Choosing to raise a child is a major decision. That’s because it can have a tremendous impact on your finances. Estimates suggest that the average family of four with two children spends around $13,000 per year raising the child, for a total cost of around $233,000 across their lifetime (until they become independent).
But which factors are going into that cost? In this post, we find out.
Childbirth
Childbirth is a major component of the cost of raising a child. According to data collected from health insurers, the cost of paid maternity care averages around $4,500, after deductibles. However, if families do not have insurance cover, then the costs skyrocket to more than $30,000.
Housing Costs
Housing costs are a major on-running cost that explains why having children is so expensive. When you are just a couple, you can quite happily live in a studio flat. However, the moment children come along, everything changes, and that kind of arrangement is no longer acceptable.
Data suggests that the cost of additional housing is around $3,750 per year for each additional child that you have. This cost takes into account the price of paying for extra space as well as the additional maintenance and depreciation caused by children.
Furniture Costs
Then there are furniture costs. However, these can vary considerably, depending on where you go. Foryourlittleone says that furniture can be affordable and high-quality at the same time. This way, parents can avoid having to buy new items to replace old ones that have worn out every time they have another child.
Transportation Costs
Transporting your child around also entails additional costs. Children are expensive to move.
There are two main reasons for this. First, you often need a larger vehicle – and these tend to be more expensive than their smaller counterparts. You require extra room to put car seats and transport kids’ luggage around.
Second, you regularly wind up driving further. It’s not just the daily commute, but also taking kids to school, friends’ houses and clubs.
Childcare Costs
Working parents also have to factor in childcare costs. Childcare can be expensive – and not something that parents can always afford. Estimates suggest that the average family will spend around $37,000 in total on childcare – a substantial sum. In some cases, tax breaks are available, but they are small in comparison to the total cost.
Food Costs
Food costs for children can be high. In some cases, they comprise around 18 percent of total household expenditure. Even thrifty plans cost more than $100 a month, or $1,200 per year. More likely, you will spend around $240 per month on food for your kids, meaning that if you have three children, your monthly food expenses could easily exceed $500.
Raising a child is costly, but there are also opportunities to save. It just depends on the kind of lifestyle that you want to live.
