The headline number
The Department of Agriculture's last full study put the cost of raising a child born in 2015 at about $233,000 through age seventeen for a middle-income, two-parent family. That figure excluded college and predates a good deal of inflation since. Housing was the largest share at close to thirty percent, which surprises people: the expensive part of a child is often the extra bedroom and the better school district. Food came second, and childcare and education third. The average hides a lopsided shape, with a costly start, a cheaper middle, and a costly finish.
Where it goes by stage
The birth itself commonly costs a few thousand dollars out of pocket even with good insurance, and up to your plan's out-of-pocket maximum if there are complications. A pregnancy that spans two plan years can mean meeting the deductible twice.
From birth to age five, childcare dominates. Full-time infant care at a center runs from under $10,000 a year in low-cost states to well over $20,000 in expensive metro areas. Federal guidance calls childcare affordable at seven percent of household income, a standard that few families with an infant come near. Costs fall as children get older and the required ratio of staff to children loosens, and they drop sharply when public school begins.
During the school years the bills are smaller and more frequent: after-school care, summer camps to cover ten weeks without school, activities, and a steadily rising grocery total. In the teenage years expect food, phones, sports fees and car insurance, which can rise steeply when a sixteen-year-old is added to a policy.
The cost nobody itemizes
A parent who leaves work or cuts back gives up more than a salary. Retirement contributions, employer matches, raises and seniority go with it, and the gap compounds. Run the comparison over five years and not one before deciding that childcare "costs more than one of us makes."
What offsets it
- The federal child tax credit and the child and dependent care credit both reduce your tax bill, and the amounts change, so check the current IRS figures.
- A dependent care flexible spending account through an employer lets you pay for childcare with pre-tax dollars up to an annual limit.
- Secondhand clothes, strollers and toys are nearly as good as new, because babies outgrow things long before wearing them out.
Note Add a newborn to your health insurance within thirty days of the birth. The birth opens a special enrollment window, and missing it can leave the child uncovered until the next open enrollment.
