What Is the Average Cost of Raising a Child in the U.S.?

FT Contributor  | 

There is one thing every parent wants to know, and that is the average cost of raising a child in the U.S. The United States Department of Agriculture (USDA) raised eyebrows across the country when they released a report entitled Expenditures on Children by Families, 2015

Using national data to calculate a realistic average cost, the report relies on factors like family income, location, marital status, and the number and age of the children. The USDA’s study shows that for a middle-income, two-child family in the United States, it costs an average of $233,610 to raise a child until the age of 17.

Of course, not every family receives the same income, and not all families have two children. The costs were calculated based on expenditures in areas like food, clothing, and education. Each of these areas is heavily dependent upon income and thus present huge variables when calculating average costs. Find out how to calculate a more realistic cost of raising a child in your family.  

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What Is the Average Cost of Raising a Child Annually?

There is no definitive way to calculate the exact cost of raising a child, with inflation and technology continually changing the markets with every passing minute. You can still use everyday expenses and past inflation to calculate ballpark costs for raising your child, though.

As children grow, so do their needs, and parents must prepare for steady increases in costs such as food, transportation, and education as their child ages. According to the USDA, this is what a child costs to raise by age group:

Birth to Two Years Old

A baby’s first-year costs can easily exceed $10,000 for households of all incomes, with high-income households paying an average of nearly $20,000.

  • Low income: $9,690;
  • Middle income: $12,680;
  • High income: $19,770;

Ages Three to Five

It’s normal for costs to increase as children grow older, and during the ages of three to five, parents can expect to pay an average of $12,730.

  • Low income: $9,700;
  • Middle income: $12,730;
  • High income: $19,790;

Ages Five to Nine

Children ages five through nine are now of school age, so tuition and school-related expenses seem to balance out the cost of childcare.

  • Low income: $9,330;
  • Middle income: $12,350;
  • High income: $19,380;

Ages 15 to 17

Teenagers are like miniature adults, with many of the expenses and hardly any of the income, so prices swell again.

  • Low income: $9,980;
  • Middle income: $13,900;
  • High income: $23,380;

What Are the Biggest Expenses of Raising a Child?

There are many things your child will need over a lifetime, but there are some specific, basic needs that are more important than others. Housing, food, and childcare are among the leading expenses when you’re raising a child. By understanding what they cost, you are better able to budget for other items your family may need.

Housing

A safe place to lay your head is among the most fundamental needs of a human being, so it may not be surprising to find that nearly one-third of your child’s expenses involve housing, or about $37,378 for the average child. Housing expenses include things like rent and mortgage payments, utilities, furniture, and appliances.  

Food

Food is the largest expense after housing, demanding nearly 20% of total costs. Food expenses include not only your groceries, but also non-alcoholic beverages, restaurant meals, and school lunches. Supplemental Nutrition Assistance Program (SNAP) benefits qualify here, as well. Babies only require an average of $141.70 per month compared to $304.60 for an 18-year-old male’s monthly diet.

Childcare and Education

Childcare can easily become an enormous expense for parents, accounting for up to 22% of the family’s household income. Average costs are about $37,378 per child for things like daycare, babysitters, and nannies. As the child ages into school, childcare costs become education costs for things like tuition, books, and supplies.

The Cost of Raising a Child Varies by Location and Number of Incomes

The cost of raising a child greatly depends on where you live and how much money you make. Rural areas face lower average costs because they do not deal with the high inflation of more populated urban areas. For example, it costs an estimated $264,090 to raise a child in the Urban Northwest, while parents pay just $227,400 on average in the Urban Midwest.

Single-parent households typically have less income than multi-income households, so the former pay a lower average cost for raising their children. Wealthier families have more disposable income, so they tend to spend more liberally in areas such as housing, childcare, and education.

The USDA study failed to account for households beyond the traditional two-parent, middle-income household with two children. For families making under $59,200, the average cost to raise a child peaked around $9,980 in 2015, but in a wealthy household making more than $107,000 before tax, it could cost almost $24,000. Some households may qualify for the child and dependent care credit on their taxes, which could help to lower total costs.

To determine what it will cost you to raise a child, you must first consider how much total income your household makes each year.

What About the Cost of College?

A college education can be a parent’s greatest pride and also a thorn in their side. College tuition is no small expense, and many parents today begin saving early in preparation. The USDA only includes expenses for children under college age, so the reported costs totaling $284,570 do not include the exorbitant cost of college.

Tuition can vary greatly depending on where your child enrolls; there is an enormous difference between public and private colleges, as well as in-state and out-of-state tuition. CollegeBoard shows that public, out-of-state tuition averages $38,330, while private tuition averages more than double that number, at $49,870 per year. Community college is a far more affordable option, with an average tuition of $3,660 per year.

When you’re raising children, the key is to remain flexible and frugal. Maintaining a budget and saving for expenses will go a long way when you’re rearing your children. Be smart with your finances so you’ll have the funds you need for all of your growing child’s expenses.


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