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Here's How Much Your Child Will Cost You Here's How Much Your Child Will Cost You
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Here's How Much Your Child Will Cost You

LearnVest •  February 2, 2017 | Home and Family, Your Finances

If you’re a parent-to-be or plan to have a kid in the near future, better be prepared to cough up a lot of cash.

That’s because the cost of raising a child from birth to age 17 is estimated to run you a mind-boggling $233,610, according to the USDA’s latest Expenditures on Children by Families report, released last month.

That whopper of a number is based on projected costs for a child born in 2015 to a middle income, two-parent family with two kids, although the USDA makes it clear that the sticker price would vary by family size and income.

How does that nearly quarter of a million break down? Forget trendy kid must-haves like luxury strollers and pricey summer camps. Housing actually accounts for the largest expenditure, making up 29% of the total, according to the report. Food and childcare/education costs comprise the next biggest chunks of cash, at 18% and 16%, respectively.

Geography made a difference in the overall price tag of parenthood as well. Moms and dads living in cities in the Northeast, West and South shelled out more for their offspring than did parents living in the Midwest and in rural areas across the country.

How many kids you have also either jacked up or lowered the total amount. Households with three or more kids spent 24% less per child; parents of only children ended up spending 27% more.

The upside to the child-rearing sticker shock is that you don’t actually need to have all that money in your bank account at once. And while it’s possible to come up with all kinds of small, creative ways to save on costs as your child grows, the smartest thing new or wannabe parents can do is plan ahead as much as possible. Below are a few baby-prep money tips that can help.

Reassess your budget. From out-of-pocket doctor fees to car seats to boxes and boxes of diapers, the day-to-day costs of having a child can really add up: According to the USDA report, the yearly breakdown runs between $12,350 and $13,900. This likely means you’ll have to recalculate what your new fixed and flex monthly expenses should be relative to your take-home pay, and rejigger your budget so you’re meeting your daily needs as well as your bigger-picture financial goals.

Choose the right health insurance. Examine your health insurance policy and that of your partner, checking to see how well each health plan covers baby costs, how much more it’ll cost you to add an infant to the plan, and if the pediatrician and local hospital you want to use are in network.

Consider a Dependent Care Flexible Spending Account. For families who plan on paying for childcare, a Dependent Care FSA helps offset the cost. These plans work like regular FSAs, except that you’re setting aside pretax dollars for expenses like daycare or babysitters, with a maximum allocation of $5,000 per year.

Look into life insurance. It’s not a topic most people want to discuss, but it’s the responsible thing to do: If something happens to you or your partner, a life insurance policy can help contribute to the financial support your child would need. Here are some tips for getting started.

Research those tax breaks. The IRS tries to make life easier for parents via child-related tax credits and deductions, like the child tax credit, the dependent exemption or the child and dependent care credit. So ask your accountant what tax breaks you may be able to take advantage of now that baby makes three … or four … or five.

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LearnVest, Inc. is owned by NM Planning, LLC, a subsidiary of The Northwestern Mutual Life Insurance Company, Milwaukee, Wisconsin.


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