The Price Tag On A Baby: $245,340

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My baby’s feet at birth <3

If you didn’t know, having kids is expensive.  From the moment they are born they incur a lot of cost from $1000 strollers to $20,000/year daycare costs to $300/month extracurricular activities and everything in between.  Kids ain’t cheap.  That should be a rap song.

I recently gave birth to my second child and of course I’m in love.  When you’re holding your baby, all thoughts of money and practicality go out the window (sort of).  I actually really want another one (don’t ask my husband though), but it’s doubtful we’ll be able to afford one comfortably and keep our current lifestyle.  There are families out there whose household incomes are considerably lower than us and have 3 kids or more.  But the reality is each child you have is going to cost you to the tune of a quarter million dollars and that doesn’t even include the cost of college.

According to a USDA report in 2014 (weird, they grade beef and study the costs of raising children), it will cost an average of $245,340 to raise a child born in 2013 til age 18 in the US.  So let’s see I have two young kids so that’ll cost me about a half-million dollars to raise them.  If I factor in college too, our two darling children will easily cost Husband and I about $750,000.  Holy crap.  So let’s take a look at some of the interesting and mundane things that are wrapped up in this hefty price tag.

Childcare.  As more and more families trend toward the almighty dual income household, that also means you need to shell out for childcare.  And let me tell you, good childcare is not cheap.  In Southern California, daycare costs about $1500 to $1800/month, roughly $20,000/year.  Preschool’s a little cheaper at $1000-$1200/month.  This is all after-tax money.  How much of this is deductible?  A maximum of $3000 for one child.  If you have access to a dependent-care flexible spending account, a maximum of $5000.  That still leaves you to pay a full $15,000 a year in childcare for just one child with no additional tax break.  Start being nice to the grandparents, you might want to hit them up for some free/cheap childcare.

Socioeconomic status.  For better or for worse, the higher your socioeconomic status, the more expensive it is to raise kids.  From fancier neighborhoods (and homes) to private schools to a multitude of extracurricular activities, being rich also means a higher price tag on raising children.  I know families right now sending their one year old to swim lessons and art class, two year olds to ballet class and violin lessons.  This will continue on til these kids become 17-18 years old.  Maybe that’s why having more children is somehow the new status symbol of the rich.  Nothing says “hey look at how rich we are!” than raising 4 kids in Manhattan or San Francisco.

College Costs.  While the cost of college was not factored into the USDA report, I think its safe to say its a very important cost to consider for most families.  Our family’s goal is to save at least 50% of college costs for each child to attend an in-state 4 year public university.  I plugged in our numbers into a college cost estimating calculator Saving for College Calculator and Finaid College Calculator.  Both calculators roughly estimated total costs (tuition, fees, room and board) at ~$200,000.  That means we’ll have to save at least $100,000 for each child.  This is for in state public school.  What if Junior wants to go to Harvard?  That costs $490,000.

Everything else.  Housing was and is still the largest expense of raising a child for families at roughly 30% of total expenses in 1960 and in 2013.  Interestingly enough, food and clothings expenditures did not vary much by income and appears to cost less now than it was in the 60’s.  Below is an infographic from the USDA.

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Obviously, even with a hefty price tag I don’t think anyone should not have a child if they want one, but you might want to stop and budget before you have a whole gaggle of them.

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