How Much Does It Cost to Raise a Child?

Having kids can be an incredibly rewarding experience. And as any parent will tell you, it’s also an expensive one. From pregnancy and childbirth costs to everyday expenses like food, clothing and extracurricular activities, growing your family can come with a steep price tag—and that doesn’t include big-ticket items like college.

The good news is that you can get your budget ready for parenthood, whether you’re trying for your first baby or already have kiddos at home. It may not seem like the right time—you're not sleeping and you’re adjusting to a new norm—but anytime is the right time to get your finances in order. The goal is to strike a balance between immediate costs and saving for the future.

How much does it cost to raise a child each year?

For a middle-income married couple in the United States, the average cost of raising a child to age 18 is about $320,000. (That’s according to inflation-adjusted 2015 data from the U.S. Department of Agriculture (USDA.))¹ This translates to over $17,000 per year.

It goes without saying that your lifestyle and where you live could change this number quite a bit. If your lifestyle is relatively modest, your total expenses could be much less. But extra costs—like family vacations, piano lessons, entertainment and childcare—can add up significantly.

Typical costs of raising a child

According to the USDA data mentioned earlier, child-related expenses eat up about 16 percent of a middle-income family’s pre-tax money. Let’s say your family falls into that category, and you have two children. Of the total amount you’ll spend on raising a child, the USDA predicts that your costs will follow this pattern:

• 29 percent: Housing
• 18 percent: Food
• 16 percent: Childcare and education
• 15 percent: Transportation
• 9 percent: Health care
• 7 percent: Miscellaneous expenses like entertainment and personal care products and services
• 6 percent: Clothing

Average cost of raising a child in dollars

Now, to make this more real, let’s translate that into dollars. Assuming your family spends the average of $17,000 per year, it would mean:

• $4,930 on housing
• $3,060 on food
• $2,720 on childcare and education
• $1,530 on health care
• $1,190 on miscellaneous expenses
• $1,020 on clothing

Budgeting for a child may seem like a daunting tasks to do while you’re so busy, but it can help you be prepared for these expenses.

Your new budget will depends on your lifestyle and parenting decisions or choosing private school, for example, will increase your total costs. The number of children you have is another factor. So here’s a closer look at what you might expect to spend on kids.

Pregnancy and childbirth

You’ll first want to budget for costs associated with having a baby. For pregnant women enrolled in large group health plans, the average out-of-pocket costs of having a baby in the U.S. add up to nearly $3,000, according to Kaiser Permanente.³ These figures are for one pregnancy, so if you end up having more than one child, you’ll want to budget for each birth. If you have an HSA, you may also be able to use your HSA to cover childcare expenses.

Living expenses

As your family grows, you might need a bigger house. Or you might decide to move to a new neighborhood with better schools (and higher taxes). If you plan to buying a new home, this complete guide can be a huge help.

When you think about food costs, you probably won’t see a drastic increase if you’re breastfeeding—but formula could add an extra $100 to $150 to your monthly budget. And as your child grows, they’ll start eating more and taking a bigger bite out of your grocery bill.

Transportation is another cost to consider, whether that includes buying a minivan or just gas to shuttle your kids back and forth to soccer practice and out-of-town games. Some employes offer reduced parking costs or help with public transportation cost. Check with your HR department to see if your work provides benefits like these.

Child care

How much you spend on child care can vary drastically depending on where you live and the level of care you need. The average weekly rate for a nanny to stay with your toddler is $858, according to Care.com. That number drops to $315 for daycare.

Think about the type of arrangement that works best for your family. A nanny that visits your home is typically the most expensive option, but you could consider a nanny share. This involves splitting the cost with another family that also needs child care.

Education

Education costs can fluctuate depending on where you live, the age of your children, and whether they attend public or private school. The average annual tuition for a private elementary or middle school is $9,210, according to the Education Data Initiative. It’s $16,420 for high school. Public schools don’t charge tuition but may require school supplies and payment for special activities and events. Even a high-end calculator for math classes can be more than $100.

And then there’s the cost of college. The College Board² puts the average annual price tag for a public four-year in-state school at $24,920 per year, which includes tuition, fees, housing and food. Going out of state puts the cost at $44,090 and selecting a private school means $58,600. Multiply the numbers by four to get a sense of the total cost, and keep in mind that they will probably increase by the time your child heads off to college.

Tax-advantaged savings accounts like a 529 plan can go a long way in helping you save for college. You can also use special account types like a Uniform Transfers to Minors Act (UTMA), Uniform Gifts to Minors Act (UGMA) or custodial Roth IRA to invest and save for your child’s future.

Healthcare

Once you have children, you’ll probably need to upgrade your health insurance to a family plan—and that comes with higher premiums. In 2024, the average annual premium for a family on an employer-provided plan was $25,572, according to the health policy organization KFF.⁴ Depending on your plan, you might be able to contribute to an FSA or HSA. These accounts allow you to set aside pre-tax dollars to pay for qualified medical expenses.

You can also expect bills from your child’s pediatrician. When your child is young and building their immune system, you might make frequent trips to the doctor. The American Academy of Pediatrics also recommends regular check-ups beginning at one week old. This will likely be covered by your health plan, but you may still be responsible for some out-of-pocket costs until you meet your annual deductible.

Other health-related expenses include dental care, vision and mental/behavioral care.

Fun activities

This category includes everything from purchasing toys to enrolling in dance classes to going on family vacations. You’ll likely spend less during your child’s early years—and more as your child gets older and discovers their talents and interests.

Clothes

Kids grow fast, especially when they’re young. Don’t be surprised if you find yourself switching out wardrobes every few months. But that timeframe should get longer as your little one grows. No matter their age, you could find savings by taking advantage of sales and considering gently used clothes.

Saving for life milestones

Perhaps you’d like to buy your kid their first car or help pay for a wedding when the time comes. On average, parents cover about 52 percent of wedding costs, but you can come to any arrangement that feels right for your budget. Similarly, you may choose to help your child with a down payment on their first house.

No matter your goal, saving early and often is key—especially when using investment accounts.Compound interest has power, and even if you can only put a little per month toward savings, the earlier you start, the better.

Planning for the unexpected  

With more people in the family to support, you may want to pump up your emergency fund. It’s a good idea to budget three to six months of living expenses in a savings account to cover unexpected costs (or use for a great opportunity). You might unexpectedly get laid off, need a home repair or get an unplanned medical bill. 

• It’s also a good time to review your life insurance coverage to ensure that it’s large enough. You might also consider taking out a life insurance policy for your children, which is a great way to get them a financial head start.
• Tax-advantaged retirement accounts like 401(k)s and IRAs also deserve your attention, especially if you have access to an employer match.

How to financially prepare for the cost of raising a child 

When you find out you’re expecting, you’ll want to discuss important financial goals with your partner—including short-term goals, like whether one of you will take time off work, and long-term goals, such as paying for college. It’s a good time to reach out to your Northwestern Mutual financial advisor. After asking deep questions to get to know you, they can help you create a financial plan that’s tailored to your family’s future.

Just keep in mind that you don’t need to meet your savings goals overnight. What matters most is getting started, making a plan, sticking with it. Anytime is the right time to start, all it takes is a conversation.

¹US Department of Agriculture, Expenditures on Children by Families, 2015. The amount from 2015 USDA data was $233,610. Our analysis used the Bureau of Labor Statistics Consumer Price Index (CPI) inflation calculator at https://data.bls.gov/cgi-bin/cpicalc.pl to determine that $233,610 in January 2015 is equivalent to $320,661 in April 2025.

²College Board, Trends in College Pricing 2024. https://research.collegeboard.org/media/pdf/Trends-College-Pricing-2024-presentation.pdf

³Matthew Rae et al., Health Costs Associated with Pregnancy, Childbirth, and Postpartum Care, Peterson-KFF Health System Tracker, July 13, 2022 cited in Uncovering the unpredictable costs of maternity care by Kari Carlson, MD, Updated June 5, 2024.

⁴KFF 2024 Employer Health Benefits Survey https://www.kff.org/report-section/ehbs-2024-section-1-cost-of-health-insurance/ Published October 9, 2024.