Babies are adorable. Yes, they can be quite a handful when they become toddlers and even more so when they become teenagers. But their purity and innocence never fails to delight our jaded souls. And this is why many couples still want to have kids. But these little souls cost money, too. It might be a bit cold and cynical to look at these children like this but the reality of the situation is that for parents to be able to raise them healthy and well, money is necessary.
The United States Department of Agriculture in its 2011 Expenditures on Children by Families has revealed that in a two-child, husband-wife household with before-tax income of less than $59,410 the cost of raising a child can range anywhere from $8,760 to $9,970 depending on the age of the child. For those with incomes between $59,410 to $102,870 the number is considerably higher. It can cost $12,290 to $14,320 annually to raise a kid. Meanwhile, those households that earn more than $102,870 before tax, the yearly cost of raising a child can range anywhere from $20,420 to $24,510. Depending on the income bracket you belong, you will have to shell out anywhere from $150,000 to more than $400,000 to raise your kids until 17 years old. After that, college expenses are going to be an entirely different cost as well.
If you are staring in disbelief at these figures, perhaps a more detailed look at the different spending categories will make it easier to see just how expensive it can be to become a parent.
1. Housing. From mortgage or rent payments to utility bills to repair and maintenance expenses to furnishings, you need to provide a decent shelter for your child that can also protect him or her from the elements and other dangers. Yes, you may think that you still pay these expenses even if you don’t have children but when they do arrive, the cost increases. For instance, you’ll want to move in to a bigger place which is going to be more expensive to maintain. You will need to buy additional furniture, like a crib, a stroller, and other necessary stuff.
2. Food. Families can save a handful in the first few years if the mother breastfeeds but as the child grows older, grocery expenses will definitely increase as well. Eating out or ordering food to be delivered can also increase as parents naturally love to treat their children to special family dinners out and/if mom and dad gets so busy at work that it’s virtually impossible to cook at home.
3. Healthcare. This one is going to be a major expense if you have kids. If your employer-sponsored healthcare insurance plan covers your family then you will have alleviated the costs somewhat but you will have to factor in those medical and dental expenses that you will have to pay out-of-pocket. Prescription drugs, medical supplies, and other possible medical needs of your children that are not covered by insurance are also going to increase your expenses.
4. Childcare and Education. If both you and your spouse work, you are going to have to factor in the cost of baby sitters and day care. Costs can vary depending on where you live. As the child grows, you also need to spend for elementary and high school tuition fees and school supplies.
5. Clothing. Diapers are just the start. Shirts, pants, dresses, coats, and shoes that will have to be augmented as the children grow and the seasons change are also real expenses that parents have to be ready for. Though minimal, related expenses like repair and dry cleaning will also have to be paid for.
6. Transportation. Car payments and expenses for maintenance and repair will have to be factored in here. When you have children, you’ll realize that you will have to be making more trips—and thus spend more for gas—to the school, to camp, to their doctor’s appointments.
7. Miscellaneous. Items that do not fit in any of the above categories such as those for their personal care and entertainment are classified here. These include storybooks, toys, gadgets, clips, hairbrushes, computers, and others.
According to the USDA 2011 report on Expenditures on Children by Families, housing comprises the biggest expenditure of a child from birth to 17 years old. This is followed by childcare and education, food, transportation, healthcare, and clothing. The USDA also found that childrearing expenses were highest in the urban areas in the Northeast, West, and Midwest.
The urban South and rural areas had exhibited the lowest childrearing expenses.
In case you’re new to parenting, it’s also important to understand that childcare costs are directly proportional to age. You can expect your expenses to go up as your child grows older. They consume more food, they are going to want new stuff, and their school needs are going to increase as they go up the educational ladder.
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