Financially Savvy Kids

How Much Does it Cost to Raise a Child?

Having children and raising a family are not, strictly speaking, financial decisions. Instead, they reflect and satisfy your most fundamental instincts and longings.

But these decisions do carry financial implications of which you should be aware and for which you should plan.

Here are some facts (brace yourself):

Middle-income families (those with about $61,000 in pre-tax income) can expect to spend more than $204,000 to raise a newborn child through his or her 18th birthday, according to the latest figures from the U.S. Department of Agriculture, which has been providing these estimates for nearly half a century.
The cost for low-income families (average pre-tax income of about $29,000): $148,320.
The cost for high-income families (average pre-tax income of about $115,400): $298,680.
These figures include the cost of providing food, shelter, clothing, health care, child care and other necessities.
Brace yourself again: The estimates do not include any money you might set aside for college. That could cost you...(are you ready?)...tens or hundreds of thousands of dollars more, depending on the school.
There is an economy of scale for larger families. The estimates cited above are for the younger child in a two-child family. If you have one child, it will cost you a little more; three or more will cost a little less per child.
Housing is the largest expense across all income groups and accounts for approximately one-third of the total. Food costs are the second largest expenditure, accounting for about 20 percent of the total.
During the last 50 years, child-rearing expenses have changed considerably, according to federal officials. The proportional cost of providing food has decreased, while cost of child care and education has increased notably.

You can calculate your own estimates here: www.bankrate.com/brm/calc/raiseChild.asp

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