Having a child can be one of the largest household expenses, on par with mortgage payments in both frequency and price. However, people often underestimate the total cost of having a family, which can make budgeting for this life milestone difficult.
As with most expenses, the price of raising a child has only increased over time. In fact, the cost increased by 20% between 2016 and 2021 alone.
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Many factors impact the total cost of raising a child, but the basic categories are food, housing, education, childcare, healthcare, transportation, clothing, and miscellaneous.
However, many prospective parents are finding that having a family has become unmanageable — it causes many to delay having kids, limit their family size, or even deter them from having children altogether. A recent survey found that 31% of parents had to limit the number of children they had due to their financial situation.
Seventy-four percent of parents agree that having children is far more expensive than anticipated, and 55% report going into debt to keep up with family-related expenses.
An overview of the cost of raising children
Many factors affect the cost of having a child, including location and the cost of living. Therefore, each family’s actual expenditure will vary.
For example, the USDA’s 2015 Expenditures on Children by Families report — the most recent year for which data is available — found that married couples in the urban northeast face the highest prices when raising a family, while those in the urban Midwest and rural areas face the lowest costs.
The Brookings Institute found that the average cost of raising a child born in 2015 until age 18 was $310,605 when adjusted for post-2020 inflation rates. This amounts to a staggering average of $17,000 per year.
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The Institute for Family Studies notes that the costs for additional children tend to decrease, reducing expenses by up to 24% for families with three or more children. This is rooted in the fact that after the first child, basic necessities such as housing and utilities are covered, food can be purchased in bulk, and clothing can be handed down to younger children.
Still, most parents find that food, housing, childcare, and education are the most significant financial drains when raising a family.
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The main financial constraints for families
The USDA reported that nearly one-third (29%) of all child-raising costs are attributed to housing, followed by food (18%) and childcare (16%). This is pronounced by families in urban areas, which pay 27% more for housing and food than those in rural areas.
Though housing prices are mainly dependent on the housing market and food is subject to inflation, childcare is one area that can be improved upon through public policy to lessen the burden on parents of young children.
The United States is one of few developed nations that doesn’t offer universal childcare or paid maternity leave. Of the top 41 developed nations ranked by UNICEF, the United States ranks second to last overall, ahead of Slovakia only.
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The financial burden of limited parental leave forces many families to use expensive childcare options. The U.S. Census Bureau found that when adjusting for 2022 dollars, the average cost of childcare in the United States ranges from $5,300 to $17,000 per year per child, depending on age and location.
These mounting costs have forced many families to rely on less formal childcare alternatives: Twenty-two percent of American families have a relative watch their children, and a shocking 61% did not have any childcare plans at all for children under 17.
Louisa Quittman, Director of the Office of Financial Security at the U.S. The Department of Treasury notes that understanding the costs of having a family is paramount to long-term financial stability. Taking advantage of the Department of the Treasury’s budgeting tools like MyMoney.gov can help create budgets, find assistance with childcare options, and plan for big purchases such as college tuition.
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