How much does it cost to raise a child? Just for the first year of life alone, your guess is probably way off, say Elizabeth Renter and Diamond Richardson:
Expectant parents, including those currently pregnant and those planning to have a child in the next three years, dramatically underestimate this cost: 54% of hopeful parents believe their baby’s first year of life will cost $5,000 or less. Americans in general are only slightly more realistic: 44% believe the average U.S. baby’s first year will cost that amount.
“$5,000 or less?” Nope:
Even assuming households making $40,000 would be savvy shoppers when outfitting baby, wouldn’t buy life insurance and wouldn’t start saving for college, the first year of parenting is potentially costly — as much as $21,248 in a $40,000 income household, according to the analysis.
The more you make, apparently, the more you’ll spend. A household making $200,000 a year might be expected to spend $52,000 in that first year! James Dennin tells us where all that cash goes:
Of all costs, childcare and housing were by far the biggest expenses for the $40,000-per-year households, costing roughly $8,000 and $4,700 respectively. That’s no surprise, as other analyses show the cost of childcare for families with working moms has risen by at least 70% since the 1980s.
Food, healthcare, transportation and “miscellaneous” — including toys and diapers — gobbled up the rest of the cash.
To see how much it costs to help a child make it to high school graduation at 18, we turn to Lam Thuy Vo at the Wall Street Journal:
The cost to raise a child born in 2013 from birth to an 18-year-old adult is:
$245,340 for middle-income families with two parents and up to five children.
For low-income families, this cost is $176,550.
For high-income families, it is $407,820.
I hope you were sitting when you read that! About a third of the cost goes to housing. Add in food, and “Room and Board” for a hungry eater who hopefully sleeps well accounts for about half of the total cost of supporting a child until 18. Child care services and education (public schools and universities will cost much less than private) take up nearly one quarter of the total, and healthcare nearly 10%.
Here are some ways to save on:
Housing — Buy only what you can afford. Make your house energy efficient by weatherproofing, insulating, and using energy-efficient lighting and appliances.
Child care — Hopefully a family member can help out if one parent can’t stay home.
Food — Prepare more meals at home, eat out less, eat real food, drink water.
Transportation — Drive fuel-efficient cars that you maintain in good shape for longer use.
Education — Private schools (including private colleges) will cost a lot more. Begin contributing to a college fund early and often.
Clothing — Your baby, child, and teenager can probably get by with half the clothes they have.
Healthcare — Make sure your child is covered by healthcare insurance at all times. Also make sure that dental and vision coverage are included.
Any other ideas? Type any you might have in the comments box below. I think other parents shellshocked after reading this post might like to know!
Try this Cost of Raising a Child Calculator here.