Children can be an expensive proposition. Clothing, shoes, food, toys and a roof over their heads -- it adds up fast. Just as each child is different, however, the amount of money required to raise a child varies according to your family's circumstances. One thing is certain -- the amount you'll spend on your child through the years will be a significant investment.
The Major Costs
The U.S. Department of Agriculture prepares an annual publication titled “Expenditures on Children by Families.” According to this report, major expenditures on children in descending order are: housing, childcare and education, food, transportation, health care, miscellaneous and clothing. Housing makes up approximately 30 percent of the total cost. Child care and education are 18 percent and food is 16 percent. Transportation is 14 percent of the total, while health care and miscellaneous are 8 percent each. Clothing makes up 6 percent of the total.
The USDA does not look at prenatal or birth costs and stops short of college expenses. Location makes a difference, however. The USDA reports that families in the South and rural areas spent the least, followed by families in the urban West and urban Midwest. The urban Northeast had the highest child-rearing expenses. The USDA notes these figures are for families with both husband and wife, and do not include single-parent families.
Dual or Single Parenting
In a single-parent household, the parent would spend a total of $161,220 to raise a child born in 2012 to the age of 18. In a household with both husband and wife, the USDA reports parents would spend a total of $173,490. However, the USDA makes some assumptions that might affect overall costs. For example, in families with two children, the USDA assumes the children will not share a bedroom. Housing expenses would include the costs of furnishing the second bedroom. In many families, however, children would share a bedroom and much of the extra cost would be unnecessary.
The Bottom Line
The annual cost to raise a child will increase slightly each year, although only part of that cost is due to inflation -- parents spend more on older children, according to the USDA. A child born in 2012 would cost $9,290 to $21,000 before her first birthday, depending on whether her parents earned a low, middle or high income. The USDA notes that parental incomes may change over the course of a child’s life, and expenditures typically increase as the parents’ income increases. Nevertheless, the USDA reports that the average cost of raising a child born in 2012 to age 18 is $216,910 for low-income parents, $301,970 for middle income parents and $501,250 for high-income parents.
Saving Money on Children
The USDA figures make certain assumptions that might not be relevant to your situation. You might also employ a variety of strategies to save money on expenses. For example, if one parent stays home full-time, child care costs would be much lower. Generic rather than brand name diapers can be a cost-saving, according to a July 2009 article in “Managing Your Money.” Children of any age can wear used clothing, especially for play wear. Breastfeeding instead of using formula saves money, as does the use of secondhand equipment such as strollers, cribs and other baby furniture. If you choose secondhand furniture and equipment, however, check to ensure that it meets child safety standards.
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