How much does it cost to raise a child?

Raising a child is a substantial financial responsibility, with costs that have continued to rise over the years. In 2015, the estimated cost to raise a child from birth to age 17 was $233,610. When adjusted for inflation, this figure increases to approximately $313,939 as of May 2024. This significant sum reflects the various expenses involved, including housing, food, childcare, education and healthcare. The financial pressure on parents is considerable, making it vital to understand and plan for these costs. That’s why Bankrate has put together a comprehensive overview to help you navigate and manage the expenses associated with raising a child, helping ensure you’re fully prepared for the journey ahead.

What’s the average cost of raising a child?

The journey of parenthood is filled with joys, challenges and significant financial commitments. From the moment of arrival, the cost of nurturing a child is a continuous investment in their future, and potential parents should be prepared for this financial commitment. We’ll help break down the various expenses parents can expect to get a better glimpse at how much it costs to have a child.

How much does it cost to have a baby?

The arrival of a new baby is an unforgettable milestone, yet it comes paired with notable financial implications. Beginning with hospital delivery costs, families can anticipate an average expense of around $24,336, covering the entirety of pregnancy to postpartum care. Alternatives such as home births may offer a less pricey initial sum of around $1,500 to $5,000; however, this route is typically not covered by insurance, translating to significant out-of-pocket charges.

Once the hospital bills are settled, nutrition for the baby is another vital aspect you’ll have to consider. Parents who choose formula feeding might encounter substantial monthly costs, potentially surging to $800. As for other necessities, new parents could spend up to $936 annually on disposable diapers, given that babies typically require six to 12 diapers per day. Then there’s the gear — from strollers to car seats to playpens — which could amount to anywhere between $425 to nearly $3,000.

How much does it cost to raise a child?

As a child grows, so do the expenses. A significant cost that parents might face during the child’s early years revolves around childcare. The U.S. Treasury Department’s data indicates that the annual cost for center-based care averages about $10,000 per child for infants to four-year-olds. In areas such as Washington, D.C., these averages could soar up to $19,000 per year. Alternatively, home-based care could amount to around $8,000. If your family opts for a nanny, you might expect to pay $766 per week on average, up 4 percent from 2022.

How much do school expenses cost?

The educational journey, beginning with preschool and extending through high school, is one of the most substantial investments in raising a child. Early on, preschool sets the financial tone, costing parents around $10,000 each year. As children grow and if private schooling is preferred, annual tuition hovers around $12,350. Factor in textbooks, technology and other essentials, and the figure can escalate to approximately $16,050 annually.

While public schools offer tuition-free education, they are not without expenses. Extracurricular activities, which are becoming more important for college admissions, can significantly add to the cost. A study revealed that families might spend an average of $731 per child annually on these activities. Affluent families often invest heavily in sports, music lessons and other pursuits, driving up costs due to private coaching, equipment and travel for competitions. These expenses can strain family budgets, leading many to seek creative ways to manage these additional financial demands.

Paying for college

Currently, the average cost of full-time undergraduate tuition for a public university ranges from $10,940 for in-state students and $28,240 for out-of-state students. If your child chooses to go to a private college, those tuition fees could jump up to $39,400 per year. Parents who choose to pay for college can take advantage of savings plans like the 529 plan. Starting early in your kids’ lives allows you to leverage time to build up savings for your child’s post-high school education.

The school that your child attends matters, too. While they may pay less in tuition for attending an in-state public school, they may choose to go somewhere out of state instead. Below are the most expensive and cheapest states for out-of-state students attending a four-year public university for 2023–2024:

Five cheapest states for out-of-state students attending a 4-year public university:

• South Dakota: $12,650 per year
• North Dakota: $14,750 per year
• Mississippi: $21,220 per year
• New York: $21,570 per year
• Florida: $22,000 per year

Five most expensive states for out-of-state students attending a 4-year public university:

• Delaware: $36,470 per year
• Oregon: $37,380 per year
• Virginia: $38,320 per year
• Michigan: $40,450 per year
• Vermont: $41,000 per year

Other costs of raising a child

While housing, food and child care represent the largest expenses in raising a child, other significant costs should not be overlooked. Clothing, education, health care and various forms of insurance, such as health and life insurance, add to the financial burden. These expenses grow as children age, and their needs evolve. Additionally, new costs, such as vehicle expenses and car insurance premiums, arise when teenagers start driving. Planning for these diverse expenses is essential for effectively managing the overall cost of raising a child.

Housing

Housing is arguably the most significant expense associated with raising a child. According to the USDA report, housing costs make up 29 percent of the overall cost of raising a baby. The cost of housing varies widely by location and the type of housing you choose. Many parents dream of a suburban house with a white picket fence and enough bedrooms for the entire family. However, the cost surrounding maintaining that dream is often not taken into consideration.

For instance, the average cost of home insurance is $2,230 per year for $300K in dwelling coverage, according to data from Quadrant Information Services. This is just one factor in the cost of owning a home; you will also have to consider the cost of a mortgage, utilities and maintenance.

Vehicles

Having children may necessitate a vehicle upgrade. Whether you need a larger car to accommodate your growing family, a safer car with advanced safety features or both, these changes can lead to increased expenses. The average cost of car insurance varies depending on the type of vehicle you own. Generally, larger or safer vehicles might have different insurance premiums compared to smaller or older cars.

When your child starts driving, adding them to your insurance policy typically results in a significant increase in premiums. The annual average cost of car insurance is $2,311, and when you add a 16-year-old to your policy, it can rise to $4,974, an increase of 115 percent. This rise is due to the higher risk associated with teenage drivers. Thus, planning for these additional vehicle-related costs is crucial to managing your family’s finances effectively.

Food

Food remains a pivotal component in the average cost of raising a child, second only to housing. Between March 2024 and April 2024, the Consumer Price Index (CPI) for all food experienced a modest increase, with food prices 2.2 percent higher than they were in April 2023. Breaking these numbers down:

• Food at home: Increased by 0.1 percent from March 2024 to April 2024 and was 1.1 percent higher than in April 2023
• Food away from home: Increased by 0.3 percent in April 2024 and was 4.1 percent higher than in April 2023

Even as food-related inflation shows signs of slowing down, its growth rate remains above historical averages. In 2024, the USDA anticipates:

• All food prices could potentially increase by around 2.2 percent.
• Groceries might see an uptick of approximately 1.2 percent.
• Dining out costs could experience an increase of close to 4.2 percent.

These projections underscore the importance of budgeting for food as a significant expense when raising a child.

Life insurance

Life insurance can be crucial for families, especially if your income might not be easily replaced in the event of an unexpected death. Expenses such as funeral costs, living expenses and education costs could quickly add up, even for those who budget carefully. Having a plan in place typically ensures that your family can maintain their lifestyle and have a financial cushion for the future if you or your partner are no longer able to provide support.

Term life insurance is usually a good option to consider, as it allows you to customize the policy length to match the timeline of your children’s upbringing. This flexibility helps ensure that the coverage is in place during the years when your children are most financially dependent on you, providing peace of mind and security for your family.

Both parents may want to consider purchasing adequate life insurance to replace their salary. But even if one parent stays home with the kids, life insurance could be beneficial. A recent survey by Salary.com estimates the annual worth of a stay-at-home parent at $184,820 per year.

The bottom line

Raising children is both a joy and a significant financial commitment, with the average cost of raising a child to age 18 being undeniably substantial. Parents might find themselves investing over a quarter of a million dollars or more in their child’s upbringing. Bankrate’s recent Credit Card Debt Survey discovered that approximately 26 percent of balance-carrying consumers report their reasons for credit card debt are due to childcare, groceries and utilities — indicating that families may need to rely on credit cards to afford day-to-day family expenses.

Given these financial pressures, forethought and strategic planning are crucial. Parents or those contemplating starting a family should consider key steps like crafting a budget, living modestly, saving as much as possible and securing life insurance while young and in good health. These proactive measures can help families navigate the substantial costs of raising children while maintaining financial stability.

Frequently asked questions

• How expensive is it to raise a kid in 2024?

  A study conducted by the USDA in 2015 highlighted that for a middle-income, two-parent family with two children, the average cost of raising a child from birth until age 18 was estimated at $233,610. When adjusted for inflation, this figure increases to approximately $313,939 as of May 2024. Given the continuous upward trend in expenses, raising a child to age 18 in 2024 and beyond is likely to exceed this figure. It’s essential for parents and those considering starting a family to be aware of these costs, ensuring they’re equipped to manage the financial implications of such a long-term commitment.
  

• What is the annual estimated cost of raising a child?

  The annual estimated cost of raising a child varies based on numerous factors, including the family’s location, income level and lifestyle choices. Based on the adjusted 2024 figures, raising a child from birth until age 18 would cost around $26,000 per year. However, it’s important to note that these costs can be higher or lower and may vary considerably by year, especially when factoring in inflation, child life stages and the ever-evolving economic landscape. Parents should also consider additional expenses such as extracurricular activities, health care and education when estimating their annual child-rearing costs.
  

• What is the most expensive part of raising a child?

  Among the various costs associated with bringing up a child, housing consistently emerges as one of the primary expenses. This includes not only the price of the home itself but also related costs such as utilities, maintenance and location-related premiums, like being close to reputable schools. While factors like food, education and child care also contribute significantly to the overall cost, housing generally demands a larger share of a family’s budget throughout the child’s life. For those pondering how much it costs to raise a child, it’s crucial to factor in these housing-related expenses and plan accordingly.
  

• What is the most expensive state to raise a child?

  While several states in the U.S. come with hefty price tags for raising children, California, Washington, D.C. and Massachusetts frequently rank among the most expensive locations, based on data from the Economic Policy Institute. Factors like housing, education, child care and the overall cost of living contribute to these elevated costs.