Life Insurance

Raising a Child to Adulthood May Cost More Than $252,000. Are Today's Young Couples Prepared?

Raising a Child to Adulthood May Cost More Than $252,000. Are Today's Young Couples Prepared?

Depending on the city, child-related spending equals anywhere from 15% to 30% of the median household income for expenses such as housing, food and child care
A baby and her big sister

Nearly every couple understands that having children is an enormous commitment — but not many have a clear idea of the dollar amounts involved. In order to determine how well-prepared families are to support a new child, ValuePenguin compared the data on child-related spending to the median income of couples across the country.

Key findings:

  • Adjusted for inflation, the most recent data showed that a typical two-child family had annual costs of $14,000 for each child. Over 18 years, total spending by two-child households came out to an average of $252,072 per child.
  • Averaged over 18 years, housing costs represented the largest annual expense at $3,970 (28% of total spending). Food took up $2,480 (18%), followed by child care and education at $2,280 (16%).
  • Each additional child increased total family spending, but also reduced the amount spent per child. Households with only one child spent 27% more per child than those with two kids, while families with three children spent 24% less.
  • Family income was a major influence on both total spending and yearly increases. Households earning less than $64,000 spent 25% less per child than those earning the national median income.
  • Families in major cities like New York and San Francisco earned enough that they spent a lower portion of their income than average on children, even though their costs were often much higher.
  • The cities where families spent the highest portion of their incomes on children were located in Southern states, including Texas and Florida. For example, the average amount spent on a child in McAllen, Texas, was equal to 30% of the median income among married couples.

Housing and food are the biggest expenses, with child care close behind

The cost of raising a child from birth to adulthood is measured in the hundreds of thousands, according to the latest available research by the U.S. Department of Agriculture. Two-child households earning the median income spent $252,065 on each child over 18 years. That's an average of about $14,000 per year covering housing, food, health care, education and entertainment.

Pie chart showing the different categories of spending on children
Pie chart showing the different categories of spending on children
Housing: $3,971Cost of utilities, mortgage and/or rent for an extra bedroom
Food: $2,482Cost of meals, based on average individual consumption and household food use
Child care and education: $2,280Cost of babysitting, child care and school expenses — not including private tuition
Transportation: $2,127Cost of transportation to family-related activities — roughly 75% of all transportation spending
Health care: $1,302Out-of-pocket health care expenses such as premiums and deductibles
Miscellaneous: $1,047Personal care and entertainment such as haircuts, toys, electronics and sports
Clothing: $795Cost of children's clothing
Annual total: $14,004
Spending data from 2015 USDA Expenditures on Children by Families, adjusted for inflation to 2019 dollars. Numbers represent average spending in 2015 by families who earned between $64,000 and $116,000 in 2019 dollars.

While the average annual figures do a fair job of representing costs at every age, certain categories did change as children grew up. Food costs per child increased every year, for obvious reasons, with the average annual bill going from $1,700 to $3,000 between age 0 and 17. Transportation costs also increased over time, thanks to extracurricular activities and teen driving costs, such as auto insurance.

In other spending categories, the increase over time was not as consistent. For example, parents of kids between 6 and 8 reported that child care cost $1,250 less per year than during ages 3 to 5 — probably thanks to the start of school attendance. This had the interesting effect of making ages 6 to 8 the cheapest years for parents.

Family size and income significantly influence spending per child

The data also showed that the more children there were in a household, the less it spent on each child. However, this doesn't necessarily mean siblings must fight for a limited pool of resources. The more likely explanation is that economies of scale allow parents with multiple children to spend less per child on groceries, transportation and other items.

Column chart showing how spending per child decreases while total child spending increases as families gain additional children
Column chart showing how spending per child decreases while total child spending increases as families gain additional children

Where the typical two-child, median-income family spent $14,000 per child in an average year, households with only one child spent $17,780 — an increase of 27%. Meanwhile, households with three children spent $10,640 per child, or 24% less than two-child households.

Different incomes, different expenses

Families who earned more also tended to spend more on each child, especially when it came to areas like education. The USDA data divided households into three income bands: those earning less than $64,000 (in 2019 dollars); those earning between $64,000 and $116,000; and households earning more than $116,000.

We compared some of the biggest spending categories across these three groups below. Predictably, households that earned more spent more as well. The middle-income group spent 25% more on child costs than those in the lowest-income group, and 37% less than those in the highest-income group.

Less than $64,000$64,000 to $116,000More than $116,000
Housing and food$5,456$6,452$9,189
Child care and education$1,273$2,280$5,204
Transportation$1,493$2,127$2,989
Average annual total$10,472$14,000$22,312

However, the data also showed that the level of extra spending differed by category. Basic necessities such as food, housing and transportation increased in a somewhat linear pattern, but households in the highest-income group spent more than four times more on child care and education than those in the lowest-income group.

This was also true of spending in the miscellaneous category, where the highest-income group spent three times more on things like personal care and entertainment.

How much does child-related spending vary from city to city?

Finally, we considered whether the cost of raising a child would impact prospective parents differently according to where they live. This was done by applying the Regional Price Parity of the top 100 metropolitan areas to the national child spending figures and comparing the results to median household income in each city.

MSAAnnual spending per childMedian incomeRatio of spending vs. income
San Francisco-Oakland-Berkeley, CA$18,429$107,11217%
San Jose-Sunnyvale-Santa Clara, CA$18,121$121,23415%
Urban Honolulu, HI$17,392$87,95520%
New York-Newark-Jersey City, NY-NJ-PA$17,378$77,98122%
Washington-Arlington-Alexandria, DC-VA-MD-WV$16,496$102,26016%
Los Angeles-Long Beach-Anaheim, CA$16,398$72,54623%
Oxnard-Thousand Oaks-Ventura, CA$16,398$86,68319%
San Diego-Chula Vista-Carlsbad, CA$16,300$78,62621%
Bridgeport-Stamford-Norwalk, CT$16,146$95,62817%
Boston-Cambridge-Newton, MA-NH$15,992$90,26818%
Seattle-Tacoma-Bellevue, WA$15,810$87,36318%
Miami-Fort Lauderdale-Pompano Beach, FL$15,390$57,22027%
New Haven-Milford, CT$15,166$70,13422%
Riverside-San Bernardino-Ontario, CA$14,984$64,46323%
Baltimore-Columbia-Towson, MD$14,942$83,82518%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD$14,760$71,48221%
Denver-Aurora-Lakewood, CO$14,690$78,25119%
Portland-Vancouver-Hillsboro, OR-WA$14,536$75,28019%
Sacramento-Roseville-Folsom, CA$14,508$71,99520%
Worcester, MA-CT$14,466$74,07720%
Portland-South Portland, ME$14,452$69,21721%
Chicago-Naperville-Elgin, IL-IN-WI$14,452$72,02420%
Minneapolis-St. Paul-Bloomington, MN-WI$14,368$80,05418%
Hartford-East Hartford-Middletown, CT$14,298$77,32818%
Houston-The Woodlands-Sugar Land, TX$14,256$65,70222%
Stockton, CA$14,102$65,78421%
Dallas-Fort Worth-Arlington, TX$14,102$69,45820%
North Port-Sarasota-Bradenton, FL$14,074$59,88424%
Austin-Round Rock-Georgetown, TX$14,032$78,08918%
Providence-Warwick, RI-MA$13,990$66,55821%
Albany-Schenectady-Troy, NY$13,990$70,52020%
Allentown-Bethlehem-Easton, PA-NJ$13,976$69,29420%
Colorado Springs, CO$13,892$68,44720%
Tampa-St. Petersburg-Clearwater, FL$13,864$55,73225%
Orlando-Kissimmee-Sanford, FL$13,822$58,49824%
Salt Lake City, UT$13,822$74,91918%
Phoenix-Mesa-Chandler, AZ$13,738$64,14521%
Cape Coral-Fort Myers, FL$13,696$57,68824%
Rochester, NY$13,682$59,53523%
Springfield, MA$13,626$59,65923%
Atlanta-Sandy Springs-Alpharetta, GA$13,626$68,97420%
Virginia Beach-Norfolk-Newport News, VA-NC$13,584$67,41420%
Las Vegas-Henderson-Paradise, NV$13,556$58,99023%
Charleston-North Charleston, SC$13,556$64,12421%
Harrisburg-Carlisle, PA$13,527$66,85520%
Madison, WI$13,527$74,58818%
Raleigh-Cary, NC$13,527$76,33018%
Fresno, CA$13,513$53,15225%
Syracuse, NY$13,513$61,55622%
Bakersfield, CA$13,499$51,79726%
Palm Bay-Melbourne-Titusville, FL$13,485$56,79024%
Richmond, VA$13,457$68,38120%
Deltona-Daytona Beach-Ormond Beach, FL$13,429$49,55627%
Spokane-Spokane Valley, WA$13,415$58,00823%
Jacksonville, FL$13,373$61,91322%
Detroit-Warren-Dearborn, MI$13,373$62,61921%
Durham-Chapel Hill, NC$13,289$61,60522%
Nashville-Davidson--Murfreesboro--Franklin, TN$13,289$66,58320%
Buffalo-Cheektowaga, NY$13,275$58,86723%
Milwaukee-Waukesha, WI$13,275$63,91921%
Ogden-Clearfield, UT$13,205$76,69717%
Albuquerque, NM$13,191$55,47324%
Charlotte-Concord-Gastonia, NC-SC$13,191$65,78420%
New Orleans-Metairie, LA$13,177$51,94325%
Tucson, AZ$13,149$51,31726%
San Antonio-New Braunfels, TX$13,149$61,68821%
Boise City, ID$13,093$60,58822%
Lakeland-Winter Haven, FL$13,051$49,66626%
Pittsburgh, PA$13,037$61,22921%
Kansas City, MO-KS$13,009$66,83819%
Des Moines-West Des Moines, IA$12,967$71,14418%
Grand Rapids-Kentwood, MI$12,911$65,40320%
Omaha-Council Bluffs, NE-IA$12,897$68,34819%
Scranton--Wilkes-Barre, PA$12,883$51,91125%
Columbus, OH$12,869$65,37820%
Columbia, SC$12,855$59,06022%
Baton Rouge, LA$12,841$58,38822%
Indianapolis-Carmel-Anderson, IN$12,827$62,64220%
St. Louis, MO-IL$12,743$65,38219%
Oklahoma City, OK$12,701$59,01922%
Greenville-Anderson, SC$12,659$55,47123%
Memphis, TN-MS-AR$12,631$53,40024%
Louisville/Jefferson County, KY-IN$12,631$59,35821%
Akron, OH$12,617$55,42723%
Cleveland-Elyria, OH$12,617$57,17222%
Cincinnati, OH-KY-IN$12,603$65,22919%
Greensboro-High Point, NC$12,575$49,14126%
Tulsa, OK$12,547$54,70023%
Jackson, MS$12,491$54,56723%
Little Rock-North Little Rock-Conway, AR$12,491$55,22923%
Augusta-Richmond County, GA-SC$12,449$53,36323%
Winston-Salem, NC$12,435$50,11225%
Chattanooga, TN-GA$12,435$51,49524%
Knoxville, TN$12,421$53,32623%
Birmingham-Hoover, AL$12,421$56,87922%
El Paso, TX$12,407$45,66327%
Wichita, KS$12,407$56,61922%
Toledo, OH$12,155$53,40123%
Youngstown-Warren-Boardman, OH-PA$12,057$48,04825%
McAllen-Edinburg-Mission, TX$11,581$38,59430%

Taken together, the child spending and income data showed that cities with the highest dollar amounts of child-related spending actually spent the lowest amounts relative to their median family income. This is because incomes tend to be highest in these major cities, including famously expensive locations such as San Francisco and New York City.

Cities in Texas and Florida could expect the highest child spending in proportion to local income levels. In McAllen, Texas; El Paso, Texas; Deltona, Florida and Miami, the average family may have spent more than 27% of the local median income on child-related expenses for each of two children. This was despite the fact that local costs of living were among the lowest. For instance, McAllen's adjusted child spending came out to $11,581 per year — the smallest figure among the top 100 cities.

How couples can financially prepare for parenthood

While the amounts of money discussed above might seem daunting to prospective parents, couples with an interest in having children can take comfort in a few facts.

First, it's helpful to understand that the data reflects typical spending rather than theoretical cost. These figures represent the typical amounts that real families spent in the normal course of parenthood. They illustrate how much parents probably spend in any event — not how much they're supposed to spend.

Get ahead of your spending with a budget

Second, couples who have yet to become parents still have plenty of time to make financial preparations for the changes that a child will bring to the household budget. If you don't already have a budget, preparing for a baby is an excellent time to make one. It doesn't need to be perfect, but it should give you a fair picture of the regular expenses that will hit each month.

With a new child, the budget should include the many extra costs that occur at birth and in the first year: baby supplies, baby equipment, and the cost of medical care for mother and child. Hospital bills are often the biggest expense, which makes it critical to read your health insurance and find out what costs you're responsible for out of pocket.

As the data shows, the things you spend money on will change as your child gets older. Starting on the budget for childbirth and the costs of caring for a baby represent the first stage in that 18-year process.

Start saving now for future education and emergencies

One major parental expense omitted in the analysis was college tuition. The child care and education spending numbers do not include money spent by households on private tuition or money put into savings accounts for future schooling.

If you plan on supporting your kids in college, it's not too early to start saving even during pregnancy. The cost of college tuition has outpaced the inflation of other costs by an astounding margin in recent years, with little signs of slowing. Besides college, parents should have savings handy to cover potential job losses and the inevitable accidents of childhood.

Consider life insurance as a way to guarantee your child's future costs are covered

One of the more daunting aspects of becoming a parent is realizing the level of responsibility you have for your child's future. That's why having a life insurance policy is one of the most vital decisions you can make as a parent. If something should happen to you, the payout of a life insurance policy guarantees your family isn't deprived of the financial support you would have provided.

No policy can replace a parent, but the data makes it clear that any household's child-related spending does add up over the years. Making sure you have enough coverage is just one small part of your family's journey.

Methodology

The annual and total spending amounts on children were obtained from the USDA's Expenditure on Children by Families, 2015.

While we adjusted this data for inflation, the USDA's annual study has not been repeated since its last update in 2017. Together with the disruptive economic effects of the coronavirus, this makes it harder to know where child-related spending and family incomes stand today.

The comparison of household income and child costs for individual cities relied on 2019 median household income data from the Census Bureau's American Community Survey, provided by S&P Global Market Intelligence.

The comparison also used Regional Price Parities for each MSA (MARPP), from the Bureau of Economic Analysis. To calculate child costs in each MSA, the USDA's nationwide child spending data was multiplied by the BEA's most recent Regional Price Parity for each MSA. For example, Cincinnati's reported price parity was 90, which meant that a $100 cost nationally would cost $90 in that city.

Sources

Chris Moon

Chris is a Product Manager for ValuePenguin with years of experience in addressing critical questions about mortgages and homeowners insurance. He spends his time evaluating insurance providers and policy features to understand where consumers might find the most cost-effective coverage. Chris has contributed insights to the New York Times and many other publications.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.