When it comes to raising kids, you need more than a vague idea of what it’s going to cost. Granted, there is no predicting a specific figure, but you can get close, thanks to a 2017 report by the U.S. Department of Agriculture.
Expenditures on Children by Families breaks down the cost of raising a child born in 2015. It’s not as simple as citing one universal figure. The real cost depends on all sorts of factors, including how much you earn, whether you’re married or single, how many kids you have, how old they are, where you live, and whether you’re saving for college.
To get closer to the real cost of raising kids, answer these six questions.
- What is your household income?
The real cost of raising kids depends on how much you earn, as what you spend will depend on your budget. As stated in the report:
“In general, expenses on a child for goods and services considered to be necessities (e.g., food and clothing) did not vary as much as those considered to be discretionary (e.g., miscellaneous expenses) among households in the three income groups.”
According to the report, low-income families spend:
- 27 percent of their pre-tax income on raising kids
- $174,690 from birth to 17 years
- $9,330-9,980 per child each year*
Middle-income families spend:
- 16 percent of their pre-tax income on raising kids
- $233,610 from birth to 17 years
- $12,350-13,900 per child each year*
High-income families spend:
- 11 percent of their pre-tax income on raising kids
- $372,210 from birth to 17 years
- $19,380-23,380 per child each year*
*There’s a range of spending per child each year because the cost increases as kids age.
2) Are you married or single?
If you’re a single parent earning less than $59,200 a year, you may spend slightly less raising a child than a married couple. For instance, if you are in this financial bracket, the cost of raising one of two kids from birth to 17 years is $172,200 compared to a low-income married couple’s average spend of $174,690. That’s a difference of $2,490, or $146 a year.
This difference could be attributed to the child’s other parent covering some of the expenses. As stated in the report:
“The parent with whom the child does not reside the majority of the time may incur transportation, food, and entertainment expenses during visitation days and maintain a larger living unit because the child stays with him or her on weekends. The parent without primary care could also contribute to the child’s clothing and health care expenses.”
- How many kids do you have?
Obviously, the more children you have, the more it will cost you to raise them overall. But with each additional child, the average cost can go down. After all, kids can share bedrooms, clothes, and toys. You can also buy food in bulk, considerably lowering the cost per meal.
For instance, married-couple families with two kids spend 27 percent less per child than married couples with one child. By the same token, married-couple families with three or more kids spend 24 percent less per child than married-couple families with two children.
- How old are your kids?
As expensive as young children may be, you’ll spend more on them as they get older. In general, younger kids cost more in the categories of child care and education. But as they grow up, those costs come down while others go up – for food, transportation, health care, and clothing.
- Where do you live?
If you live in an urban area, you should expect to spend more on raising kids than if you live in a rural area. By far, the most expensive place to raise kids is in the Urban Northeast. That’s followed by the Urban West, Urban South, and Urban Midwest, respectively. You’ll spend the least in rural communities nationwide.
6) Are you saving for college?
The budgetary categories used in this report to figure the cost of raising a child do not include college expenses. So, if you plan on setting money aside every month for a college fund, be sure to include that in the financial planning for growing your family.
The inflation factor
The figures cited in Expenditures on Children by Families are based on 2015 dollars, meaning they do not factor in inflation. However, you can refer to Table 10 on page 19 of the report for future estimated annual expenditures.
Customize your calculation
Again, no figure you arrive at today will be 100 percent accurate, but you can get close enough to plan effectively for your family’s future.
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