Cost of Raising a Child and How You Can Save

Every parent-to-be worries about the cost of raising a child, just as every current parent tells them that it’s not an issue and you always find a way. However, it clearly is an issue, as affordability and career concerns are one of the many reasons why the birth rate is declining all over the developed world and why, for the first time in recorded history, the birth rate isn’t high enough to replenish the population.

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Cost of Raising a Child

We have some good news and bad news. The bad news is that children really are expensive. Expecting parents are right to worry. According to a recent estimate, the average cost of raising a child in today’s financial climate is a staggering $233.000.

To put this into perspective, it has been said that the average Millennial needs to wait for 14-years before they can afford a 20% down payment on the average house, which, ironically, is a few grand less than the $233,000 it costs to raise a child. 

This doesn’t necessarily mean that you have a choice between a child and a house, and we’ll get to that shortly, but first let’s look at where that astronomical amount of money goes. 

Itemized Cost of Raising a Child

Children are expensive, and we don’t just mean at Christmas and Chuck E. Cheese. There are many expenses involved with keeping your little ones safe, nourished, and happy, including:

Fertility Treatment = $11,000+

This is the outlier, as the majority of couples don’t use fertility treatment and many pregnancies are actually unplanned. However, Americans are increasingly putting their careers first and not thinking about starting a family until later in life, at which point the likelihood of natural conception decreases significantly and they need a helping hand.

Fertility treatment can be very expensive, and those costs increase if you need multiple rounds. A single IVF treatment can cost upwards of $11,000 and that doesn’t account for medications and repeat sessions. 

Many couples have been hit with bills in excess of $50,000 for a process they initially thought would cost less than $5,000. As soon as they begin that process, their expectations and their hopes are raised and if it fails, they’re more inclined to just keep pumping money into it until they get the results they seek.

Housing = $2,500 to $4,000 a year

Housing is one of the most overlooked expenses of raising a child. After all, they live with you and unless you really love (or hate) your kids, you’re probably not going to buy them their own home for their sweet 16.

However, the more kids you have, the more allowances you need to make with regards to your living space. Children need their own bedrooms, for starters, and an extra body means higher utility bills and insurance premiums. That 1-bedroom apartment may look like the ideal option now, but when that little bundle of joy/financial black hole comes along, you’ll need to think about bigger and more expensive accommodation.

In urban areas, the costs have been estimated to be as high as $4,000 a year. And that’s just the average for a single child. If you discover you’re having twins and you live in San Francisco, it’s time to pack your bags and head east. 

Food = $100 to $300 a month

Children eat. A lot. You probably didn’t need us to tell you that (and if you did, it might be time to think that fertility treatment) but you might be surprised to discover just how much they eat. 

It has been estimated that a baby needs just under $100 worth of food every month and this steadily increases as the child ages, by the time they hit 15, they’re devouring over $300 of your monthly food bill, with teenage boys costing $50 more than teenage girls on average.

Childcare and Healthcare = $20,000 to $35,000

Parents with a middling income spend around $150 a week on daycare but surprisingly very little is spent on healthcare. Children are attracted to chaos and accidents like moths to a flame, but thanks to family plans and the resilience of youth, they are generally much cheaper than you might expect.

Over the course of their childhood, the average cost of healthcare is between $12,000 and $23,000 or roughly 5% to 10% of the total cost of raising a child. 

College Education = $20,000 to $40,000

One of the biggest costs of raising a child is a college education. An increasing number of grandparents are paying for college tuition because parents can’t afford to, but the onus is nearly always on the care providers to cover the cost directly or to acquire the necessary loans.

The average cost for a college education is between $20,000 and $40,000 depending on the school. This increases significantly for medical school and law school.

Other Costs = Varies

While things might not look bad thus far, there are still countless other costs to consider. Children need clothes and shoes, they’ll beg for phones, TVs, games consoles, digital downloads, sports equipment, and whatever else their friends own, or they recently saw on a commercial.

Birthdays, Easter, Christmas, Spring Break, Summer Break, Wednesday—there are no shortage of expensive days when you’re a parent and that’s why the costs of raising a child are so astronomically high.

How to Reduce These Costs

It’s time to ease some of your burden and the terror that you’re feeling right now. Firstly, the aforementioned figure is an average and it takes into account what the average middle-class family will spend. That average family has a household income of around $60,000, and when we break the costs down to an annual sum, it means they’re spending just over $13,000 a year or roughly 21% of their income on raising a child.

Secondly, it’s calculated over 17 full years and many of the expenses come towards the end, including college tuition and the endless succession of tech they insist on owning.

If you’re a struggling single parent or a small family with a limited budget, you don’t need to spend anywhere near this amount and can get by with much less than $100,000, which equates to a more reasonable $5,800 a year.

If this is still too much or you’re one of those middle-income earners terrified at the prospect of spending a house on your unborn child, take these tips on board.

Work from Home

Parents who work from home can save a small fortune on childcare and also reduce key costs such as transportation. If you have your own car and can make your own hours, you can drive your child to and from school, football practice, and anywhere else they want to go, thus saving on buses, taxis, and the hassle of asking friends and family to assume the role of a chauffeur.

Working from home also means your career will suffer less in those crucial months after the baby is born. You don’t need to worry about missing days at the office because your office is right where the baby is. You can catch up with lost work while they nap. 

Maintain a Good Relationship with your Parents

Not only can your parents help to fund your teenager’s education, but they can also babysit them when they’re younger. Grandparents are a huge time and money saver. 

Older people usually have more money tucked away and fewer bills to worry about. The fact they are long-since retired means they also don’t have to worry about work and will be available for the odd pro bono babysitting.

Cook More

TV dinners may seem like a cheap and convenient way to feed yourself, but once you have a family to feed they can be very expensive. Not only that, but you’re raising your child on a diet of processed food.

By learning to cook a few simple recipes you can stretch your grocery budget much further and cook filling meals for the whole family with just a few basic ingredients.

The average American household spends around $500 a month on groceries and 40% of these are thrown away. That’s a lot of waste and it stems from a reliance on junk food and an obsession with buying fresh food that never gets eaten (I promise I’ll eat healthily this week!). 

Be realistic, be resourceful, and discover the merits of frozen vegetables. It also helps if you freeze your leftovers and use them at a later date, stretching the food much further and shedding dollars from your grocery bill.

Plan Ahead

We tend to miss money when it’s spent in one go. That’s actually one of the main reasons parents underestimate how much it costs to raise a child, because while they would definitely miss $233,000 spent in one lump sum, that wouldn’t be the case if stretched over 17 years.

By planning ahead and saving small amounts here and there, you can prepare for a rainy day and help with your child’s education. Save for an unexpected financial disaster, save for a home, a college education—just save. It doesn’t matter which account the money goes into or what you use it for, as long as you’re putting a little money aside each month to prepare for a simpler future. 

Encourage them to Work

Teenagers are considerably more demanding than younger children, but they’re also capable of working. If you teach them the value of money and don’t spoil them when they’re young, they will be less inclined to demand money from you, more understanding of your financial difficulties, and more inclined to get a job.

Start charging them rent and using some of that money to pay for their food and clothing. If there is a little left over, put it aside to save for their college education and encourage them to do the same. It’s important, however, that they keep some of the money they make from their job, otherwise, they won’t be motivated to keep working.

Be Wary of Debt

Many parents take out loans and credit cards to pay for big-ticket items. They don’t have the money to spend but they’re desperate to give their kids what they ask for and so they get themselves into debt.

This debt eats away at their financial prospects and reduces their cash flow, hovering over their heads like a dark cloud and threatening to drag them under following a simple financial misstep.