We all know kids aren’t cheap. If you’re not financially secure, a baby can wreck havoc on your budget. That’s one of the reasons why we waited to have a kid until we were in our late 30s. I’m sure you have seen the ridiculous amounts the USDA estimated a kid will cost. You can use the estimator at CNN Money (based on USDA’s 2012 estimates.) It shows we’ll spend $255,237 raising our kid until he’s 18 years old. That’s not even including college, so it’s a bit scary.
Actually, I wrote about this topic two years ago, but now that RB40 Jr. is 3 years old, we have some real data to compare to the estimate. (Does it really cost $295,560 to raise a child?)
Let’s see what our monthly cost looks like.
The USDA assumes families will move to a larger home to accommodate a kid. That’s why they added over $6,000/year in this category. We are still living in our 2 bed, 2 bath condo so we haven’t incurred the additional cost yet. Now I’m thinking about moving up to a 3 bed/2 bath home, though. It would be nice to have a little more space especially now that my mom is living with us part time. We’ll keep an eye out for a house, but I doubt we’ll be able to buy soon. The housing market is just too hot right now. We’ll probably wait until things cool off in a year or three.
Baby RB40 was on formula for a long time and that cost about $50/month. Now he just eats whatever we eat. I haven’t broken out this cost, but it’s probably about the same. He doesn’t eat a lot, but we buy organic milk and fruits for him. That increased our food cost from a couple of years ago. I’m sure the food cost will increase a lot as he gets bigger. You can see that in the graph above.
No more diapers. Yeah! We went cold turkey last August to prepare for preschool. He made a mess a few times, but after a couple of weeks, he was fine without diapers.
Now, he’s really hard on his pants and shoes. Kids grow so much at this age that you can’t expect clothing to last long. However, I think a pair of jeans should last at least 6 months. All his pants have holes in them and I don’t want to buy any new ones because soon he’ll insist on wearing shorts every day. He loves shorts. Anyway, a mom commented on the hole today so maybe we should patch his pants.
He is also really hard on his shoes. They usually last about 3 months before they are completely beat up. At least shoes are pretty cheap at this age. I usually pick them up for under $20 from Babies ‘R’ Us or Walmart.
We’re on Mrs. RB40’s employer sponsored insurance. Her plan is self + family so RB40 Jr. doesn’t cost anything extra. Nice plan.
Thank goodness we don’t have to pay for full time daycare anymore. I heard Portland is one of the most expensive cities as far as childcare goes. Now we spend about $300/month for 2 days of preschool. Next year should be pretty similar. We’ll probably pay a little more for 3 days instead of 2 days, but the increase will be minimal.
Loss of Income – The USDA doesn’t include the loss of income from having one parent stay home. It’s hard to figure this one because it’s just not the loss of income. It will be very difficult to get back on a career track after staying at home for 5 years. I gave up my (low) 6 figures income to become a stay at home dad and I doubt I can ever get into my old career track. It’s worth it for me, though. I had more reasons to quit my engineering career than just our kid.
Well, the USDA didn’t include college cost in their estimate so I’m not going to include it on our table either. We contribute about $10,000/year to our kid’s 529 plan. Once the fund is around $50,000, then I’ll probably cut back to around $4,000/year.
Our cost is much lower than the USDA estimate
As you can see, we spend about $5,000/year on our 3 year old. This is much lower than the USDA estimated of about $13,500. The big part of this comes from staying put in the same condo (for now). Our childcare cost is also much more reasonable now that he’s a bit older. Once he’s 5, it will be a little cheaper because he’ll go to public school. I guess all the lessons and extracurricular activities will bring the cost back up.
Anyway, according to the USDA, we’re in a sweet spot for now. The cost of raising a child increases when they are about 10 and it will keep going up. Then, it’ll time for college and I’m sure we’ll get a big sticker shock in 2029.
What about you? Do you think the USDA estimate is on target? Some of our friends send their kids to private school and I’m sure they spend much more than this.