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Cost of raising a child -- how do you stack up?

June 15th, 2012 at 12:27 pm

The USDA released their interesting study of what people spend on their kids. Of course all the news articles about it have headlines bleating "It costs $235,000 to raise a child in the U.S.!!!" The study itself is much less alarmist. They're talking what people SPEND, not what a basic, good child-raising would cost.

So, I had some fun playing with numbers to see how I stack up. You can play too! Here's the study: http://www.cnpp.usda.gov/Publications/CRC/crc2011.pdf. I'm basing my calculations on page 29, the line for a year of raising a 0- to 2-year-old, with before-tax income of more than $102,590, in the urban Midwest.

Their estimates:
Total expense $20,070 (so $40,140 with 2 kids age 0-2)
Housing $6,850
Food $1,830
Transportation $2,500
Clothing $1,030
Health care $940
Child care and education $5,080
Miscellaneous $1,840

My estimates (with some explanation):

Housing $120 (Most of their estimate comes from upsizing to a home with more bedrooms, which we didn't do. They include furniture, and we have spent a bit on a crib, shelves, dresser over the years, though most has been borrowed/hand-me-down/used. This is my estimate per year per kid.)

Food $540 (SL doesn't take any food except vitamin D supplements, and I suppose a few extra calories for AS while nursing. AA doesn't eat much more than we'd cook before, but she does drink milk and eat yogurt and string cheese and a few other things we wouldn't have bought before. So I estimated $85 per month for her and $5 per month for SL [that will clearly go up when AS needs to transition her from breastfeeding to formula].

Transportation $888 (I included the cost of the stroller $1100 minus the profit we made from our hand-me-down stroller $400, so I included $700. After some back-and-forth, I also included the Hourcar, which we spend about $90 per month on. Although we might have eventually gotten a carshare anyway, having kids definitely pushed us toward that decision. We don't actually use it to transport them much, but we use it for convenience and speed partly because kids add more work and take more time out of your day.)

Clothing $816 (Though we hardly ever buy clothes for the kids, we use a cloth diaper service [$91 per month] and buy compostable diapers for when AA is at daycare [about $45 per month]. That's 100% of this cost; any other bits of clothing we buy like sunglasses, socks and the occasional pair of sneakers are truly negligible when divided over 2 kids over a year.)

Health care $750 (I'm only counting the healthcare deductible, which is pretax so even less than this. They have the occasional co-pay or bottle of medicine needed, but both kids have been insanely healthy so far, and so there's really not much else so far.)

Child care and education $6900 (Here's the first cost we have that's greater than the average. We have a REALLY good price for where we live in the city, but I suppose they average it in with the metro area and get a lower average; or maybe people don't have full-time daycare like we do.)

Miscellaneous $1,056 (My estimate is a bit lower than the USDA's. I counted $100 each for Xmas and for each of their b-days; $8 per month each for miscellaneous gifts & supplies; and $63 per month to cover the additional cost of travel [AA needs her own seat now when we fly]. These are just estimates [except the Xmas and b-day gifts].)

Total expense $10,254 (so $20,508 with 2 kids age 0-2)

So, we spend a bit more than half the average in our region for our income level. Not bad! I'll be interested to see if we track the averages at this level the whole time through having kids, as different expenses come and go.

6 Responses to “Cost of raising a child -- how do you stack up?”

  1. MonkeyMama Says:

    Interesting.

    Total Expenses $13000
    Housing $4670
    Food $2150
    Transport $1960
    Clothing $720
    Healthcare $870
    Education/Daycare $1520
    Misc. $1240
    (Per link, For reference - same total expenses for kids 0-2. HA! Because diapers, formula and daycare doesn't cost a small FORTUNE?)

    Housing - that is hard for me to quantify. Though we bought a bigger house for raising children, the difference in cost for extra square footage is negligible (maybe an extra 10%?). It certainly does not cost another $5,000 per year to house kids, BUT could easily cost a small fortune if we lived in neighboring cities. $2k might be fair for mortgage interest, property taxes, insurance, extra maintenance, etc. Utility costs are lower than when we had a smaller home, so hard to say on that stuff. To be fair, we downsized cost when we moved up from our condo, so I could easily say our extra square footage cost $0. Maybe less than $0!

    Food - my kids eat a TON. But on the flip side we do well with "kids eat free" and buffets, when we eat out. School lunch is very reasonably cost, etc. If I say the kids our half our food expense, I'd guess closer to $3k per year. Maybe $3500.

    Transport - I can't say we spend any more or less on transport, on average (than pre-kids). Kids walk to school.

    Clothing - certainly don't spend much on clothing.

    Healthcare - try an extra $800 per MONTH to add the kids.

    Education - $0 at their current age, as we take advantage of public school. No daycare with spouse at home (& they are quickly outgrowing daycare ages anyway).

    Misc. - we don't spend much on miscellaneous, but we also don't do a lot of air travel with the kids because it is inordinately more expensive to pay for 4 versus 2. Just to say I can see where the misc. adds up, if it includes vacation, etc.

  2. MonkeyMama Says:

    To sum up, I think age 5-15 is kind of a honeymoon period between baby/diaper/daycare days and new driver/college days. Aside from food, our kids really don't cost much. But healthcare will always be insane for anyone self-employed or working for small business (us). I might have said a million times that the lost wages (or alternative of daycare) and the healthcare is the expensive part of raising kids. That has cost us many tens of thousands of dollars every year since having kids. For us. The *stuff* (homes, cars, clothing, misc.) isn't what we find to be expensive. Obviously we have made some very calculated choices on housing and education to keep those costs down. They could easily be very high too.

  3. MonkeyMama Says:

    I think this study includes a lot of people who don't pay fair market rates for full-time daycare. As many people I know rely on family, etc. Or they work opposite shifts to avoid the costs. Makes sense - who could afford the average $12,000 it would really cost around here?

    I also suppose since I have 2 kids I need to double all the USDA numbers. Which puts us far below average for everything but healthcare. Even well under on food!

  4. ceejay74 Says:

    Yup, when I double our daycare we're at $13,800. (Or we will when SL goes to daycare in August. Currently, if you want to look at it this way, it's costing us more in lost wages.)

  5. Monkey Mama Says:

    That reminds me that a lot of people utilize "nannies" to keep these costs downs - probably also factored into the USDA average. (Not the traditional nanny of the wealthy, but basically a college student to work for minimum wage, as needed, or someone who will nanny in exchange for room or board. All of our money conscious friends have ended up going that route - it's just much more flexible and affordable. Around here. That $12k quote I mentioned was just for one kid).


  6. Looking Forward Says:

    Oohhh.. Nanny - I want one! Wink

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