The cost of raising a child: priceless. Well, no, there is a price-tag. The U.S. Department of Agriculture (USDA) released its annual report, Expenditures on Children by Families, which shows that a middle-income family with a child born in 2012 can expect to spend about $241,080 ($301,970 adjusted for projected inflation*) for food, shelter, and other necessities associated with child-rearing expenses over the next 17 years.
There was an overall 2.6 percent increase from 2011. Expenses for child care, education, health care, and clothing saw the largest percentage increases related to child rearing from 2011. However, there were smaller increases in housing, food, transportation, and miscellaneous expenses during the same period. The 2.6 percent increase from 2011 to 2012 is also lower than the average annual increase of 4.4 percent since 1960.
The report notes geographic variations in the cost of raising a child, with expenses the highest for families living in the urban Northeast - the 9-state northeast region, which includes Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont -followed by the urban West and urban Midwest. Families living in the urban South and rural areas have the lowest child-rearing expenses.
The report, issued annually, is based on data from the Federal government's Consumer Expenditure Survey, the most comprehensive source of information available on household expenditures. There is also an interactive web version of the report where individuals can easily enter the number and ages of their children to obtain an estimate of costs through age 17.
Housing accounted for the largest share of total child-rearing expenses. For the middle and highest income groups (for households with the expense), child care and education was the second largest expenditure on a child, accounting for 18 and 23 percent of child-rearing expenses, respectively. For the lowest income group, child care and education accounted for 14 percent of total child-rearing expenses (again, for households with the expense). For lower income families, child care may be provided by relatives or friends at no cost due to affordability issues, the report pointed out.
Expenses per child decrease as a family has more children. Families with three or more children spend 22 percent less per child than families with two children. As families have more children, the children can share bedrooms, clothing and toys can be handed down to younger children, food can be purchased in larger and more economical quantities, and private schools or child care centers may offer sibling discounts.
Among the largest potential costs in child-rearing is the cost of a college education, which was not included in this study, which only included direct parent expenses through age 17. The College Board estimated that in 2012-2013, annual average (enrollment-weighted) tuition and fees were $8,655 at 4-year public colleges (in-State tuition) and $29,056 at 4-year private (non-profit) colleges; annual room and board was $9,205 at 4-year public colleges and $10,462 at 4-year private colleges. For 2-year colleges in 2012-2013, annual average tuition and fees were $3,131 at public colleges. These college costs may be offset by financial aid.
The report concluded, as only a government report could, by stating: “The direct and indirect costs of raising children are considerable, absorbing a major share of the household budget. On the other hand, these costs may be outweighed by the benefits of children.”