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Does it cost $250,000 to raise a child?


This article is by Kristi Muse, our writer. She is a freelance writer, blogger, police officer’s wife, and stay at home mom of two.

$250,000 to raise kid

Every August, the United States Department of Agriculture publishes an annual report titled Expenditures on Children by Families. National data shows that the three main expenses contributing to the overall cost of raising a child are housing, food, and childcare/education. Last year’s data claims that middle income American families, who earn between $61,530 and $106,540 before taxes, will spend $245,340 to raise a child from birth to 17 years old. Let that sink in for just a minute. It costs just shy of a quarter million dollars to raise a child in middle income America.

The most fascinating part of the USDA’s report is that the total spent per child per year increases as the family’s income increases. Lower income families will spend a minimum of $9,130 per child, which is significantly less than $12,800 spent by the middle class and $21,330 spent by upper income families. The reason for the disparity, obviously, is that lower income families don’t have more than that to spend on their children. They can only afford the basics. They live in smaller houses, send their children to public school, and can’t afford expensive groceries.

I love this report because it gives American families a realistic bottom line amount. It provides a budget number that families could conceivably cut back to each year to raise their child. It also leads me to believe that any amount spent over the minimum $9,130 per year is spent by choice. I can already hear the naysayers shouting responses such as:

  • “What?! I have no choice! There is no cheaper child care available! I have to work, and someone has to watch the kids while I do.”
  • “We chose this house for the school district, if we move to a cheaper home, they will be in a terrible school, and we will compromise our children’s future.”
  • “We already cut back our grocery bill as much as possible! I clip coupons, wait for sales, and buy in bulk when affordable! I refuse to buy cheaper food that isn’t as nutritious.”

Feathers get easily ruffled when talking about finances and life choices. No one wants to hear that they aren’t necessarily managing their lives or their money in the best way possible. Here’s the thing…all of the above are valid concerns, but they are still choices. It’s a choice to pay more to live in a house with a better school district. It’s a choice to go to work every day and pay for childcare. It’s a choice to buy the food that you buy. There are always cheaper options and various ways to offset your cost of living.

It doesn’t have to cost a quarter million dollars to raise your kids. You could move into a smaller home with a lesser monthly rent or mortgage payment. You could quit your job, retire early, and work from home so as to not pay for childcare. You could homeschool instead of paying for private school. You could grow a garden, hunt for meat, plant fruit trees, or raise chickens for eggs to supplement the grocery bill. None of these choices are necessarily easy, and they may even seem like unattractive options to you, but they are still choices.

You don’t need to keep up with the Joneses as your income grows. Just because you can afford to spend $21,330 per year on your child doesn’t mean you should. You could live a more frugal lifestyle and save that extra $10,000 a year for their college fund instead. You don’t have to go into debt or spend your retirement money to raise your kids.

If your job makes you miserable, you hate paying for childcare when you never see your kids, and you loathe the mundane 9-5 of a corporate job, then quit.  Don’t be afraid to make completely life-altering choices that could allow you to spend less and save more. Take your life into your own hands and make new choices. Track your family’s child rearing expenses for a year to see if the number comes close to the national average. Take a good look at your life and see if there are decisions that you could make to spend less each year and invest the difference.

Do you think you could cut back to $9,130 per year or less to raise your child? Would you ever quit your job to live a more cost-effective lifestyle?

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.

Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.

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{ 45 comments… add one }
  • Sarah De Diego November 15, 2017, 8:25 am

    Dear Joe,

    Great post. It saddens me when people consider not having kids solely because they think that they cost too much money.

    To answer your question, I can say with 100% certainty that kids can cost less than ~9,000 a year because we do it right now. As a family of four plus a dog, we live off $20,000USD (I’m Canadian).

    We have recently sold our house and will be maintaining (mowing the lawn and living there for insurance purposes) a family farm in exchange for rent (we will pay for electricity and heating).

    I am a Homemaker so I cook from scratch (including bread items), have chickens (for eggs) and a garden. My kids are homeschooled (not by our choice, however, we travel 6 months a year for pleasure so it’s just easier that way).

    We drive a 2004 van and a 2006 small car (which we’re thinking about selling in the spring and trying to live with only one car).

    99% of our clothes (excluding socks, underwear and some shoes) are purchased from a thrift store or sewn by me. Furniture is from the side of the road (excluding mattresses, they’re new), thrifted or gifted. We borrow or barter as a first resort.

    Personally, I am challenged by trying to minimize my consumer footprint on the earth and am happy for every extra dollar that I save. My husband isn’t as enthusiastic as me but he plays along as he’s retiring this year, something he never thought he would be able to do (our kids are young).

    I don’t try and push our lifestyle on others. I totally understand how it might not be for them. For the record, I don’t clip coupons, we eat meat, we don’t have tv/cable but do have the internet. We’re generally just like everyone else. Yes, we’ve made sacrifices but not in the areas that are important to us.

    Our kids have spent 100% of their days with their family (my husband worked from home), have traveled for 3.5 of their 8 years, are conscious of all that they do have (and have regularly seen how others don’t) and most importantly, are happy.

    Besos Sarah.

    • retirebyforty November 15, 2017, 1:59 pm

      That’s great! You’re doing it right. Traveling will give your kid a unique perspective that most of us didn’t get when we were young. Really cool. Great job being frugal as well.
      Best wishes.

  • middle class June 18, 2015, 9:35 am

    When the discussion is about staying at home vs. working, people always forget to include the fact that the person quitting is not only losing their current income but also future raises, advancement opportunities and reduced retirement income.

  • Nicole M. June 17, 2015, 11:44 pm

    Yes! Love this! I find that so many people (myself included) confuse wants and needs. I have friends that spend SO much money on hobbies, social events, or clothing because they “have to” for some reason or another. It’s insane to me!

  • Ginger June 17, 2015, 3:02 pm

    This is the first article that has bothered, ever, not this site. The attitude that losing an income is not a cost is something I can’t even fathom. Yes, I could give up all my income even though daycare is a 1/3 of the my income. That makes no sense, especially since taking time off will have a long term decrease in income, if I do go back. Some areas have cheap daycare, some don’t. Some people have the ability to work at home, some don’t. Some kids would not do better supervising themselves, while their parents works, at home or otherwise. This article came off extremely uninformed and arrogant about that. I’m not impressed with this new writer.

    • Kristi June 17, 2015, 5:35 pm

      I’m sorry you feel that way, Ginger. Arrogance has no part of my tone or intent. I am merely making the point that it doesn’t have to cost a quarter of a million dollars to raise a child. There are always ways to cut back expenses without leaving your job. Every family has to make the best decisions for their family. If you are happy with your job and it takes care of you and your children, then of course you shouldn’t quit. Best of luck to you!

      • Ginger June 24, 2015, 12:21 pm

        When you say “It also leads me to believe that any amount spent over the minimum $9,130 per year is spent by choice.”, and then state any disagreement is excuses, that is rude and arrogant. You obviously have never had to find childcare for your child. Even in cheap areas, you can’t always find cheap daycare. Being able to stay home is privileged that not everyone gets and it also is not always the best for the family or child. The attitude here actually got me to stop reading this blog, which I really enjoy for bit, I was so annoyed. Is a parent who sleeps all day (though home) so they can work nights so they don’t pay daycare a better option than a parent working full time during the day and increasing their income. You can’t say yes, every single time. Not all jobs allow you to work off hours and just in case you did not know night workers die soon. There are reasons why programs like Head-start exists, because many spending only that $9000 are not providing the support the child or children need. And to ignore all of those issue and make a blanket statement like that, you come off as either ignorant or arrogant or both. Your response did not make you seem better. Thanks for the info Retire by 40, I won’t be back.

  • amber tree June 17, 2015, 1:15 pm

    In these studies, I always wonder how the cost of the house and electricity is calculated. I think they assume I would live smaller and cheaper if I had no kids. I am not sure of that. Having no kids, I see myself living in the city centre. This would be more expensive per person than where we live now.

    We have 2 kids ourself, but I do not keep detailed track of the kids costs vs our costs. Are there people out there that do this? I just keep track of kids specific (noon food) expenses like cloths, excursions, school costs… Now they re older, it is not so much. I guess it will go up over time, just as shown in the study.

    • Kristi June 17, 2015, 5:29 pm

      That’s a great point, Amber. Childless couples living in a city center could certainly spend more per person per year than families with children.

      Some people keep very detailed records of kid costs. I know generally how much our kids cost us each year, but not a hard number. It’s something that I am trying to improve on. If you keep track of expenses then you will know which areas could be cut back on.

  • jim June 17, 2015, 12:13 pm

    I think the press or public misunderstands this report. The report is citing average expenditures which isn’t what people consider the “cost” of things. The average spending on cars is probably $30k but if I asked “whats it cost to buy a car” the answer should be a range staring at around $1000 and going up.

    • Kristi June 17, 2015, 1:36 pm

      You’re absolutely right, Jim. This report doesn’t include all typical “costs” related to raising a child. It only covers the bare essentials of housing, food, and childcare/education. The purpose of the annual report is actually to help assist social services in deciding how much money to pay foster parents to cover the cost of taking in a child.

      • jim June 18, 2015, 11:09 am

        Were did you hear the report is related to foster care? Thats news to me. Nothing about that on the USDA site that I can see.

        I’m not sure you got my meaning. The USDA report does include everything and not just bare essentials. My opinion is the report grossly over estimates what is really required to raise children. In my mind the “cost” of something isn’t defined by the average amount spent. What does a car cost?

  • Swedishsis June 17, 2015, 11:49 am

    Great post! Our baby is definitely going to cost more then that since I am resigning my job to stay home with her so we are losing my 6 figure income. It will definitely slow down our FI but so worth it. I plan on being full time stay at home til she is in school full time. Haven’t decided if I will put her in preschool once she hits 2-3 yo since we are trying to reduce expenses. In other ways our costs will be reduced – more home cooked meals, no commuting or work clothes expenses, etc.

    Luckily, we already live in a great school district since I bought our home with resale in mind. And being the first grandchild, we got a lot of big items as baby shower gift, eg. crib, car seat, stroller, etc. We have definitely spent less then $9130 this first year. Actually, I think I have only bought a half dozen articles of clothing since she was born since we got gifts and hand me downs. I also look for bargains at Goodwill and resale.

    • Kristi June 17, 2015, 1:33 pm

      How fantastic that your little one has been spoiled rotten by the grandparents! Grandparents are great for that in my house too =] My mother in law actually sews most of my kids’ clothes, so I really lucked out.

      If you are worried about preschool expenses, you might want to read one of my post “6 Ways to Create a Home Preschool on a Budget.” Home preschooling has worked very well for us for remarkably little expense – http://www.budgetblonde.com/2015/03/11/6-ways-to-create-a-home-preschool-on-a-budget/

  • Retire29 June 17, 2015, 10:56 am

    I tracked our expenses for our first daughter on our blog, and found out that after you account for tax savings, we actually profited $141 in the first year, I wrote this post about it (http://www.retire29.com/our-baby-has-made-us-money/). Parenting.com says the first year should cost $10-12k, so we’re clearing doing something different or wrong.


    • Kristi June 17, 2015, 11:16 am

      Great post. We have very similar parenting philosophies, Eric. I absolutely agree that children are only as expensive as you choose to make them.

  • Mr. FF June 17, 2015, 10:14 am

    It should cost no where near $250k. I know it didn’t cost that much to raise me. I look at Justin at RoG and Mr. MM. It can be done for much cheaper, and still have a fulfilling childhood with lots of learning 🙂

    I think one parent staying home is a great thing if you can swing it.

    • Kristi June 17, 2015, 11:08 am

      I agree, completely. You can give your children a fulfilling and meaningful childhood without spending money. All you need is a loving home.

      • Matt June 17, 2015, 7:40 pm


        You are kidding, right?

        • retirebyforty June 17, 2015, 10:36 pm

          I’m assuming she meant without spending a lot of money. Kids can cost a lot, but there are many things you can do to reduce that cost. I had 2 brothers and we shared one room for many years.

  • retirebyforty June 17, 2015, 9:47 am

    The housing cost is huge. We stayed in our 2 bedrooms condo after we had a kid, but we will move to a bigger place at some point. I didn’t care about school district at all before we had kids, but now it’s the number one factor in finding the right home location. There is no way we can home school our kid, he’d drive me nuts in a week.
    The opportunity cost is huge too, but I don’t think they address that much here. Preschool cost us around $5,000 per year right now and we only have one year left. Then he’ll go to public school.

    • Kristi June 17, 2015, 11:04 am

      Haha, I hear you Joe! There are days that I want to throw my hands in the air and give up. Homeschooling requires a great deal of patience for sure.

      I would be interested to see a cost comparison for living in whichever district you choose and sending your child to private school vs. living in a more expensive housing district for better public schools.

  • Stockbeard June 17, 2015, 8:47 am

    I’m worried by these costs too. As Seth mentioned above, the prices go up and down depending on the age of the kid. I’m getting worried that I didn’t plan enough for our early retirement nests… our 2 kids are 4 and 1 right now…

    BTW, interestingly, I blogged about the cost of raising kids not so long ago, and reached the same conclusions as you, with one additional point, on how kids can actually save you money in some areas: “Are Kids really that expensive?” (http://howtoretireearly.net/are-kids-really-that-expensive/)

    • Kristi June 17, 2015, 10:48 am

      Great points, well-made, in your post. People generally don’t think about how kids could potentially save you money. I have only been “out on the town” three times in the past 5 years, so I personally suspect there is an element of truth to your hypothesis.

  • Chris G June 17, 2015, 8:37 am

    It will cost us a lot more then 250k, since my wife quit working to care for our kids. Granted are tax liability went down a ton and we don’t have to pay for childcare.

    Still a good decision for us though.

    • Kristi June 17, 2015, 10:24 am

      Sometimes the best decisions for your family aren’t the most cost effective, but that doesn’t make them bad choices. Good for you for doing what is best for you family and taking more than money into consideration.

  • Seth June 17, 2015, 8:02 am

    I agree totally that it cost at least $250,000 for each child. Dividing it into equal sums doesn’t give an accurate picture. Kids are very expensive the first couple of years or so, with all the diapers, baby foods, toys, clothing, etc. Then the costs drop off for a few years until they hit about 11, then WHAM!! They start eating like horses. Child discounts disappear starting at 10 at many places. They want name brand everything; clothing, phones, games, shoes, the whole spectrum. Don’t forget pets, almost all kids want a kitty or a puppy. Entertainment; movies, amusement parks. Then it’s cars, especially if you have boys the insurance is sky high. Then college. Weddings. Grandkids. Kids, once born, are going to cost you in one way or another the rest of your lives. Hand me downs? The last 3 kids we had were girls. It was impossible to get them to wear used clothing, even from siblings. Same with video games and all of the other electronics that become obsolete seemingly overnight.
    I love all of my kids, but they were certainly very expensive.

    • Kristi June 17, 2015, 10:34 am

      There certainly are many costs outside of housing, food, and childcare, but those costs are all elective costs. I grew up wearing hand me downs and eating out was a rare treat. Visiting amusement parks is enjoyable if affordable for your income, but not all families have the opportunity to partake in those things. I have no doubt that there are many families that spend 250k and beyond on their kids, but spending that much is definitely still a choice.

      • Seth June 17, 2015, 5:09 pm

        It’s darned if you do and darned if you don’t Kristi. My parents were both lawyers, but my Mom did not work outside of the home and my Dad was addicted to poker games. Most of the time, we didn’t even have a TV or decent food. The house had no heat or air and this was in Central Florida. My dad never took us places that were not free.
        I tried to be my Dad’s opposite and gave the kids more than I could afford. I worked 2 jobs and was in the Army Reserves. (When I was a teenager, I was in the active duty Army for 2 years) I even paid for most of their college so that they could graduate debt free.
        Know what? 2 of the girls hate me because, in their opinions, I did not do enough for them. I haven’t seen one daughter or her kids in 6 years. I’ve never seen my 3 year old grand daughter.
        There doesn’t seem to be an answer no matter how much or little that you spend.

  • nicoleandmaggie June 17, 2015, 7:58 am

    There are definitely a lot of benefits to having a high income– the cost of high quality childcare being negligible compared to salary being one of them.

    • Kristi June 17, 2015, 10:40 am

      Quality childcare is an amenity that is definitely within reach for higher income brackets. Right now, it makes more sense for me to work from home and watch our kids. If my income exceeded the cost of monthly childcare for two kids, I might reevaluate that decision, but for now staying home is the best decision for our family.

  • Justin @ Root of Good June 17, 2015, 7:48 am

    That $250,000 figure is an average. Luckily we can all do much better than average! 🙂

    I know our three kids aren’t going to be $250,000 each by the time they get out of the house.

    • Kristi June 17, 2015, 10:36 am

      I agree, Justin! Average is just a number! Do what works best for your family, save as much as you can, and make smart financial decisions. Our kids won’t cost nearly that number either!

  • Mrs. Budgets @MrandMrsBudgets June 17, 2015, 5:34 am

    I love that you take a different stance when it comes to the cost of raising children. I don’t have children myself so I don’t feel entitled to tell one that does that I think their spending is out of control on their child. Like you pointed out often theses people have every excuse lined up. I think their are so many ways to cut back on expenses, college is obviously one of the major life costs. But I think it is important that a child takes a vested interest in the costs of college.

    • Kristi June 17, 2015, 10:22 am

      Even having kids, I would never dream of telling another family that their spending is out of control. It really all boils down to quality of life, and which things are the most important to you and your family.

      College is expensive, but if you start saving early, you will be able to give your kids a better start in life. I agree that children need to be active participants in saving for school as well.

  • John C @ Action Economics June 17, 2015, 4:51 am

    The cost of additional kids is non-linear though. For example, I have 4 kids and there is no way I spend $36,000 a year on them, even when adjusting for having a larger home with enough bedrooms for them. The opportunity cost of having a parent stay at home or work opposing shifts is the same regardless of how many total kids there are, so that expenses gets divided by the total number of kids too. Clothes and toys get passed down as well.

    • Kristi June 17, 2015, 5:37 am

      You’re absolutely right, John. They address the diminished cost percentage of each subsequent child on page 17 of the report: “[Those] with three or more children spend an average of 23 percent less on each child. As families have more children, the children can share a bedroom, clothing and toys can be handed down to younger children, food can be purchased in larger and more economical packages, and private schools or child care centers may offer sibling discounts.

  • Alan June 17, 2015, 4:27 am

    Wow, this is not even close. I’m paying $35k per year for a nanny and an extra $70k per year to live in a bigger apartment for my one year old twins. And this is all before factoring the cost of diapers, food, toys, music classes, etc.

    • Kristi June 17, 2015, 10:56 am

      It sounds like you are very well-situated, financially, Alan. You’re right that this number is off for your family, if your income falls into the highest tax bracket.

    • jim June 17, 2015, 12:11 pm

      You’ve got to realize the amount you’ree spending is at the very high end of typical. Clearly it doesn’t “cost” $105,000 a year plus to raise 2 kids as the vast majority of families don’t even make that much. I’m guessing you live in New York City or a similarly high cost area and make high 6 figure income.

  • Pennypincher June 17, 2015, 3:41 am

    I never kept track of how much it costs to get a kid to independence-oops! I can tell you this-it’s goes beyond 17 years. College, and all the unexpected costs of it, is a major expense. Backing up, high school can be a big expense too. Sports, extra curricular activities, etc. really add up. All this while you are moving closer to retirement.
    There are also ways you invest in your kid to move them closer to independence. Helping w/the cost of a car, insurance, so they can work/save for college. You may also be helping out with living expenses until they get on their own after college.
    Get your kid into a thinking mode like this when the time comes-sooner than later: “We need to save for your college education. You (your kid/s) need to save at least half of your earnings for college expenses.” They may not “get it” or appreciate it growing up, but they’ll certainly “get it” when the time comes to pay for it all. There’s no such thing as a free lunch in this country! Sorry to burst your bubble, kids!

    • Kristi June 17, 2015, 4:25 am

      I agree! It’s definitely important to get your kids started early with saving half of their earnings. They might hate it now, but they will appreciate the life skill as well as the money saved when they get to college and beyond.

      • Pennypincher June 17, 2015, 6:27 am

        Ps- In addition to having them save for college, have them start a Roth IRA w/earned income. Teach them to distinguish between wants and needs. Wants vs. Needs.

        • Kristi June 17, 2015, 6:51 am

          Great advice! Our daughter will be starting kindergarten this fall, so part of my home school program for her will be learning about money. She will also start getting a weekly allowance when she turns 5, so we will have her start her accounts at that point. It’s never too early to save for retirement!

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