How much does it cost to raise a child in the U.S.?

I’m expecting my first child in a few days, and I couldn’t be more ready to finally meet my baby. My bank account, on the other hand? That’s another story. I don’t know if there’s any way to fully prepare my monthly budget for the cost of raising a child.

How much does it cost to raise a child in the U.S.?

According to the most recent data from the United States Department of Agriculture (USDA), released in 2014, the average cost to raise ONE kid to the age of 18 is over $245,000 (more than $304,000 when adjusted for inflation), excluding costs associated with pregnancy and college.

That’s a whole lot of money, especially considering the cost of having a baby (which averages around $3,400 out of pocket) isn't part of your family budget. Planning on paying for college? You’ll need to add an additional $20,000–$45,000+ per year to your total spend PER CHILD.

But what, exactly, are you spending money on? Here’s how the percentage of spending breaks down for middle-income families' children:

• Housing costs: 30 percent 
• Childcare/education: 18 percent 
• Food: 16 percent 
• Transportation: 14 percent 
• Healthcare: 8 percent 
• Miscellaneous (sports, etc.): 8 percent 
• Clothing: 6 percent 

Incidentally, the most expensive child-rearing years are 0-2 years old (approx. $12,940 per year) and 15-17 years old (approx. $14,970 per year). 

Preparing your family budget for the average cost of raising a child

When my husband and I were finally ready to share our big news, one of the first people we told — after friends and family, of course — was our financial planner. We were nervous about how we’d afford the cost of raising a child and we knew she’d be able to offer some tips on budgeting for baby.

Tip 1: Factor so-called hidden costs into your monthly budget

We knew we’d be buying baby clothes, diapers and bottles, but we didn’t think about some of the less “exciting” things we’d be spending money on. Babies go to the doctor a lot in their first year (an average of six to 12 times, assuming baby is healthy), which means $100–$300 in insurance co-pays that need to be factored into our budget. 

We do a lot of cooking, but our financial planner said we’ll probably spend $100–$200 on takeout that first couple of months as we get into a new routine — and that should be added to the budget as well.

She also warned against underestimating the number of diapers we’ll need: We could go through around 10 per day! A “giant” pack of diapers at Target costs $35 and has 148 diapers, which means we’ll need to budget around $70 per month for diapers. 

Tip 2: Start saving for college early

Our financial planner advised that we can’t open a 529 college savings plan until our baby is born, but told us that we should open one as soon as she arrives. That way, we can set aside a few hundred bucks a month from our budget over the next 18 years, vs. trying to play catch-up when baby’s closer to college age. She also said that in the early years, we should request friends and family contribute to our 529 plan for birthdays, holidays, etc., instead of buying baby toys she won’t play with. 
She also reminded us that since we’ll be working while our daughter is in college, we’ll likely be paying for some of her schooling from our income instead of trying to do it all from savings. 

Tip 3: Budget for disability & life insurance

My husband and I each have a life insurance policy, but our financial planner told us we were better off dropping it & opting for disability instead, or having both plans, with baby on the way. That’s because a person under the age of 65 is far more likely to become disabled, at least for a short period of time, than to die during their working years — and disability coverage offered through the workplace might not be enough. The average annual cost of disability insurance is about 1 to 3 percent of your annual income, or between $500 and $1,500 per year for someone earning $50,000. While this isn’t exactly a child-related cost, I do want my family to be covered in the event my husband or I wind up out of work for a while due to an injury.

While there’s no way to full prepare your monthly budget for the average cost of raising a child, adjusting your spending and your expectations before baby comes will (hopefully) make the transition to parenthood a little easier on your wallet. I’ll let you know in a few months!