Kids don’t cost that much, right? Very, very wrong. The cost for a middle-income family to raise a child to adulthood is climbing, and currently rests at about $245,000 for a child born in 2013.
Cost varies depending on where you live and how much you make
When calculating the cost of children, be sure you use a calculator that takes into consideration your locale, whether you live in a rural or urban area, and how much you make. Costs for a child can vary from around $10,000 annually to as much as $25,000, depending on the family income alone. On top of that, the costs for raising a child in, San Francisco, California are going to vary greatly from the costs in Butte, Montana. Also consider whether you will be moving over the course of the child’s first 18 years, as that can change the annual cost of the child.
Childcare is the biggest burden
If both parents plan on working while the child is young, expect to pay an arm and a leg for childcare, especially before the child starts school. Costs can exceed $2,000 annually for childcare from ages 0 to 5 for daycare and babysitting – and that’s just the national average.
“In 2012, center-based care for one infant was greater than median rent payments in nearly half of the states, according to Child Care Aware of America’s most recent report. In Seattle, Britta Gidican and her boyfriend spend $1,380 each month on daycare for their 17-month-old son, just $20 less than they spend on their mortgage each month” (CNN.com).
Once the child starts kindergarten, costs go down, but after school daycare can still cost a pretty penny if not offered through school. Check with the elementary schools in your area to see what kinds of after school services they offer.
Cost goes up as kids age, not down
Yes, childcare costs will lessen over time, but with constant inflation, costs for a child will go up over time. The most increase is seen in the categories of food and transportation:
“Rising transportation and food costs are also eating up a big chunk of family budgets. Gas prices have nearly doubled since 2004, according to the AAA. Meanwhile, food prices have increased more than 13% since 2008, according to the USDA, and make up the third biggest child-rearing expense in the agency’s estimate” (CNN.com).
While gas prices are currently at an eight-year low, the costs for transportation will still increase as your child becomes more independent and involved with extra-curricular activities. Before having a child, decide with your partner whether or not you want to buy your child a car when the time comes, if you’ll buy new or used, and what price is acceptable.
As for increased food expenses, we all know how much teens can eat, especially in those growth-spurt years.
“Kim Blackham, a mother of four and part-time marriage and family therapist, says she has seen her grocery bill climb dramatically in the past decade. Today, she and her husband spend around $1,000 each month, in part because of her son’s food allergies and her efforts to cook healthier meals for her family” (CNN.com).
Don’t forget the costs of “miscellaneous” expenses
It’s always best to plan for emergencies, such as health problems or injuries, but there are some miscellaneous expenses to consider that will definitely come up. Don’t forget to factor in costs of school supplies and holiday or birthday gifts each year.
There are also some larger items such as furniture that will need to be changed with the child’s age. Sure, you may have budgeted for a crib and changing table, but you will need to buy a bed once your child is old enough. Once they start school, they will need a desk for school work. As they age, their clothes will get bigger as well and you may need to size up their dresser.
What is the best way to offset these expenses?
Tax credits are a big help once you have a baby. Also, healthcare and childcare can be paid for tax-free with the use of a flex spending accounts through many insurances or employers. Hand-me-downs, thrift stores, and garage sales are good ways to get cheap clothing and furniture without breaking the bank.
The biggest help though? Planning.
“When possible, expectant parents should prepare for the added costs ahead of time, said Matt Becker, a financial planner who specializes in working with new parents. First, estimate your child-related expenses and then try to save that amount each month. By the time your child is born, you’ll be used to living without that money and also have a sizable savings built up. ‘Having a baby is a huge life change. You are going to have unexpected things come up,’ said Becker, founder of planning firm Mom and Dad Money. ‘Having that extra savings can help a lot'” (CNN.com).
