What's in this guide?
- How much does it cost per year to raise a child?
- How much does it cost to raise a child to 18?
- Cost of raising an infant
- Determining childcare costs
- Why are teenagers so expensive?
- Will life insurance financially protect my kids if something happens to me?
- Is your life insurance sufficient enough to raise your children?
- Five ways to cut costs and raise kids on a budget
- Compare life insurance providers
- Bottom line
- Frequently asked questions
How much does it cost per year to raise a child?
When trying to decide how much life insurance is necessary to cover your kids, you need to consider how many children you have. With the exception of special needs or other unusual circumstances, your first child will be your most expensive.
While it does cost more to have more children, the cost of each child is incrementally less than the previous child. In fact, families with three or more children spend 24% less per child than smaller families.
The amount you’ll spend on your child varies based on where you live, how much money you make per year, the size of your family and the age of your children. Here’s how much the average family in each income bracket spends per year on children of different ages based on the USDA’s Cost of Raising a Child Calculator.
|Age: 0-5||Age: 6-11||Age: 12-14||Age: 15-17|
|Child care and education||$3,64523%||$2,17214%||$1,81611%||$2,65415%|
Housing costs consistently crown the list as the highest chunk of your child expenses budget. Costs include mortgage payments, rent, property taxes, insurance, utilities and repairs. Expect housing expenses to account for 26% to 30% of your annual child costs. Keep in mind that housing expenses vary widely depending on where you live, with rural homeowners paying less, on average, than their metropolitan counterparts.
Child care and education
Child care can be pricey, and expenses are at their peak between ages 0 to 5. During these early years, child care amounts to 23% of the annual budget. From age six onward, allocate 11% to 15% of your child’s expenses for child care and education costs, including day care, baby-sitting, tuition, books and supplies.
Arranging care for more than one child? Your expenses won’t necessarily double. Some day care centers and babysitters offer discounts for multiple children.
Food costs are at their lowest within the first five years of your child’s life and are at their highest between the ages of 12 to 14. You’ll spend between 13% to 21% of your child cost budget on food, including household groceries, take-out meals, dining out at restaurants and school meals.
Transportation costs typically account for 14% to 16% of annual child costs and include auto loan payments, vehicle maintenance, insurance and public transportation costs.
Expect for health care costs to take up 8% to 9% of your annual child expenses. These are costs not covered by health insurance providers and include dental services, prescription medication, medical services and health insurance premiums.
Budget between 5% to 7% for clothing costs — the smallest portion of annual child expenses across all age ranges. Expenses include diapers, apparel, footwear, dry cleaning and alterations.
How much does it cost to raise a child to 18?
In 2015, the USDA found that the cost of raising a child to 18 years old by a middle-class married couple was about $233,610.
The study found that the two variables most likely to affect overall costs were annual household income and the age of the child. Typically, annual child costs rise as the child grows older, with costs peaking between the ages of 15 to 17.
Cost of raising an infant
There are a number of age-specific costs associated with this stage of childhood. We’ve broken down the essentials of the typical American family.
Basic expenses for infants and babies
- Essential baby gear. Strollers, car seat, toys, diaper bag, baby-carrier, clothing.
- Nursery. Crib, mattress, bedding, blankets, mobile, baby monitor.
- Nutrition. Bottles, sippy cups, dishes, utensils, bibs, high chair, formula or breastfeeding aids as needed.
- Hygiene. Baby towel or bathrobe, baby nail clippers, infant bathtub and changing table.
- Other. Childproofing supplies, safety gates, pacifiers.
These basic costs can be as low as several hundred dollars up to as much as several thousand dollars. Because these items are mostly one-off expenses and can be passed down to your younger children, these costs are generally fairly manageable and can be planned for.
By expecting and planning for hidden costs, it can turn from an unwelcome surprise into a manageable expense. Here are some costs to look out for:
- Medical expenses. Infants have developing immune systems, making them vulnerable to some illnesses and infections that can lead to unexpected medical expenses.
- Utility costs. You’ll be washing a lot more clothes and dishes than normal. You’ll also be running the heater, lights and air conditioning more too. If you or your partner is taking time off work to be a stay-at-home parent, then simply having someone home all day can also take a toll on the utilities bills.
- Housing and renovation. Bigger houses, bigger cars, new furniture, moving expenses, renovation costs and everything else involved in making room for the baby can get expensive.
Why is childcare important?
Out of necessity, dual-income families are becoming the norm. This has led to big demand for childcare services which has in turn led to higher costs. For modern families, paid child care has become a primary cost to factor in their budget.
Returning to work vs. staying home
Do you want to return to the workforce, use childcare services or become a stay-at-home parent? To decide what your next move is, you need to know what your childcare plan will be.
If you’re household is dependent on two incomes, you’ll have no choice but to use child care.
Also, don’t underestimate the total costs of childcare. If you’re unable to return to work in a secure position that pays well enough, the cost of childcare might not be worth it for your situation.
Will life insurance financially protect my kids if something happens to me?
Life insurance pays benefits if the unexpected happens. You can choose to be covered for death, disability, serious injury or illness, or even lost income. Each of these protections is can be part of a life insurance policy — meaning choose the ones you want and get rid of the ones you don’t.
- Term or whole life. This part of life insurance pays lump sum benefits on death and is included with all policies. Choose an amount of coverage that lets your family carry on if you were to pass away.
- Critical illness insurance. This component of life insurance pays out if you’re diagnosed with a serious illness or suffer severe health issues. These ailments carry big medical costs, as well as potential disablement and loss of income which can add up to really put your family in a tight spot.
- Disability. Total and permanent disability is one of the most expensive things that can happen. A policy will pay out if you suffer a permanent disability that leaves you unable to do your job. Coverage should be enough to help you adapt and keep your family above water in the meantime.
- Income protection. Income protection insurance will pay out a portion of your typical earnings — usually no more than 75% — until you can get back to the job if you’re medically unable to work. If you don’t have enough savings to provide for children and other dependents for at least several weeks, if not months, income protection insurance can make a clear difference.
Compare life insurance providers
The cost of raising a child in the US varies by income, location and family size, but investing in life insurance can help provide coverage for your children in the event of a sudden illness, injury or death.
Explore your life insurance options to find the policy and coverage best suited to the needs of your family.
Frequently asked questions
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