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How much does it cost to raise a kid in the US?

What are the costs involved in having and raising a child? According to a study from 2015, raising two children in a middle-class family with two parents from birth to age 17 will cost around $233,610. The equivalent amount in 2022, when adjusted for inflation, is slightly over $280,000. Parental stress can increase as a result of having to shoulder the cost of raising children, particularly while those costs are on the rise. So, how much does it really cost to raise a kid in the US?

Of course, there are many things that determine just exactly how much you will spend while raising a child in the US. Depending on your income and where you live, the exact amount will change. For instance, families tend to spend more in the urban Northeast than in the metropolitan Midwest or rural areas. Government studies also reveal that lower-income families spend more on their children even though they make overall less money.

We will only feature the most basic needs every family should have in order to live, things such as shelter, health, education and food.

1. How much does education cost?

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Don’t be surprised to find out that young children cost more than even college at times, this is because it takes a lot more effort to care for toddlers and babies who need constant care. A significant part of an average family budget in the US goes to education and child care especially since nannies are also quite expensive. Studies show that this part of the budget represents an average of 16% of expenditures.  It can cost anything from $372 and $1,100 per month to attend college or $4,460 to $13,158 annually.

Private or public?

Parents have a choice of public or private schools for children from kindergarten through high school. According to the Education Data Initiative, private school tuition is on average $12,350 per year. This could increase to $16,050 in related expenses such as computers, books, back-to-school supplies, and more. An estimated $208,650 might be spent for a child’s private education from kindergarten through eighth grade. In most public schools, extracurricular activities are what you need to prepare for as they can be quite costly due to costs like participation fees, equipment and travel.

2. How much does housing cost?

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Up to one-third of all expenditures linked to children go toward housing, which is the biggest cost. However, measuring is challenging. Getting a bigger home with more bedrooms, kitchens, and living areas may be necessary if you have kids. Moving, however, can sometimes include leaving the city for the suburbs, where prices are typically lower. 

Most parents would obviously wish to have a white picket fence and a swimming pool but is that really the reality? Housing expenses account for 29% of the total cost of raising a child, according to a USDA analysis. Depending on your location and the sort of house you select, the cost of housing varies greatly.

3. How much does food cost?

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Toddlers may be easy to feed especially when you have to keep pestering them to eat, but have you seen how teenagers eat? Teenagers are probably the reason why food is the second-largest cost, accounting for 18% of the total price of raising a child.

Food costs have risen over time, with prices for food consumed at home rising by 12.1% and those consumed away from home rising by 7.7% between June 2021 and July 2022. The USDA anticipates increased expenses in 2022, with hikes of up to 10.0% and 7.5%, respectively.

Foods like meat, processed food and veggies plus bakery products have all gone up in the last year. All of these expenses have been severely impacted by inflation.

4. How much does clothing cost?

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Properly dressing a child is one of a parent’s duties. For their children, American parents can choose from a wide range of options, including simple clothing and luxury clothing. The type of clothing and the amount of money spent on each child often rely on a few things.

The amount of money parents spend on each child’s clothes depends on a number of factors, including the size of the household, the family’s income, the child’s age, and the necessity for special clothing for extracurricular activities.

According to a USDA survey, families can spend up to $1,280 on apparel annually, particularly if children are in their tweens or teenagers. The amount that goes into it amounts to about 6% of the entire expense of raising a child. Your budget will determine how much you spend annually on clothes for your kid. 

5. Health insurance

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Approximately 9% of all expenses associated with children go toward health care, while wealthier families typically pay substantially more. These expenses include prescription medicines, higher insurance premiums, and uninsured medical, dental, and mental health services.

For a 40-year-old couple, the standard Silver plan’s average monthly premium in 2022 will be $1,052. An average Silver plan would cost $1,362 per month for a 40-year-old couple with one small child, and $1,9831 per month for a family of five.

6. Life Insurance

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Families must have life insurance, especially because losing an income would be difficult to replace. Even for people who are diligent with their finances, funeral fees, living costs, educational expenditures, and other charges can quickly build up.

Because of this, it’s also critical to have a plan in place in the event that you or your partner can no longer provide for your children financially. Some parents rely on life insurance to make sure that, in the event of their passing, their family might continue living the way they do and have some financial security.

Life insurance is often the most affordable when you are young and healthy, particularly if you go for a term rather than permanent life insurance. The kind of life insurance you get, the amount of coverage, your age, your health, and the underwriting guidelines used by the firm are just a few factors that affect the cost of your policy. Finding the greatest fit for your needs and budget will be aided by comparing prices from several life insurance providers as each one has its unique method of calculating policy costs.

7. Transportation

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When children are between the ages of 15 and 17, the cost of transportation—including car payments, gas, insurance, airline tickets, and public transit—peaks. Of course, that is the time when many teenagers begin driving. However, according to USDA data, it also reflects an increase in participation in activities performed away from home.

According to data, Americans spend more on transportation than individuals in Europe, at 13% of household spending. Although the average American spends about 13% of household income on transportation, this cost varies depending on income. As people go up the income scale, they tend to spend less on transportation and lower percentages of their income on it. The highest percentage of expenses falls on those with the lowest income.

The lack of a transportation system has the most negative impact on the most vulnerable. The average annual transportation expense for people making about $30,000 was 22%, compared to 17% for the next group. Personal vehicles are not inexpensive and are not subsidised. People in American cities are compelled to utilise their own vehicles to get around because there are no other transit options available. Low-income individuals are consequently left with few options.

For many people, having children is rewarding and fulfilling. But in today’s world, it’s also very expensive. As a parent, you’ll probably spend close to $250,000 or more from infancy to age 18. But even on a tight budget, you can be well-prepared to raise your child in comfort by mentally preparing and putting financial planning strategies into practice.