When contemplating major life expenses, prospective parents often turn their attention to the anticipated costs of college education. With an average annual price tag of nearly $30,000, college expenses loom large on the financial horizon. However, according to Parents.com, research suggests that parents across certain regions should brace themselves for an annual financial commitment equal to or exceeding this amount for various unavoidable child-related expenses.
According to a comprehensive future inflation-adjusted analysis by the Brookings Institution, the average middle-class family raising two children born between 2015 and 2032 can expect to spend a staggering $310,605 until the age of 17, averaging approximately $17,000 per year. For those without parental responsibilities, this presents an opportunity to allocate funds toward personal savings, investments, or indulgences.
Geography and income levels significantly influence these costs, as outlined in the Brookings report. Parents residing in the Northeast shoulder the highest financial burden, while those in the Midwest and rural areas experience comparatively lower expenditures. Income disparities also play a pivotal role, with higher-earning families contributing more in absolute terms, while lower-income households allocate a greater percentage of their income to child-rearing.
To provide a nuanced perspective, The Washington Post developed a calculator based on Brookings data, offering parents the ability to estimate the total cost of raising a child to age 17 relative to their annual income. The results demonstrate a spectrum of financial commitments, ranging from $120,300 for households earning less than $25,000 annually to $376,500 for those earning $175,000 or more.
Let’s delve into some of the most substantial expenses parents face, which childless individuals can blissfully sidestep.
1. Prenatal Care
Kelly Palmer, founder of The Wealthy Parent and a chartered financial analyst specializing in assisting parents and young families, highlights the commencement of financial responsibilities from the moment of childbirth. “Becoming a parent is an experience unlike any other, but it’s also an experience that comes with a price tag,” she notes. According to WebMD, prenatal care, including medical costs and prenatal vitamins, amounts to an average expense of $2,000.
2. Diapers
The high cost of diapers becomes evident even before the new mother leaves the hospital. Cross River Therapy reports that the average parent spends $70 per month or $840 annually, totaling $1,680 for the 6,000 diapers an average baby consumes in the first two years of life.
3. Formula and Baby Food
Parents typically allocate $70-$250 per month on formula and baby food during the first one or two years, with costs varying based on factors such as brand preference and breastfeeding duration, as reported by VeryWellFamily.
4. Necessary One-Time Purchases
Beyond ongoing costs, parents face additional one-time expenses that elude their childless counterparts. From medical bills to late-night delivery orders, the financial commitments abound. Consumer Reports and VeryWellFamily cite various average price ranges for common one-time purchases, including car seats ($80-$300), cribs ($150-$400), bassinets ($80-$200), baby chairs or infant swings ($75-$100), and strollers (starting at $200).
5. Child Care
The substantial costs of child care pose a financial challenge that non-parents avoid. “Whether it’s daycare or a nanny, childcare will have a large impact on your budget,” cautions Kelly Palmer. According to Care.com’s 2023 Cost of Care Report, 67% of surveyed parents spend 20% or more of their annual household income on child care. A staggering 79% anticipate child care costs exceeding $9,600 per child annually, surpassing the price of in-state college tuition, according to Kendall Meade, certified financial planner at SoFi.
For many parents, the expense of childcare stands out as a defining factor in their lifestyle choices, often requiring tradeoffs in travel, retirement savings, or other aspects of their financial lives. As Palmer emphasizes, “When it comes to paying for childcare, this is when many parents have to make tradeoffs in their own financial lives — whether it’s dialing back on travel or retirement savings, something has to give.”
