The Cost of Raising a Child
If you and your partner are trying to get pregnant, than you are probably very excited about the prospect of adding to your family. Starting a family can be one of the most fulfilling and gratifying experiences that a couple can share, however, it can also be a very expensive one, too! Children are often a household’s single greatest expense, requiring money for food, clothing, education, and other essentials. Here are some details about the cost of raising a child and a few tips on how you can successfully manage your finances to ensure that your family stays healthy and happy!
Who Determines the Cost of Child-Rearing?
In the United States, the Department of Agriculture determines the average cost of raising a child from birth until the age of 17. This cost is estimated every year based on averages, inflation rates, and common trends throughout the country. In its report on the cost of raising a child, the Department of Agriculture investigates seven key areas that make up the greatest financial burden for most families. These areas include:
- health care
Raising Your Child: The Costs
According to the 2005 report from the Department of Agriculture, the cost of raising a child to the age of 17 will be approximately $500,000. These costs include:
Housing is the single greatest expense when it comes to raising a child. Housing expenses include rent payments, mortgage payments, furniture, insurance, and utilities. Depending upon your annual household income and where you live, expect to pay between $200 and $400 per child, per month on housing. This can add up to $100,000 by the time your child turns 17.
Food expenses include the cost of beverages, meals, dining out, groceries, convenience and specialty foods. Most parents will find that the cost of feeding their child will increase as their child ages, hitting a peak around the ages of 12 to 17. Expect to pay between $70 and $260 per child each month on food expenses. This works out to as much as $40,000 over a 17 year period.
Transportation is a necessity for all children, in order to get them to school, the doctor’s office, or to their recreational activities. This category includes the costs of purchasing a vehicle, supplying your vehicle with gas and oil, regular car maintenance, or the cost of public transportation. Depending upon the type of car you drive and the number of children you have, transportation could cost up to $200 every month per child. This adds up to about $30,000 over 17 years.
Clothing is something that you child cannot go without, and, as a result, it is going to make up a significant portion of the cost of raising your child. Clothing expenses include costs for diapers, shirts, pants, suits, seasonal clothing, alterations, and dry cleaning and are generally between $30 and $100 per month. This adds up to about $17,000 once your child turns 17.
Health care costs can vary greatly, depending upon your child’s health and your insurance coverage. Health care costs include medical and dental expenses and insurance premiums, but not the cost of prescription medications and hospitalization. Expect to pay about $15,000 over a 17 year period.
Childcare is one of the biggest expenses for couples raising young children. It includes the costs of babysitting, professional daycare services, and preschool. Expect to pay about $20,000 over 17 years.
Education becomes one of the single greatest expenses of raising a child, particularly once they head off to college. Tuition expenses are becoming very significant, so it is essential to start saving early. Expect to pay between $100,000 and $200,000 for your child’s education.
Easing the Financial Burden: Tips on How To Save
The cost of raising a child can become quite a burden for some families, so it is a good idea to start saving early. Here are a few great tips on budgeting and how you can lower your child-raising costs!
- Housing: To lower your housing expenses, consider moving into a smaller home or refinancing your mortgage. This will considerably lower your monthly housing expenses and allow you to save for education and other costs.
- Food: Food can become very pricey, especially if you are shopping at high-priced stores. Try to save money by shopping online. Online food stores offer great bargains and often allow you to buy in bulk.
- Transportation: To save money on transportation, forgo buying that new car. New cars depreciate very quickly, so instead, think about purchasing a used car or leasing a vehicle.
- Clothing: To save money on clothing, try shopping at second-hand and consignment retailers. Hand-me-downs are also a great way to save money – try buying children’s clothes in neutral colors, so that they work well for boys and girls.
- Health Care: Health care can be a difficult thing to get a good price on, so try to shop around. Look for a plan with the best premiums. If premiums seem too high, increase your deductable or opt for annual or semi-annual payments.
- Childcare: To save a bit on child care, think about setting up a babysitting cooperative in your area. This will allow you to cut down on costs while involving your neighbors in childcare opportunities.
- Education: Education is becoming a bigger and bigger expense for most parents. Work to save money for the future by investing in savings bonds and setting up investment accounts at your local bank. Alternatively, look into some government savings plans that are designed to help parents save for their children’s future education. Many of these plans offer tax breaks and other incentives.