Ways to cut the rising cost of raising kids

The average cost of raising a child from birth until their 18th birthday is $233,610, according to the most recent study by the U.S. Department of Agriculture. And the average cost of a public school four-year degree (for residents) is $57,000. That means you can expect to spend, at minimum, nearly $300,000 on your child by the time they reach early adulthood.

Thankfully, there are some tips and tricks that can help you.

Know the tax breaks

Child tax credit: With the Child Tax Credit, you may be able to reduce your federal income tax by up to $2,000 for each qualifying child under the age of 17. A qualifying child is someone who satisfies six criteria related to age, relationship, support, dependent, citizenship and residence.

Dependent care credit: You may be able to claim a Dependent Care Credit of up to $3,000 (for one child) or $6,000 (for two or more) for unreimbursed childcare expenses you paid while working or looking for work. The amount of the credit is a percentage of the amount of work-related expenses you paid to a care provider for the care of a qualifying individual. The percentage depends on your adjusted gross income.

Flexible spending account: You can put away up to $5,000 per year pre-tax in a Flexible Spending Account to pay for qualified dependent care expenses. The list of what qualifies is fairly broad and even includes paying for summer day camp.

Savvy areas to save

Clothing: I polled my network for their favorite money-saving tips related to kids and the most common response I got was hand-me-downs. I’ve been lucky enough to benefit from having family members with slightly older children pass down their gently used clothing, which drastically cut down on the amount we had to buy.

We’re now paying it forward and passing along clothing to friends and family who can use them. I also recently took a bin of clothing to a children’s resale shop and used the money to buy my daughter a few new (to us) items while I was there, at a deep discount. Leveraging store rewards programs and maximizing member promos can be a smart way to save, as well.

Parties: Hosting birthday parties at home costs a fraction of what you’d spend at a place that caters to kids’ birthday parties. For the price of some pizzas, birthday cake, lemonade, snacks, glow sticks and a few other activities from a craft store, you can help your kids have a blast and put that saved money in an account for them that could appreciate in value.

Entertainment: Consider buying annual memberships for fun places that you frequent, like your local zoo, children’s museum or science museum. Often for the cost of about two trips, you can buy an annual family pass and visit as often as you like.

Also, many zoos and museums are part of nationwide networks of other similar attractions, which means you can use your local membership to enter for a reduced cost, or sometimes even for free, while you’re traveling.

Essential gear: Secondhand sales sites like Craigslist or Facebook Marketplace can be a great place to buy and sell certain types of baby and kids’ items, especially things that get used for a relatively short period of time, such as Halloween costumes, baby swings, or a changing table. I’ve even bought and later resold the same gently used items, making the cost of using them for a few months or years nearly free.

This list could certainly keep going, but these ideas are among of my favorites. I hope they help you reduce the cost of raising kids, even if just by a little.

You can start making smarter financial moves today.


How else can you financially plan and save with kids?

How to plan for multiple kids in college
10 child-related expenses to plan for
How to coach your kids to be smart with money

Ways to cut the rising cost of raising kids

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Jordan Lochner Mills

CFP® | Senior Financial Advisor

Jordan Lochner Mills, CFP®, is a Senior Financial Advisor for Wipfli Financial Advisors in Minneapolis, MN. Jordan focuses on personal financial planning and investment management for individuals and families, and also specializes in planning matters related to women investors and retirees.

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Ways to cut the rising cost of raising kids

time to read: 3 min