From diapers to diplomas, raising a child costs money. Whether you’re budgeting for a new baby or planning to take in an older child, knowing the costs can help you prepare for the hit to your finances. Tax credits and deductions can help ease the financial burden. The USDA has an online calculator you can use to figure your likely cost of raising a child, taking into consideration where you live, your annual salary and the size of your family.
How much you’ll spend in a year depends on the age of the child. According to a 2011 United States Department of Agriculture survey, for an only child aged two and under, families spent between $10,010 and $15,460 a year, while expenses for a 17-year-old only child rose to between $11,840 and $17,900. These costs include food, housing, clothing, childcare and other miscellaneous expenses, but don’t include any college savings. Smaller children have higher expenses for clothing (such as diapers) and child care, while old children have higher food and transportation costs.
Family Size Matters
Two-parent households spent more than single parents. According the USDA survey, single parents spent about 7 percent less raising children than two-parent families. Families with more children also spent less per child. The USDA survey only looked at families with up to three children, but with each additional child, the amount spent on all children was less than that of the rate for one child multiplied by three. With three or more children, the USDA found parents spent about 22 percent less on each child. With more children, younger children may wear hand-me-downs or share a bedroom, lowering the cost of clothing and housing.
The more you have to spend on a child, the more you will, the data suggests. In the USDA surveys, families in the highest income groups spent the most on their children. For two-child, husband-wife families, those with before-tax incomes of more than $102,870 spent between $20,420 and $24,510 per child, compared with families who earned a before tax income of less than $59,410, who spent an average of between $8,760 and $9,970 per child. The USDA survey found that higher-income parents spent more on discretionary expenses such as entertainment, sports equipment, classes, camp and other activities for their children.
Where You Live Matters
If you live in the urban Northeast, you’ll spend more each year on your children than if you live in the South or in a rural area. Different housing costs and the cost of education and child care in different areas of the country account for most of these regional differences, according to the USDA. Families in the West and rural areas spent more on transportation.
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