Parents will spend, on average, more than $200,000 raising a child by the time their teen graduates from high school. Those couples earning more than $75,000 a year will shell out over $300,000. As staggering as those numbers are, I'm on track to fritter away far more. And realistically, I see no way to cut down my expenses.
According to a recent study by IBISWorld, a Los Angeles based market research firm, a typical family spends $12,658 a year raising a child. Those who live in the west spend about 8 percent more than the average and those residing in eastern regions, including New England, shell out about 4 percent more.
Seeing these figures is helpful for any couple considering starting a family. Once would-be parents get an idea of just how much it will cost them to have a baby (or two) they can start playing around with their budgets and prepare for the expense. Some families may figure out that they can't afford to have one parent stay home with the kids. Others might realize that things won't be quite as tight as they fear.
My one word of caution for couples is that they need to realize that they could end up spending quite more than the national average. If you live in an area of the country with a fairly high cost of living -- think major metropolitan areas -- your costs could be at least twice as high.
As I mentioned above, I end up spending significantly more than the typical family. The main reason is because I live in New York City where everything seems to cost a fortune. While I try to live as frugally as I can, there is one expense I can't trim: Child care.
I placed my daughter in day care when she was 18 months old, in part to save money. Having her in group care is significantly cheaper than hiring a babysitter. While I tried to find a licensed center that was on the cheaper side, I found most of the reputable ones all charge about the same amount, roughly $2,000 a month. (Add a second child into the mix and the price tag doubles.) So my child care alone costs more than the average family spends raising a child for an entire year.
The only way I can figure out to spend less money on child care (and still live in New York) is to watch my daughter myself -- which I would love to do -- but then I wouldn't be able to work and earn money. And the loss of income is no temporary situation. Even once my daughter is in school and I could return to the work force, I would likely take a large pay cut and may never return to my full earning potential if I hadn't taken a few years off to raise a family.
So what's a family to do? I would never suggest a couple not have children because of the cost. I sincerely believe that families can make their situations work, no matter how much they earn. But you do need to have some idea of what your expenses will be so you can plan accordingly. For some parents that may mean moving to a cheaper part of the country or require living in a smaller home so you don't spend as much on housing. And finally, some couples may even decide to have fewer kids than they had originally hoped.
The good news is that confronting the costs and adjusting your budget accordingly is half the battle. I find it's the couples who go into parenthood completely unprepared who struggle the most, no matter what they earn.