Thinking about having a baby? You may want to consult your checkbook. A recent report released by the U.S. Department of Agriculture found it can cost around a quarter of a million dollars to raise a child, and that's before you even think about sending your kid off to college.
According to the report, parents who are planning to have a baby should expect to spend around $233,610 over the next 18 years for food, clothing, education and child care. And honestly, the USDA figures are based on 2015 data, which increases at a rate of about 3 percent per year. You can do the math if you want, but suffice to say that before your little one goes off on her own, you will spend close to 250,000 to raise her.
But it's just diapers and baby food right? It turns out, the single biggest expense connected with raising a child is housing. A baby in the crib may not have many expenses in the way of housing, but once your child is old enough to need his own room in your home or an apartment, it can cost around 30 percent of the child-rearing budget. Next up is food. (There's a reason it feels like your teenager is eating you out of house and home; he really is.)
Childcare and education are other big expenses, particularly for families in the higher income brackets. Transportation, clothing and health care are additional expenses that round out the kid-raising budget.
Income and location matter
Child-rearing costs vary by a number of factors and not surprisingly, income was at the top of that list. The USDA found that lower-income families spend an average of $174,690, while those with more disposable income spend closer to $372,210 over the same time period. Similar lines were drawn around child rearing expenses and location, with those living in urban areas spending an average of around $244,400, while families in rural areas spending closer to $193,000.
The good news is that you don't have to shell out all of the costs required to raise a child up front. In fact, despite the endless need for diapers and baby food, the USDA found that babies are easier on the budget than older children. The average cost of raising a child breaks down to about $12,350 to $14,000 per year, but you can expect to need about $300 less than this for children from birth to 2 years old and $900 more for teenagers between the ages of 15 and 17. For example, it costs 22 percent more to feed a teenager than it does to feed an elementary school-aged child. So you have time over the years to adjust your budget as your kids get older.
More good news: Kids really are "cheaper by the dozen." Hand-me down clothing, toys, and furniture and shared bedrooms help spread out the costs associated with raising kids. According to the report, dual-income families with one child spend an average of 27 percent more per child to raise their offspring than couples with two children.
You might also be glad to know that the growth in child-rearing costs has slowed in recent years. From 1960 to 2015, the cost to raise a child increased by an average of 4.3 percent each year. But from 2104-2015, those costs only increased by about 3 percent from the year before. So if you see kids in your future, now might be a very good time to make the investment.