Children are priceless gifts. But as with everything good. They come with their responsibilities. Whether you are an expectant mother or planning on starting a family, you’ll eventually be faced with one question: How much does it cost to raise a child to 18?
According to the US. Department of Agriculture, for a child who was born in 2015, it will cost a parent an average of $233,610 to raise the child to age 18.
- Food: 18%
- Housing: 29% on
- Transportation 15%
- Health care 9%
- Clothing 6%
- Child care and education 16%
- Miscellaneous 7%
- A middle income family will spend on average $12,980 annually.
- They’ll spend 233,610 (plus an additional $50,960, when inflation is factored in) to raise a child to age 18. This is spent on food, accommodation and basic necessities, excluding education.
HOW MUCH DOES IT COST TO RAISE A CHILD MONTHLY
If it costs $233.610 to raise a child to 18,
Then annually you will spend
233,610 / 18 = 12,978.33
Your monthly expense therefore will be
12,978.33 / 12 = 1,081.53
So how much does it cost to raise a child monthly?
Short answer: $1081.53
This is an estimate. It was done by the U.S Department of Agriculture. And they probably made use of U.S data, so variations should be expected if you’re from other regions. And of course, if you have more than one child, the cost of raising kids will skyrocket.
But how much more?
How do you factor in the expenses that come with twins or triplets?
Do you have them all at once or one at a time?
There are no hard and fast rules when it comes to comparing costs between children.
Check out this handy infographic with everything you need to know about raising kids.
There used to be a “cost of raising a child calculator” that can help you do a rough estimate of how much it costs to raise a child. Well. that is no more. But you can sign up to the USDA My Plate email subscription for updates.
The 18th birthday is a milestone coming in a distant future to most parents. That was what my parents thought when they gave birth to me a few years ago. Don’t ask my age. I’m now way over 18.
Same might be true in your case. So don’t get stuck in that procrastination quagmire. Your child will grow faster than you think. And his/her 18th birthday will come sooner than you expect.
Even if you’re mentally prepared though, the costs associated with raising a child can still come as a surprise to even the most prepared of parents.
The bulk of the expenses are spent on housing and naturally food follows closely behind. As more children are brought to birth, more space is needed to accommodate them and so larger apartments are sought.
Children need good nutrition to live, and grow both physically and mentally.
If you’re currently pregnant or about to have a baby, then you might want to plan for this expense as early as possible. If you plan your pregnancy sometimes in the future, then cash this jackpot. Save well and comfortably the pressure will be less when the pregnancy and eventual birth comes along.
Saving for your child’s expenses is something that can be done at any stage of your life, but it is recommended that you start creating a savings plan during your pregnancy and set aside money for their education and other future needs.
This is a recommendation. You on the other hand can choose to go one step further. Are you newly wed? You probably planned on getting a baby after “2 years of honey-moon.” But do you see the opportunity, you have 2 extra years of budgeting, saving and investing in preparation for your unborn baby.
HOW MUCH MONTHLY INCOME TO RAISE A CHILD TO 18
In the section above, we calculated that you’ll spend $1081.53 monthly in raising a child. Of course you’ll have other needs to care for.
But let’s go with the extreme assumption that you only have your child to care for. And still go with the other assumption that your first pregnancy is not a twin or more. These are unlikely probabilities.
But if you’re to stick with this unlikely probability, how much should you have in income?
Let’s go with the balanced budgeting rule (no pun intended) of 50-30-20. This rule says you should budget 30% of your income to care for your needs. If you spend a minimum of $1082 per month on child rearing. You’ll need the barest minimum of $3,686 in monthly income.
Of course this is not practical because we didn’t factor other necessities of life. Such as the needs of the parents.
The summary of this analysis is to bring up the fact that child rearing is expensive. To adequately care for a child, you should have way above our $3,686 estimated income.
FINANCIAL PLANNING WHEN RAISING A CHILD
You might not have complete control over income. But you do have control over how you spend, budget and invest in what you already have.
Planning well detailed investment strategies is a key to raising the funds needed to raise a child to age 18 when he legally becomes an adult. Here are some investment options available to you:
One way to do this is through your investment accounts. Many plans, like those offered by TD Ameritrade, allow you to make regular deposits into an account that can be used specifically for this purpose.
529 College Savings Account
Another option is to open a 529 college savings account through your state. These special investment accounts are controlled by you and grow free from federal taxes; when used for higher education purposes these accounts also don’t come with an income-based tax on distributions.
It is said that child rearing is a 20-year project. Like every project, you need to count the cost, get needed materials, save needed funds before embarking on the project.
If you carefully follow proven money enhancing techniques. You’ll have enough time and effort to spare to care for the child’s other needs.