As a parent, having any information which can predict where my income is going is a welcome change.
It's another evening about to be over. The sun has gone down, the remnants of dinner have been put in the fridge, and tonight's selection of homework is complete and ready for grading tomorrow. Having kids is fantastic, but my kids are older now, and I know so much more than I did when my wife told me they were "on the way." From that moment, and honestly well into the week, I had a lot of questions about the expansion of our young family. Including one, how much does it cost to raise a kid? This goes through a lot of people's minds as they learn that a child is on the way.
There is never a number that you can put on having a child. But, it is nice to see what kind of dollars having a kid entails before they become part of your family. It is nice to have a guide and figure out how much a child costs between the time they are born until 18 years old. How much should I save for college? Braces? Clothes? Healthcare?
The Cost of Having Kids
On the Center for Nutrition Policy and Promotion (CNPP) website, which is part of the United States Department of Agriculture (USDA), compiled a report in 2015 report named: "Expenditures on Children by Families, 2015" sheds some light on the subject. In the section of the report named "Selected Results," the report says: "Annual child-rearing expenses varied considerably by household income level and generally increased with age of the child. For a child in a two-child (the standard in the United States), a married-couple family with before-tax income less than $59,200, annual expenses ranged from $9,330 to $9,980 (depending on the age of the child). For the same type of households with before-tax income between $59,200 and $107,400, annual expenses ranged from $12,350 to $13,900 (depending on the age of the child). And for the same type of households with before-tax income over $107,400, annual expenses ranged from $19,380 to $23,380 (depending on the age of the child). These income groups represent the lower, middle, and upper thirds of the income distribution.
• The estimated expense to raise a child from birth through age 17 is $233,610 (in 2015 dollars)
for a middle-income (before-tax income between $59,200 and $107,400), married-couple family
with two children.
• As a proportion of total child-rearing expenses, housing accounted for the most significant share of income groups, comprising 26 to 33 percent of total expenditures on a child in a two-child, married-couple family. For families in the middle-income group, food and childcare/education (for those with the expense) were the next most significant average expenditures on a child, accounting for 18 and 16 percent of child-rearing costs, respectively.
• Overall, married-couple families in the urban Northeast had the highest child-rearing expenses,
followed by similar families in the urban West and urban South. Married-couple families in the urban
Midwest and rural areas had the lowest child-rearing costs.
• Expenditures by married-couple households with only one child averaged 27 percent more than expenses per child in a two-child, married-couple family. Costs by married-couple households with three or more children averaged 24 percent less per child than spending on each child in a two-child, married-couple family.
• The Child-rearing expenses of single-parent households with a before-tax income less than $59,200. Were about the same as those of married-couple houses in the same income group. Most single-parent households were in this income group (compared with about one-third of married-couple families).
• Expenditures between two 5-year periods, 2010-14 and 2011-15, were determined using the methods described in this report. The results are referred to as the 2014 and 2015 results. Expenditures on a child increased 3.0 percent from 2014 to 2015. The increase in child-rearing expenses exceeded the inflation rate during this time, which was negligible (0.1 percent).
However, the percentage increase in total child-rearing expenses from 2014 to 2015 is below the historical annual rate increase of 4.3 percent since 1960.." (Link: https://www.cnpp.usda.gov/sites/default/files/crc2015_March2017.pdf )
The report does include single as well as married households, amount of expenses per category, such as housing, food, clothing, etc. Also, it contains formulas and graphs showing inflation and amount spent per year on a child.
What's not in the report?
There were some exclusions to the report such as: "Expenditures estimated in this study are made on children from birth through age 17 for seven major budgetary components. One of the largest excluded expenses is the cost of a college education. The College Board (2016) estimated that in 2016-17, annual average (enrollment-weighted) tuition and fees were $9,650 at 4-year public colleges (in-State tuition) and $33,480 at 4-year private (non-profit) colleges; annual room and board was $10,440 at 4-year public colleges and $11,890 at 4-year private colleges. For 2-year colleges in 2016-17, annual average tuition and fees were $3,520 at public colleges. College-related expenses on children may even take place before children are college age in the form of savings. Other expenses that are not included are prenatal care, fertility care, childbirth and adoption expenses, or any costs made to children after age 17. These parental expenses on children after age 17 could include those associated with children living at home or if children do not live at home, gifts and other contributions to them. Expenses related to life insurance on parents are also not included in the estimates. Although these expenses are not made directly on children, it is likely that they are primarily incurred for the benefit of children." (Link: https://www.cnpp.usda.gov/sites/default/files/crc2015_March2017.pdf )
On the main CNPP website is a "Child Cost Calculator" here: https://www.cnpp.usda.gov/tools/CRC_Calculator/default.aspx. The calculator uses the formulas in the guide available for anyone to plug in their family's dollar values. I invite you to take the calendar and try it out. The results will display: 1) your total household's income, and 2) and expenses per child. Note: These are just averages, so expect some variation.
Regardless of anything else, having kids has been the most significant part of my life. When people ask me my career, it is always a Father first, and the thing I do for a living second. That's the way it should be.The information contained in the report is merely a guideline into what it costs to have a child, what you need to budget for education and other expenses. As a parent, having any information which can predict where my income is going is a welcome change. Many times, parents are faced with financial choices like (for example): should I invest in a Health Savings Account (HSA), Roth IRA (Individual Retirement Account), or my state's pre-paid tuition plan? Having this guide opens a window into future, helping to put today's funds to support tomorrow's needs.
Lino, M., Kuczynski, K., Rodriguez, N., and Schap, T. (2017). Expenditures on Children by Families, 2015. Miscellaneous Publication No. 1528-2015. U.S. Department of Agriculture, Center for Nutrition Policy and Promotion.