Before you become a parent, you will read dozens of statistics about the cost of children. Some experts say new parents should expect to spend around $200,000 to raise their children to 18; other reports suggest that figure is closer to more than half a million dollars per child. After learning of these excessive amounts, a bundle of joy can transform into a bundle of debt before your eyes.
However, I can confidently say that children are worth every penny ― especially if you know how to spend and save those pennies wisely. Let me explain how much it costs to raise a child, and why it doesn’t have to be nearly as much as some financial experts claim.
Common Childcare Costs
For those without a child, it can be nearly impossible to imagine the cost to raise a child. While new parents might expect to drop dimes on items like toys, they sometimes forget about basics like accommodation (you definitely don’t want to share a room with your children) or clothing (they grow fast and usually need a new wardrobe every few months).
Generally, childcare expenses fall into seven categories:
- Housing (to include costs like larger homes, utilities, and furniture)
- Food
- Transportation (to include costs associated with vehicles ― insurance, gas, maintenance ― or public transit tickets)
- Clothing
- Health care
- Education (to include costs for daycare and pre-school)
- Miscellaneous (to include costs like entertainment and personal care items)
For the most part, housing and food costs remain stagnant, eating up close to half of total child-related expenditures ― over $100 thousand in a two-parent, middle-income household. However, education-related costs spike during babyhood, when most modern parents pay to have other people watch their little ones while they work. This makes babies exceedingly pricey ― but there is more to worry about later on.
Despite outgrowing paraphernalia like diapers and baby formula, children just keep getting more expensive. Children require the most transportation expenditures, as they have a number of after-school events to attend, like soccer practice and piano lessons. Preteens’ health care costs soar due to their changing bodies. However, older teens are by far the costliest: The impending expense of college in addition to their increasing demands for adult assets (e.g. smartphones and cars) means just one year of later teenhood requires about $5,000. All in all, parents could easily spend about a quarter of a million dollars on a single child ― but they don’t have to.
A Better Budget
Many of the economic estimates regarding childcare costs are just that ― guesses. Most of the data comes from average spending, but what these facts and figures fail to tell you is that paying more won’t necessarily help you raise a better child. In fact, you might be able to afford a more comfortable lifestyle by spending less. For example, by employing the following tactics, you can slash your child-related spending by thousands of dollars:
- Share rooms. Compelling your children to bunk up prevents you from buying more house than you need ― and it will help them learn to share things like toys and clothes, too.
- Encourage public transit. You don’t need a mini-van for a family of four, and your sweet 16-year-old doesn’t need her own car when the bus system runs fine.
- Cook at home. Eating out with children costs well over $50 per meal (if you eat healthfully). With a cookbook and a good grocery list, you can learn to make wholesome food for under $2 per meal.
- Use public schools. Private institution tuition is excessive, especially considering the rising quality of public classes from kindergarten to graduate education.
A Stronger Financial Future
Of course, cutting back on child-related costs isn’t the only way to afford a better life for your children. You should practice smart spending and saving in all areas of your life. Financial literacy doesn’t come naturally to everyone but with practice and patience,
- Set reasonable financial goals. You should be saving toward something, like your child’s college or an adults-only vacation, to motivate proper financial behavior.
- Use the right plastic. If your credit card interest rates are bogging you down, you can transfer your balance to a more practical card.
- Have healthy emergency funds. Children have more accidents than average adults, so having money squirreled away but accessible is absolutely necessary.
- Plan your estate. It is difficult to consider, but your death is a real possibility. You must ensure your children are stable and secure even if the worst happens.
- Teach personal finance. When your child understands the value of a dollar, they will nag you less for items they don’t truly need.
While the cost to raise a child is not cheap the benefit far outweighs the cost. You can’t put a price on the love of a child.
Leave a Reply