The Cost of Raising a Child is How Much? The Figures are Eye-Popping

Thinking about having kids? It’s important to understand how much it costs to raise a child, or multiple children, for growing families.

Does it ever feel like having kids is just too unbelievably expensive?

I mean, really, what are we supposed to do? Not have kids? Isn’t the “graying of America” bad enough already?

According to the US Census Bureau, “In less than two decades, the graying of America will be inescapable: [By 2035] Older adults are projected to outnumber kids for the first time in US history… Americans are having fewer children… Fewer babies, coupled with longer life expectancy, equals a country that ages faster.”

Blaine Thiederman MBA, CFP, Founder and Principal Advisor at Progress Wealth Management says, “I’ve seen some clients decide against having children altogether because they don’t think they can afford it or because they don’t want kids. This is reflected in the trend in South Korea as well with their massive decline in birth rates.”

Having raised three kids, we experienced first-hand how expensive it is just getting them to age 18. Plus, paying for college to give them a leg up in life made it even more costly.

If you’re considering having children or already have some young ones, the Washington Post has a helpful calculator that shows the budgetary impact of raising children across different ages and budget categories.

The Cost of Raising Two Children (per the Calculator)

Here are some nuggets from the calculator (assuming you’re 35 years old, to calculate income percentiles). Note that the calculator assumes you have two kids.

1. With inflation, the Brookings Institute projects your total cost of raising kids to age 18 will reach $310,605. Each. That’s over $621k total!
2. The cost changes based on your income. If you make the median of ~$53k, your annual cost will be over $12k per kid, for a total of $434,400 (without counting inflation).
3. If you make $31k, placing you at the 25th income percentile, your annual cost will be over $10k per kid, for a total of $363,600 (again, without counting inflation).
4. If your income is $90k, at the 75th income percentile, your annual cost (without inflation) will average nearly $14k per kid for a total of $497,400.
5. The annual cost depends on age. For median-income families, the lowest annual cost is $11.4k for ages 6–8 and the highest is $12.6k for ages 15–17.
6. The costs for housing are 30 percent of the total cost, education 22 percent, food 13 percent, transportation 13 percent, health nine percent, clothes seven percent, and miscellaneous (i.e., everything else) six percent. However, that breakdown changes for different ages (for example, education drops to a mere eight percent for ages 12–14, while food jumps to 22 percent for teens — no shock there, right?!).
7. If you make the median income, raising two kids will gobble up over 45 percent of your gross annual income!

But what about those of us who have one kid? Or three plus?

After all, two (or even three) kids can sleep in the same room for years, and hand-me-downs save a good chunk of change…

The Per-Kid Cost of Raising One Kid or Three-Plus Kids Differ Significantly

The Brookings Institute report and the Washington Post calculator both base their findings on a US Department of Agriculture (USDA) 2017 report of 2015 data.

That report estimates the costs of raising one child are about 27 percent higher than the per-kid cost of raising two, while the per-kid cost of raising three plus kids is about 24 percent lower.

Thus, the cost of raising one child (including inflation) would be $394,500, while the cost of raising three or more would be $236,100 each.

As you can imagine, these numbers are based on the typical differences between siblings’ ages, slightly more than two years.

If your kids are born many years apart, you’re not likely to save as much money per kid because, e.g., you won’t likely save your firstborn’s hand-me-downs for a decade.

Also, any savings in transportation (taking both kids to the same school) and food (economies of scale — making two meals isn’t quite as expensive as double the cost of a single meal, etc.) won’t be as high.

On the other hand, spacing kids apart by many years could make it easier to make do with a smaller home compared to having three-plus kids in the span of three or four years.

And as some of my friends can attest, having three kids in college at the same time is a special kind of financial hell.

Child-Raising Costs Also Vary Across US Regions

Costs vary between regions, too, with the Urban Northeast 16 percent more costly than the lowest-cost urban area — the Midwest, and 37 percent higher than the cost in rural America.

But There Is Some Good News…

If you choose to have three or more kids, there is some good(ish) news.

Calculating from the above, the cost of raising kids 2+3 is 20 percent less than the cost of raising kid #1.

Think of it as getting two more for (less than) the price of (the first) one.

Finally, looking at inflation-adjusted costs and comparing them to your current salary isn’t quite fair math.

According to the St. Louis Fed, real (i.e., inflation-adjusted) median household income in the US increased by about 27 percent from 1984 to 2021, or an average of about 0.6 percent annually (though this wasn’t an uninterrupted increase, but rather six periods of increases interspersed with five decreases).

As a result, if you want to consider your own situation, you’d do better to compare current annual child-raising expenses to your current salary.

As your kids grow up, the annual costs will go up with inflation, but your salary should on average increase faster, especially when you consider that median income tends to increase with age from 25 to 45, and (more or less) stays at the high end of that range up to age 65.

The Bottom Line

If nobody was willing to have kids anymore, society would literally die out.

That makes parents societal heroes, at least in my opinion. We work hard to raise the best future citizens we can, with little financial support from society.

The above paints the picture of just how severely this impacts our finances. And if you take into account the opportunity cost of setting aside and investing literally thousands of dollars a month less over a couple of decades, the cost nearly doubles!

Thiederman agrees, “Some of my clients want to have a stay-at-home parent, so the other parent focuses solely on their career and works (what seems to be) endlessly in order to afford it. Others plan to work until an older age than they’d like, and often have retired parents living close by to help raise the kids.

“What I typically recommend to clients is to reduce fixed costs by moving to a less expensive area if they can’t afford the cost of raising a child, and even if they do that, I urge them to be conservative because kids’ health issues can be monumental, and it’s impossible to forecast how bad the future may be. It’s always more conservative to prepare and plan for the worst and hope for the best, rather than plan for the best and face a financial catastrophe unprepared.”

So next time you hear a childless friend complain about his property taxes paying for schools he’ll never benefit from (at least in one Maryland county, nearly half of property taxes collected go to education), ask him:

• Shouldn’t he pay society back for the cost of his schooling?
• Would he like our country to continue existing beyond his lifetime?
• And most importantly, how willing is he to forgo his Social Security benefits, which your kids and mine will help pay for?

What to Read Next:

• How Much Does a Financial Advisor Cost?
• What is a Certified Financial Planner?

Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.