How Much Does it Cost to Raise a Child? First 12 Months & Beyond
Do you want to have children one day? Already have them?
Well… they’re adorable and expensive. The cost of raising a child to age 18 is $233,610! Those costs aren’t spread out evenly either.
Read on to learn how much it costs to raise a child for the first 12 months and beyond so you’re more financially prepared to provide for your entire family.
Kids are expensive. The all in cost of raising a child to 18 is $233,610! That’s not spent evenly though, what costs can you expect in the first year vs every year after? Financial planning means anticipating all costs you can to ensure you budget correctly, save enough money, and don’t derail your own financial goals in the process of trying to give your child the best life you can. It’s all about determining how much is needed to financially meet your child’s needs and your own, then finding balance between them. To help walk that line requires planning. So, how much does it cost to raise a child? Here’s what you must know.
A Child’s Costs the First Year
Your child’s first year is full of many firsts and expenses. The USDA estimates it costs $12,980 annually per child; however, that number can be even higher in the first year because newborn babies need so much.
Here’s what to expect.
Before the Baby is Born
Before birthing your baby, you’ll spend a pretty penny. Estimate around $1,000 to get all the baby gear, and that’s after you have a baby shower with friends and family helping you with some of the most important items your baby needs.
Your Baby’s First 1-3 Months
You’ll spend the most money in your child’s first year. To bring the baby into the world, you’ll have doctor and hospital expenses and a potential stay in the hospital, depending on the health of the mother and baby.
The average cost of a birth in a hospital with insurance can be anywhere from $4,500 to $10,000. That can run even higher in California. C-sections are even more expensive.
If you breastfeed, your only costs are the breast pump, which can run around $200. If you formula feed, you’ll pay $75 - $150 a month, unless your baby is on a special formula, then it may cost more, plus the cost of bottles, which you should budget around $100.
Also, figure in the cost of diapers and wipes, which can run $75 - $100 a month.
The Fourth Month
If you’re returning to work, this is about when you’ll need childcare. This can take up a large portion of your budget, depending on the type of childcare chosen. You’ll choose between a nanny in your home or a childcare center, either public or private.
Nannies are the most expensive and cost $694 a week; a child care center costs around $226 a week.
It’s important to budget carefully if you plan to return to work. For example, make sure the cost of a nanny or child care center is worth it based on your income.
The Fifth and Sixth Months
As babies continue growing, they’ll eat more and move into solid foods. You can prepare your own or buy prepared food. This might add $50 or so to your monthly grocery budget.
You’ll also need new clothes regularly at this age, as babies grow fast. Most parents spend $50 - $100 a month in the first year on clothes. You can minimize these costs with hand-me-downs or shopping resale stores.
The Seventh, Eighth, and Ninth Months
As your baby nears his first birthday, he will start crawling and walking. This means you must make your house baby-proof. You could spend as much as $1,000 on safety equipment, including baby gates, knob covers, outlet plugs, and door locks. You can DIY the safety equipment or hire a professional to ensure your home has no dangers.
The Tenth and Eleventh Month
At this point, you might feel comfortable leaving your baby with someone other than a grandparent. If you add babysitting to your budget, you’ll need to budget $20.57 an hour, as that’s the national rate. The hours you need a babysitter and what you ask them to do will determine how much you pay.
The Twelfth Month
You’ve made it an entire year! You know expenses to expect at this point, and your baby has most of the ‘firsts’ covered. You’ll want to budget money for a special birthday party, and then it’s time to budget for the second year and forward.
Average Annual Expenses Going Forward
The average family pays $12,980 per child from their second year and forward. But where does this money go?
Here’s a simple breakdown.
Housing is the largest portion of that cost since you need a safe house for your children to grow up in. The more children you have, the larger house you’ll need so everyone has adequate room.
Food is another large expense. As your child gets older, he needs more food. In the first year, babies consume breast milk, formula, and a little solid food. As your child enters the toddler years, he’ll begin eating ‘regular food,’ which costs more. Then, as he becomes a teenager, the food expenses increase even further. The costs to raise a teenager increase by about $900 a year between 15 – 17 years old.
Finally, child care and education make up the rest. How much you spend depends on whether you use a nanny or childcare center or send your children to public or private school. Public school is affordable and keeps costs down, but if you live in an area with less than optimal public schools, you may want to budget for the higher cost of private schools. Keep in mind, though, the average cost of private schools is $12,219 annually.
Final Thoughts
Raising a child is something you should budget for long before you’re expecting. A new baby can bring a bundle of joy and a lot of expenses. Like anything in life, you always want to expect the worst, so an emergency fund is crucial before you have children.
Make sure you’re prepared with proper financial planning, including understanding the annual expenses of having a child, emergency expenses, and what to expect as your child ages.
When you have a baby, you take the responsibility of raising him from birth to 18. It’s a big responsibility, expensive undertaking, and will undoubtedly complicate your finances. There’s a lot to consider but raising a child and growing your family could be the most fulfilling thing you ever do. Money spent to bring more fulfillment and joy into your life is money well spent! It’s about finding a way to say HOW can we find balance between financially providing for a childs needs and our own, not IF. A little bit of planning goes a long way.
If you’re an existing or aspiring parent who wants to be better positioned financially to provide for a current or future child,
schedule a free 30 minute call with me here. I help young families and professionals better understand how to grow their wealth and spend it with intention.
San Diego Financial Advisor | Fee-only Fiduciary
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