How much does it cost to raise children in the US? | finder.com
cost-of-children

How the yearly cost of raising children matters when taking out a life insurance policy

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How much does it cost per year to raise a child in the US?

While the cost of having a child varies from person to person, the USDA found that in 2015 the cost of raising a child to 17 years old by a middle-class married couple was about $233,610.

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    How much does is cost per year to raise a child?

    The amount you’ll spend on child varies based on how much money you make per year. Here’s how much the average family in each income bracket spends per year on children of different ages.

    Child’s age Less than $59,410 per year before taxes$59,410 – $102,870 per year before taxesMore than $102,870 per year before taxes
    0-5$9,100$12,390$20,480
    6-11$8,760-$9,520$12,290 – $13,110$20,420 – $21,320
    12-14$9,960$13,820$22,700
    15-17$9,970$14,320$24,510

    When you’re working out whether your life insurance is enough to cover your kids, you naturally need to think about how many children you have. With the exception of special needs or other unusual circumstances, your first child will cost more than your second child, who will in turn cost more than your third child.

    While it does cost more to have more children, the cost of each child incrementally less than the previous child.

    What expenses should I be aware of for infants and babies?

    There are a lot of costs involved at this stage of childhood, so it can help to break it down. We’ve listed the essentials here that almost no family can do without.

    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 and nipples, sippy cups, baby crockery and utensils, bibs, high chair, formula or breastfeeding aids as needed.
    • Hygiene. Baby towel or bathrobe, baby nail clippers, infant bathtub and changing table if needed.
    • 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 with a straightforward checklist.

    Hidden expenses

    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 make its mark 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 very expensive.

    Determining childcare costs

    Some people may have the luxury of having parents or friends to help offset the cost of childcare, however, others will have to pay out of pocket to have their children looked after while at work.

    You and your partner need to decide:

    1. Who will be working? There has to be a stream of income in order to support a family. You need to talk with your partner to see if it’s only one of you or both of you.
    2. The working arrangements. Will it be full-time, part-time, in the office or from home? This is essential when anticipating childcare costs.

    It’s important to keep in mind that both the region where you live and your income will play a factor in how much childcare will cost you. These are some rough estimates of how much you can expect to pay for various childcare services.

    Type of childcareCost per week
    Family child care home$200
    Day care $211
    Babysitter (15-hours a week)$225 or $10-$20 per hour
    Au pair$367
    Nannies Upwards of $500

    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.

    Why are teenagers so expensive?

    There are a few reasons why teenagers are pricier than you might think.

    • Increased entertainment costs. Your toddler won’t ask for $20 to go see a movie, but your teenager might.
    • Communication. Mobile phones, internet and all the other utility costs that come with a technologically-savvy teenager under your roof.
    • Transportation. If you financially support your teenager, you’ll likely have to pay for the car, gas, oil changes, plus any costs for public transportation that they might use. Adding a teenage driver to your car insurance will also add up.
    • Education. High school and college typically cost more than middle and elementary school — think textbooks and other course materials.
    • Technology. Laptops, phones, PCs, tablets and all the other must-have gadgets of today don’t come cheap.
    • Food. Teenagers eat a lot. In fact, food is one of the single biggest expenses involved in raising children. The average middle income family will spend an estimated extra $42,000 on groceries over the course of raising a child.

    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.

    Is your life insurance sufficient enough to raise your children?

    For a family with children, a major financial consideration is the cost of raising the kids. This is why you should calculate how much coverage your family might need in your absence before taking out life insurance.

    How much does life insurance cost per week?

    Depending on the policy, life insurance can cost as little as $3 per week.

    How much should I insure my life for exactly?

    Before you apply for a specific amount of coverage, you need to consider a few variables:

    • Kids cost more as they get older. Raising a child from age 5 to 18 will cost more than raising them from 15 to 18.
    • Private and public schooling. Whether your children go to a public or private school makes an enormous difference. If something happens to you, consider whether your kids will keep attending the same school or switch to a different one.
    • Your income is a factor. Be aware of how different income brackets spend different amounts on raising children when taking out a policy.

    Tips for working out your amount insured

    To work out whether or not your life insurance benefit is enough to financially carry your kids to independence, you need to:

    • Think about future living standards. Consider whether you want a life insurance policy that pays enough for your family to maintain their current standard of living — or if they’ll have to downgrade.
    • Think about future and immediate costs. The cost of raising a child grows drastically as they get older — this is true for all income groups. Don’t underestimate how much more expensive older kids are than younger ones.

    Five ways to cut costs and raise kids on a budget

    Kids are costly, so we’re not going to pretend that having one less cup of coffee a week or saving more spare change will be enough to fix everything. Instead, try building these five habits:

    • Buy food by nutrition value. More nutritious food goes further and can fill you up faster. The best way to stop kids from eating you out of house and home is to make sure they’re well fed.
    • Embrace the sharing economy. Help friends, family or neighbors out by babysitting their kids and they’ll more than likely be happy to do the same for you. Carpooling, sharing baby toys and otherwise keeping costs down like this will not only pay off in money saved immediately, but save you increasing amounts as your network grows.
    • Take full advantage of second-hand items. Get in the habit of buying gender-neutral baby gear and clothing to more easily resell or pass it on to someone else. They grow fast so there’s always a lot of second-hand items floating around.
    • Buy in bulk. Essentials like baby food, diapers and formula can be smart items to pick up in bulk. Just make sure you’re buying items that you’ll definitely end up using.
    • Teach the important skills. Consider teaching skills and values that can help your children in the long run. Familiarize them with the public transportation early to save money on driving them everywhere. Or make sure they’re able to safely babysit younger siblings, skills of that nature.

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