For new parents considering the long-term costs of starting a family, the expense can be overwhelming. Children are a life-long commitment. For at least 18 years, they are reliant on you for everything from food and shelter to education costs. Even after their 18th birthday, most children continue to be reliant on their parents. They may move back home after college if they cannot find a new job. They might need your assistance in funding a wedding, or they could get into financial trouble and need you to pick up the tab. There are no guarantees that you will ever be wholly free of expense once you’ve had a child.
Of course, children are not monetary investments. They are literally the future of our planet. Raising a child gives you an opportunity to make an impact on the world and experience selflessness and unconditional love. Building a family is a goal that many people have had since they themselves were children, and it’s one of the most worthwhile ways a person can leave behind a legacy. For many, having children is worth every penny that it costs to raise them.
Nevertheless, while the benefits of parenthood are invaluable, starting a family is never a decision that should be taken lightly. Whether you’re considering having your first child or simply trying to put aside money to help raise your already-growing family, it’s a good idea to understand the true costs of parenthood so that you can make wise financial decisions about your future.
Early Years: The Cost of Having a New Baby
The first hurdle to overcome when starting a family is affording a new baby in the first place. Babies are unbelievably expensive. You need to pay for medical expenses throughout the pregnancy, delivery and the child’s first year. If there are any complications, these costs multiply substantially. You must also pay for supplies like clothes, diapers, bottles, formula, cribs and more. While some of these can be purchased second-hand, many represent a long-term investment for the first few years of the child’s life. There are multiple cost calculators covering a few of the expenses new parents might encounter.
Additionally, you will need to consider the cost of childcare. If you work outside the home, you will need to arrange daycare or nanny services. Good infant daycare costs around $1,000 per month or more, and a nanny can easily cost three times that amount. You also need to factor in any loss of income while you’re away from work; even if your job offers maternity leave, you may not get as much money during that time as you would otherwise. If you choose not to work, you will need to consider the opportunity cost of staying at home.
The Cost of Raising a Child
It’s easy to convince yourself that the cost of raising a child will decrease after the first year. In some cases, this is true, but you will need to continue making room in your budget for your child’s needs well through his or her teens. Adding a child to your household is not the same as budgeting for another adult; kids have a number of expenses that grown adults don’t need to worry about.
For example, you will need to purchase clothes much more frequently to accommodate growing children. Even if you buy these clothes second-hand, the costs can add up quickly. You’ll also need to pay for increased consumption of food, gas and utilities. You may need to get a larger house to accommodate a growing family, and your car insurance will cost more once you add teenage drivers. Children also need money for extracurricular activities, summer programs, new toys and entertainment, not to mention the cost of birthday parties and other pricey ventures.
Most parents will also need to think about putting money toward a child’s future by starting a college fund. College tuition costs are steadily on the rise, and a four-year degree can cost anywhere from $50,000 to $120,000 depending on the school. You might also need to pay for tutors while your child is in school.
Additionally, you will need to consider the on-going costs of childcare if you work outside the home. Not everyone is fortunate enough to have work hours that coincide perfectly with their child’s school schedule. You may need to hire someone to spend a few hours with your child after school, or you might need care for weekends or summers.
Medical costs are another ongoing factor to consider. You will need to pay for a family insurance policy, and children require immunizations and annual exams when they’re young. Kids can also be accident-prone, and it’s unlikely that your child will turn 18 without any risk of a broken arm, tonsillitis, appendectomy or other common medical emergency.
The exact cost of raising your child will vary from one family to the next. Some estimates suggest you will pay around $190,000 or more over 18 years. Of course, these costs will be lower if you have a very frugal lifestyle, and they can be much higher if you’re extravagant.
The Long-Term Costs of Having Children
Of course, you cannot expect to be expense-free after 18 years. You know how difficult it can be to start a new life, and your children will undergo those same trials and tribulations on their road to adulthood. Adult children may need to move back home after graduating college, losing jobs, getting divorces or suffering other hardships. As a parent, your door will be expected to remain open.
You may also be expected to help pay for weddings, cars, houses and other major expenses. When your child runs low on money, he or she might ask you for loans or hand-outs. You may need to sacrifice your credit by co-signing for a loan or credit card. Many people refuse to lend family members money, but you may have your resolve tested when your child asks for help. Turning them away could be harder than you would have anticipated.
Ideally, you will have raised a child with excellent financial sense. You never know what might happen in the future, though, and you should assume that you will play at least some role in your child’s life for many years after their 18th birthday. If you don’t need to spend any more money on your kids after they leave home, you can put that money aside for your own retirement, but budgeting for it can save you from problems down the line.
The Bottom Line: How Much Does a Child Really Cost?
The cost of raising a child will ebb and flow over the years. It may be highest in the first few years after the baby is born, or it may peak in high school when you’re expected to pay for cars, insurance, graduation parties and college tuition.
There are so many variables associated with raising your children that it’s impossible to know exactly what you’ll spend. Emergencies can happen, and costs of necessities can fluctuate over time due to inflation or supply and demand. However much money you think you’ll need, you might end up spending a lot more. On the other hand, you may get lucky and have money left over that can be spent on your retirement or other expenses.
The best thing you can do is set aside as much of your money as possible and budget what you have wisely. Consider children to be an on-going expense, not something to save up for. Make room in your budget for all of your miscellaneous expenses and find a way to cover those costs. Depending on your situation, you may need to make some sacrifices in your quality of living to make room for a new child. Only you can decide what sacrifices are worth making.
