Posts Tagged ‘financial planning’

Kids cost how much???

Tuesday, September 25th, 2012

piggy-bank1Some people say it takes a village to raise a child. That may be true, but I say it takes a whole lot of money! According to the United States Department of Agriculture (USDA), a middle income family with a child born in 2011 can expect to spend about $234,900 for food, shelter and other necessities to raise a child until age 17. They report that for the year 2011, child rearing expenses ranged from $12,290 to $14,320 – per child, per year. And this does not include college or post high school education! There is no doubt about it, raising a child costs a lot of money.

Where does all your money go? The USDA’s June 2012 report Expenditures on Children by Families reveals that the single largest expense is for housing, followed by child care and education (not including college) and food. It does not include pregnancy and child birth expenses. Where you live matters. The urban Northeast is the most expensive place to raise a child, followed by the urban West and then urban Midwest. The USDA’s report also says that family income affects the costs – the higher the family income, the more it will cost to raise your child. Families earning more than $102,870 can expect a price tag of $389,670. Ouch!

A bit of good news here is that the expenses per child decrease as you have more kids. Those hand-me-downs reduce the incremental costs of new clothes and toys, and room sharing helps to keep the budget under control (even if it might increase sibling tensions at times). The report notes that often private schools or child care centers offer sibling discounts, and food can be purchased in larger quantities, helping to reduce the cost per child.

I don’t know about you, but I never sat down and did the math before deciding to have a baby. Now, thanks to the Internet, there are many ways that you can estimate how much money you need to save and how to prepare for your little one’s arrival. For example, to help you get a grip on where it all goes, and how to prepare for the change in your budget, the USDA has a nifty calculator to help you.

There is no doubt about it – kids cost money. But, an informed and educated parent will be better able to handle the increase in costs. Take the time now to understand your spending habits and make a plan, so it will pay off in the future (no pun intended)!

After all, we really can’t put a price on our kids – right?