What does having a child a cost? The answer definitely seems to be a loaded one, full of what ifs and questions about where you live, cultural expectations, family values, and more. Even so, researchers have tried to pin down a number, and some compelling results that pertain specifically to U.S. families are published in Expenditures by Families on Children, 2015.
In the report, data gathered from multiple sources on 23,297 married-couple households and 7,030 single-parent households is used to create estimates of money spent on things like housing, food, and childcare. Parents can expect to spend between $12,350 and $14,000 a year on each child, totaling an average of $233,610 over the course of a child’s 17 years at home.
Using the same data, researchers also broke down the cost of raising a child by region, determining that married couples raising children in the urban Northeast could be expected to rack up the highest child-rearing costs. Living in the urban Midwest and rural areas of the country is associated with the lowest child-rearing expenses. The regional aspect of this report proved to be extremely interesting, and we’ve done some digging to provide a closer look at the cost of raising a baby—and how where you live changes the number.
Getting Pregnant and Having a Baby
Without a doubt, one of the first major expenses of having a baby is the price tag of pregnancy and childbirth. Although 91.2 percent of Americans are insured, that leaves a notable number of people without insurance and doesn’t account for excluded services. Uninsured parents in the United States spend around $10,808 on an uncomplicated vaginal delivery, according to reporting by Business Insider UK.
Having insurance doesn’t necessarily spare parents from notable expenses, either. Breaking it down further, Business Insider published numbers provided by FAIR Health. Parents in Alabama have the lowest childbirth-related expenses in the U.S., with the cost of an uninsured birth averaging $9,013.88 and an insured birth costing an average of $4,884.44. Having a cesarean section raises those expenses, of course, with an uninsured c-section costing Alabama residents an average of $12,593.60 and an insured c-section averaging $7,404.07.
States in the Northeast account for many of the highest numbers on the list. For instance, in New Jersey, an uninsured vaginal birth is estimated to cost $16,674.62 and an insured vaginal birth an average of$8,755.88.
For parents dealing with infertility, there are added expenses that can be financially debilitating if you live in certain states. Only 15 states mandate insurance coverage for infertility diagnosis and treatment, according to the National Conference of State Legislature, and some of those states don’t require coverage of all expenses associated with infertility treatments. In New York, for instance, IVF is not considered an insurance-eligible expense.
With only 15 states with laws mandating some kind of coverage for infertility treatments, there are plenty of families who find themselves funding costly infertility treatments completely out-of-pocket, which means becoming a parent can cost a small fortune before baby even arrives.
The Cost of Childcare
Paying for childcare and school expenses is often the next major expense parents worry about, and for good reason. Childcare expenses can quickly dominate a family’s budget.
“Education and childcare for two kids cost us about as much as our mortgage does every month,” shares Jamie Beth Schindler, one of the parents in a two-income family. “I was not prepared for how much of our income was going to go towards these costs.”
A quick glance at the How Does Your State Stack Up? figure provided by the Economic Policy Institute shows that, relative to family income, childcare is the most expensive in the Northeast, with Washington D.C. taking the lead at an average cost of $22,631 for a year of infant care. When considered as a percentage of the median income, that means Washington D.C. parents with median incomes are spending 35.6 percent of their earnings on childcare in their little one’s early years.
These numbers line up with Schindler’s experience. She says she was happy to see her housing expenses decrease when her family moved from Los Angeles to Pennsylvania but shocked to learn childcare would cost her just as much in the Northeast as it had out west.
Comparatively, southern and midwestern states have lower annual childcare costs. The cost of infant care is $6,294 a year in Kentucky, $8,632 in Missouri, and $5,747 in Louisiana. In many of these states, however, childcare still isn’t considered to be affordable because it continues to account for a large percentage of the median family income.
Meeting Basic Needs
When it comes to caring for a child, meeting their basic needs really start to add up. In fact, two of the largest expenses reported by families with children include housing and food, according to the “Expenditures on Children by Families” report.
For the average family, housing accounts for between 26 and 33 percent of what parents spend on their children in a year. The expense varies from region to region, with urban areas in the northeast and west taking the lead when it comes to housing expenses. Rural areas of the country had the lowest housing expenses.
Buying groceries accounts for 18 percent of child-rearing expenses. While it isn’t clear if the cost of feeding a child varies significantly from state to state, one Go Banking Rates article reports that families in the South have the highest grocery expenses, followed by those in the Midwest.
Having kids typically implies having healthcare expenses, too. Even when both parents are healthy, it is important to anticipate and prepare for the expenses of emergency room visits, allergy testing, and braces, says Byron Ellis, a certified financial planner with United Capital Financial Advisers in The Woodlands, Texas.
The Cost of “The Extras”
While it is much more difficult to measure, it’s worth noting that some of the most unexpected expenses that come with childrearing have a lot to do with keeping up with expectations. This seems to be tied less to a region and more to individual communities.
Take, for instance, birthday parties. Thanks to the existence of Pinterest, throwing a party can come with a lot of pressure to execute on elaborate themes—investing in favors, decorations, and games. An informal poll by BabyCenter showed that 25 percent of families spend between $200 and $500 on a single party, while 11 percent of families spent more than $500. Mom of four Chaunie Brusie tells HealthyWay that it isn’t just the cost of throwing parties that caught her off guard, but that buying gifts for the parties her kids attend is also a big expense.
There are also enrichment activities that aren’t included in traditional schooling that inflate the cost of educating the kiddos. These include sporting expenses, music lessons, and swim classes to name a few. Even if your child only participates in one or two after-school activities, the costs quickly multiply.
“I was surprised by the cost of lessons and how quickly they add up, especially when you have two kids,” says Mary Beth Forster. “I signed my daughter up for swimming at something like $75 a month, thinking that was pretty expensive, but it seems average for a weekly class.”
Ellis says it’s keeping up with the expectations of the community you’re in that will have the greatest impact on the cost of being a parent. “If you’re in a community that has really highly rated schools and they’re really proud of the percentage of their students that go to college and they take seriously their scholastic scores…that means the pressure is always on.”
If you intend to raise your family in a community where sports, band, and other extracurriculars are a point of pride, there will likely be extra pressure to enroll your children in afterschool activities, pay for tutors, and foot the bill for travel and cultural experiences, whether you’re paying for private school tuition or not.
Preparing for the Costs of Parenthood
If you are thinking about having a baby, Ellis recommends approaching the discussion of parenting-related expenses as you would any other major financial decision.
“As a family, you need to have a cash reserve,” he says. “That’s money that is there for emergencies or opportunities that come up. Stuff’s going to happen. That’s what a cash reserve is for, to keep you from having to go tap the credit card.”
As far as a concrete amount that families need, it really depends on your month-to-month expenses. To calculate the dollar amount that you need to set aside, add up your expenses for three to six months of living as a couple. Then add in what you expect you’ll need to pay for the added expenses of a child.
“This is hard, depending on your region. Some regions you’ll have more of a need, some you’ll have less,” says Ellis. “I would say unless you really know the numbers, go ahead and add another month to it.”
In addition to preparing for those initial parenting expenses—medical costs associated with labor and delivery, diapers, and childcare—Ellis suggests that parents (or prospective parents) look ahead to the upcoming seasons and budget for the costs they expect to be associated with their new addition beginning school, having a birthday party, and participating in lessons or sports.
When the possibility of growing your family is on the table, it can be hard to set emotions aside, but it is helpful to think about expenses as objectively as possible so you can make wise decisions as you plan for the future of your family.