parents should consider purchasing adequate life insurance to replace their salary, even for a stay-at-home parent. A recent survey completed by Salary.com estimates the annual salary of a stay-at-home parent at $184,820 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.

The bottom line

Raising children is rewarding and fulfilling to many people. But it’s also very expensive these days. Infancy to age 18 is likely to cost you close to a quarter of a million dollars or more as a parent. But by preparing mentally and implementing financial planning strategies, you can be well-equipped to raise your child to adulthood comfortably, even on a budget. Given the ever-growing costs of raising a child, parents thinking of having a baby might want to consider some of the following tips: start early with a budget, try to live below your means, save money wherever possible, shop around for home and auto insurance each year for the best deal and purchase life insurance when you are young and healthy.

Written by
June Sham
Insurance Writer
June Sham is an insurance writer for Bankrate. Before joining the team, she worked for nearly three years as a licensed producer writing auto, property, umbrella and earthquake policies.
Edited by
Insurance Editor