Since 1960 the US Department of Agriculture (USDA) has released a number for the estimated costs associated with raising a child until they reach 18. The costs include food, housing, childcare, education (not college costs), and other expenses. The full report is linked at the bottom of this post. So if you or a loved one has recently had a baby it is going to cost $245,340 on average to raise him or her to age 18.
Let that number sink in for a minute. When that number is adjusted for anticipated inflation the costs will be closer to $305,000. These numbers are the average costs for the middle third of the income distribution (annual income between $61,530 and $106,540). Families in the upper third of income earners can anticipate spending more than $408,000 to raise their wonderful bundles of joy.
I have 3 kids and wanted to check what the anticipated costs were when my oldest was born in 2002. I was shocked when I read the report and it said $173,880. When that number is adjusted for the actual inflation of the last 12 years the number would have been $230,367 in 2014 dollars.
So what about families that have more than one child? The study showed that expenses per child fall in larger families. Families with 3 or more children spend 22 percent less per child than families with 2 children. What these numbers show me is that kids are becoming more and more expensive to raise. Something I am experiencing first hand after handling the back to school shopping. The second thing is that these risings costs are increasing the importance of proper budgeting and financial planning.
After reading this report I will never complain when my wife hands me a coupon to use at the grocery store again.
Enjoy your families since they provide more joy than money could ever provide just know that it will cost you a little more each year.
Just another thought from The Factory on Main