The Cost of Raising a Child: What to Consider

Each year, the U.S. Department of Agriculture (USDA) releases an annual report titled Expenditures on Children by Families, also known as “The Cost of Raising a Child”.
The most recent report, dated August 18, 2014, shows that a middle-income family with a child born in 2013 can expect to spend about $245,340 for food, housing, child care, education and other child-rearing expenses up to age 18 (the costs associated with pregnancy and expenses occurring after age 18, such as higher education, are not factored into that figure).1

Whether you’re a new parent or thinking of starting a family, what can you do to plan ahead and prepare for these expenses? Start by considering these 10 tips.

Cost of Raising a Child

1. Child Care

If you’ll need full-time or part-time day care when you have children, it will be a huge financial commitment. Start by researching the average cost of child care within your local area. The Boston Globe recently published a helpful map depicting the average cost of child care by state (you can access it here).

While I’m not suggesting you move to a state with lower day care rates, this is another factor to consider if you’re thinking of making a move to accommodate your growing family. Here are a few other ideas to consider when assessing child-care costs:

  • Do you have a family member, such as a parent or grandparent, who might be willing to provide child care for one or more days per week?
  • Does your employer offer on-site day care or discounts at local day-care centers?
  • Do you have a friend who also requires child care and would consider splitting the cost of hiring a nanny with you?

These resources can help you reduce child-care costs, while still providing the coverage you need.

2. Housing

It pays to plan ahead for the size of house you’ll eventually need for the size of family you want to have. Moving is expensive, and in addition to “moving” itself, which includes the cost of a moving truck and hiring moving professionals, there are closing costs to plan for, specifically if you’re buying a house with a mortgage. Finally, you’ll need to consider the cost of all the things you want to do to your new home to make it yours (paint, decorate, etc.).

Think about the number of bedrooms, bathrooms and amount of square footage you’ll eventually want to have in your home. Once you’ve developed a list of your “wants”, find a home that fits those needs sooner rather than later if your budget allows for it. With houses in most areas of the U.S. still priced below their pre-housing crash peak and mortgage rates still near an all-time low, depending on your financial circumstances it may be a good time to skip the “starter home” and move into something that you can live in for a decade or two.

3. Vehicles

Similar to housing, you can save a lot by planning ahead and buying a car you can keep for the next decade or so, compared to buying a new vehicle every few years. When evaluating the amount of space you’ll need, factor in the space you’ll have when you have a car seat (or two, or three) and bulky baby gear (strollers, a diaper bag, etc.) in the backseat, and purchase something large enough early on so you don’t have to trade up when baby number two or three comes along.

4. Education

Public school versus private school. It’s a personal choice, but the decision will likely have a significant impact on your bank account, no matter which option you choose. Private school will likely add tens of thousands of dollars to the amount you’ll spend to raise your children.

Beyond the monetary investment of private school education, there are other important factors to weigh, including a potential move to a different location and the impact of your children growing up around different peers and learning a different curriculum. It’s important to consider these factors in relation to the potential financial impact of either decision.

5. Furniture and Gear

I’m a huge Craigslist fan. When I was pregnant with my first child, it felt like I was on a scavenger hunt looking through Craigslist every few days to see what deals I could score. I outfitted my baby’s nursery almost entirely with Craigslist finds — a crib, a changing table and a baby swing, all gently used and for a fraction of their regular prices.

Of course, it’s important to be smart and shop safely, and Craigslist or similar services may not be right for you. My first Craigslist purchase was transacted in the parking lot of a busy shopping center during daylight; in other instances, I always brought my husband along with me. You can save hundreds, if not thousands, of dollars by buying used furniture and baby gear. Plus, it helps that most parents can’t wait to get this stuff out of their house once their own children outgrow them!

6. Clothing

Hand-me-downs are both simple and cost-effective, especially for young children who outgrow their clothing quickly. Consider asking friends or relatives who have young children if they would be willing to give their kids’ too-small clothing to you or sell it for garage-sale prices. Speaking of garage sales, these are gold mines when it comes to finding deals on kids’ clothing, as well as baby gear. You can also try consignment stores and “mom-to-mom” sales.

7. Food, Household and Baby Products

As your family grows, it may be time to consider applying for a warehouse store membership so you can buy groceries and baby products in bulk. It also pays to stock up on non-perishable items when they’re on sale, especially diapers.

Store-brand diapers and baby wipes often work just as well as their name-brand counterparts and can cost significantly less. Breastfeeding is a personal choice for every mother, but it makes a lot of financial sense, considering baby formula is quite costly. To limit the impact of your growing grocery bills, now may be the time to clip coupons or use mobile money-saving apps.

8. Sports and Activities

Dance lessons, sports teams, music classes — no matter what activity your child is interested in, it will likely come at a cost so it’s important to make informed decisions. Dance recital costumes can cost $50 – $100 per dance number. Hockey, football, baseball and many other sports require costly equipment, not to mention fees for traveling teams and sports camps. If your child takes music lessons, you’ll likely need to buy a musical instrument at some point. If you’re on a tight budget and need to save money, consider whether your child will be equally happy playing soccer instead of hockey or singing instead of taking piano lessons.

9. Vacations

The more children you have, the more costly it will be to travel due to extra airline tickets, additional restaurant meals and fees for having additional people in a hotel room. To save money, consider driving instead of flying, camping outdoors to save on hotel costs or staying in a hotel with a kitchenette so you can limit eating out. It’s also important to plan your itinerary carefully and factor in expenses like tour packages and car rentals. Look for travel deals online and use travel websites to search for amenities within your desired price range and budget.

10. Love, Happiness and Fun

Great news: these are free! You’ll need each of these qualities in order to be a good parent, so enjoy them in abundance!

Your child is likely the single most important investment you will ever make. While you’re focused on getting acclimated to your new role and responsibilities as a parent, reaching out to a financial advisor can help you manage and prepare for the financial responsibilities of the necessities listed above.


Wipfli Financial Advisors, LLC (“Wipfli Financial”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC); however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Wipfli Financial is a proud affiliate of Wipfli LLP, a national accounting and consulting firm. Information pertaining to Wipfli Financial’s management, operations, services, fees and conflicts of interest is set forth in Wipfli Financial’s current Form ADV Part 2A brochure and Form CRS, copies of which are available from Wipfli Financial upon request at no cost or at Wipfli Financial does not provide tax, accounting or legal services. The views expressed by the author are the author’s alone and do not necessarily represent the views of Wipfli Financial or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Wipfli Financial, and Wipfli Financial does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Wipfli Financial of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional.
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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The Cost of Raising a Child: What to Consider

time to read: 5 min