Raising a child from birth to age 18 now costs an average of $237,482, per BI.
Millions of Americans find it challenging to save money, leaving them financially strained as they approach a significant life event: having a child. Raising a child from birth to age 18 now costs an average of $237,482, according to LendingTree. This cost has been steadily increasing, with the average annual cost of child-rearing reaching $21,681 in 2021, up nearly 20% from 2016.
These figures cover only the essential expenses of raising a child, including food, housing, child care, clothing, transportation, and health insurance, along with the impact of tax benefits like the Child Tax Credit. They do not include additional activities such as sports or after-school classes, nor do they consider the escalating costs of higher education.
Child care is the most substantial financial component, averaging $11,752 per year. This expense is significant enough that some parents choose to leave the workforce because their income does not cover the cost of child care.
The cost of raising a child varies significantly by location. For example, parents in Washington, D.C., face child care costs exceeding $25,000 per year, while in Mississippi, the average is $15,555. Hawaii is the most expensive state, with annual costs reaching $30,506, while Mississippi is the most affordable.
For those planning to start a family, taking proactive financial steps can help mitigate the impact of child-rearing costs. Beginning to save early and utilizing high-yield savings accounts can help. Additionally, researching local resources such as government programs or nonprofit organizations that offer financial assistance can be beneficial. Some states, like Vermont, provide pre-kindergarten and child care aid.
Once a child is enrolled in public school, parents can redirect some of their child care budget toward saving for college, such as through a 529 plan. Making small adjustments to the budget, like setting aside a portion of each paycheck for a college fund, can make a significant difference in the long run.
