Do Kids Really Cost $500,000? Raising a Child on a Budget

Kid costs

by Chris Tecmire

What would you do with an extra $500,000?

I think I would probably take a couple years off and eat my way around the world.  I love all kinds of food, so my wife and I would tour Asia, Europe, South America, and every where in between trying any and everything edible until we were both 300 lbs.  Then, we’d come back and use the remainder for liposuction.

Although…maybe I would build a 1,000 square foot luxury tree house in Costa Rica with all the amenities.  I would sit on the porch of the tree house, overlook my new 100 acre jungle property, and listen to the rushing waterfalls and howler monkeys.

I could go on and on.  An extra $500,000 would be a lot of fun, but many people choose a very different path than what I’ve described above.

They have a kid.

According to a number of sources, a single child can cost up to $500,000 to raise from birth to age 18.  The cost varies greatly depending on a number of factors such as where you live, how much money you make, and whether you plan to pay for college or not.  However, apparently, even parents in rural areas that make less than $60,000 can expect to dole out almost $200,000 per child - not including college!

Check out this calculator to see what you should expect.

Are you thinking about trading little Joey in for a new beach house yet?

But, wait, that’s just one child.  I have two.  What about those families who have 3 or 4 (or more)?  That’s a lot of dough!

Why Such A Large Figure?

Let’s take a closer look at where all this money is going.

The figures change depending on your region, income, and situation, so this may not be your exact scenario, but it may give you at least a good idea of where the average parent’s cash is going.  The $500,000 figure is based on a couple making 6 figures and living in a city or suburb.  It drops considerably for those of us making $60,000 or less per year.  A two parent household living in a city or suburb in the Midwest, making under $60,000, will pay the following amount for each child.  All costs are in 2012 dollars.

Total Cost – $258,244

Public College – $86,824 (34% of total)

It’s sad that the “more affordable choice” between private college and public college still costs $86,824!  The private school number was $30,000 more.

I probably don’t have to tell you, but the cost of college has increased 1,120% since 1980!  That’s 4 times faster than the Consumers Price Index.  It bothers me how difficult it’s becoming to get a good education, but that’s a topic for another time.  What about those of us who are raising a child on a budget?  What are our options?

What can we do?

  • Little Joey could go to a Community College for a couple years to get most of his general studies out of the way before diving into his major.  Community colleges are generally less than half the cost for tuition and there’s usually one just around the corner from where you live, which negates room and board fees.  Just make sure that you’ve checked prior to enrolling that ALL the credits are going to transfer.
  • Little Joey could pay for a portion (or even all) of his college himself.  My parents made it clear to me as college crept closer that they would help me, but were not going to hand me a blank check.  It forced me to look more closely at grants and work harder for scholarships.  It also taught me how to juggle school and work, which better prepared me for dealing with the responsibilities that exist after college.  There are certainly arguments to be made on both sides of this topic, but my point is that it’s not the end of the world if your budget won’t allow for a full-ride.

Housing – $52,560 (20%)

The argument here is that kids need space, so instead of buying a cheap one or two bedroom house, you now need a 3 or 4 bedroom house with a pool, a large yard, and a park nearby.  So, the price difference in residences, along with the extra money spent on furniture, appliances, and utilities is what creates that $50,000+ figure that you see.

Another cost to consider is that parents tend to pick homes by the school system, not just the house.  Unfortunately, since all the parents are thinking the same thing, demand affects the cost of the homes in the good school districts to rise and your child becomes expensive pretty quick.

Ultimately, this is a difficult category to comment on though because it varies so greatly from region to region and neighborhood to neighborhood.  The $52,560 figure is supposed to be representative of the Midwest couple living in the city or suburb, but Chicago real estate is vastly different from my hometown.  So, while I know that’s way too high for my situation, you might be thinking it’s actually a little light.

What can we do?

All I can say is…remember, this is only one child.  One kid doesn’t necessarily mean that you have to move to a new home or even add onto your existing home. 

We adapt. 

Growing up we moved often.  I come from a family of 4 (mom, dad, and younger brother) and I have lived everywhere from a 3 bedroom home with two living rooms and a large backyard (a few years), to a single-wide mobile home (4 years), to a motel (for a month or so).  Looking back, I don’t ever remember a time when I felt cramped. 

I mean, sure, it would be nice to have it all.  Why do you think so many people watch HGTV?  But, don’t mortgage your future to add a 2nd bathroom.  The stress of the debt and financial burden far outweighs the stress of sharing a bathroom. 

Food – $30,660 (12%)

According to, the average cost per year starts out around $1,200 for the first 5 years and then jumps up to $2000+ once they hit 10 or 11.  Apparently, by the time they’ve graduated high school, over $30,000 of grub has disappeared from your fridge and pantry.

What can we do?

If you’ve been reading Simple Family Finance for long, you know that and feel very strongly that it’s one of the very best ways to cut your family expenses.  And, no, it has nothing to do with Ramen, spaghetti in a can, or processed foods of any kind.  You can eat healthy, filling meals for much less than this.

If I had to guess, I would estimate that each of our children will end up costing us about half that amount.  And that’s being conservative, knowing that we have two very hungry boys.

There is far too much information to discuss here, so search the archives at SFF here, and take a look at for cheap and delicious recipes and ideas.

Childcare & Education – $27,060 (10%)

This category is going to vary wildly from person to person and is dependent mostly on circumstances and individual choices.  Some will spend more and some will spend next to nothing.  In fact, if you don’t need daycare and send your child to a public school, you’ll save nearly all of this.

In 2011, the average cost of sending an infant to daycare full-time was between $5,000 and $15,000 per year depending on your location.  If you tack on a private school education on top of that, you’re probably looking at a much larger number.

Transportation – $23,910 (9%)

Transportation includes the extra money that you’ll spend buying vehicles, along with repairs, maintenance, insurance, and gas.  That’s about $1,300 per year.

What can we do?

How much you spend on transportation is partially dependent on the distance you live from the important destinations in your kid’s life.  However, a big part of it is also your views on vehicles in general.  Similar to a house, remember that you don’t need to run out and buy a mini-van just because you have one child.  Your more gas-efficient sedan is probably just fine for now.  My wife and I are still making our 20 year old Grand Marquis (4 door sedan) work with 2 little dudes.  The endless supply of diaper bags, pack-n-plays, strollers, and other kid junk, certainly makes it more difficult to pack the car for a long weekend, but it is possible.  We do it all the time.

Healthcare – $13,830 (5%)

If there’s any category that actually seems a bit low, it’s this one.  Maybe it’s because there aren’t a lot of good ways to cut corners on the cost of medical care in the U.S., but I wouldn’t be shocked if we hit this number with either of our kids.  It only takes a couple of “Watch this, Dad!” moments gone bad to rack up big medical bills.

Plus, even as frugal as I am and as much as I like to analyze every expense to see where I can save a buck, when my child needs medical attention, I assure you I’m not thinking about how much it costs.  Well, when I get the bill I think a few of those thoughts, but then it’s too late.  As parents, we’ll do anything to make sure our children are healthy.

By the way, I don’t think this includes the cost of actually delivering the baby in the hospital, so add a couple million dollars to the total.

What can we do?

  • Pray.
  • Preventive medicine through diet and exercise is also becoming more and more important for our children as diabetes and obesity seem to climb every year.  Limiting the sugary and highly processed foods that are commonplace for kids and teenagers would be a good start.

Miscellaneous – $12,060 (5%)

Apparently, “Miscellaneous” is made up of personal care items, reading materials, and entertainment.

What can we do?

  • There’s a fine line between being too stingy and spoiling your kids.  Where that line stands is for you to decide.  But, love is not measured by your wallet, so get creative.  Maybe check out Pinterest if you need some help coming up with ideas on how to entertain your kids frugally.
  • Show patience when it comes to Tommy’s new passion.  In other words, don’t buy a new saxaphone just because he says he wants one.  Borrow one or find a cheap rental until you know he’s going to stick with it.  Encourage him to continue, but let a little time pass.  I once begged my parents for a keyboard for Christmas.  They doled out the cash, most likely seeing visions of Beethoven or Bach.  Instead, I excitedly took it up to my room Christmas morning, played around on it for an hour or two, and then set it in my closet, never to be heard from again.
  • Teach your kids about money.  Allow them to understand a budget and then let them choose their activities based on that budget.  It may help them to see that your bank account is a finite resource.  Plus, they’ll be better for it once they get out on their own and have to start making critical decisions about their own finances.

Clothing – $11,340 (4%)

That’s an average of $630 per year for each child.  Let me just apologize to my children real quick.  Boys…I’m sorry.  You won’t even come within spitting distance of this number.

However, it does include diapers, so the first couple years are probably more accurate for my family.

What can we do?

  • Two words…Naked Tuesdays.
  • Borrow, beg, and steal.  On second thought, just borrow and beg.  Borrow from friends and people in your community.  Create a community of parents that is willing to share their kid’s clothing – especially when they grow out of them every couple months.
  • Buy everything second hand until your kids care.  One of these days, darling little Sarah is going to grow up and begin to care very much about what people think of her clothing.  But, until then, buy nearly everything second hand.  If your kids don’t care, why do you?
  • Once your children become teenagers and “need” name-brand clothing, create a dollar limit for what you’ll buy.  When I was 13, I told my dad that I needed a new pair of Reebok Pumps.  He told me that I needed a job.  So, I got a paper route, spent $120 on my new shoes, and accidentally ruined them a few months later.

Is It Worth It?

Most days :)

What?  You expected me to say, “Of course it is!”?

Ok, ok…Of course it is!  My favorite moment of the day is when my 2 year old son runs up to me after work and screams, “Hi Dad-dee!”  But, there are a dozen other times throughout the day that make me swell up with pride, nearly break into tears, or laugh uncontrollably.  Not to mention, the entertainment value of little kids is unmatched.

Just a second…

Sorry, I was going to keep talking about the joys of parenthood, but I just heard a large crash and two kids crying.  I guess I need to wrap things up.

Maybe that beach house sounds pretty good after all :)

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{ 6 comments… read them below or add one }

gg April 22, 2014 at 12:13 pm

Oh, my darling grandson – you’re the best – I am sooooo proud of you. Thankfully, you took after your mom and not your grandmama (altho’ I do love the eating round the world and the treehouse) and, of necessity, I have learned to be a bit more practical and frugal (but not by nature) Miss you all and love you so much – keep up the great work!


Dave Wisniewski April 22, 2014 at 12:16 pm

Welcome back! Always enjoy and appreciate your write-ups!


Mom-in-law April 22, 2014 at 6:52 pm

So fun and informative to read your blog, Chris! Makes me reflect on all the decisions we made…and those we were moving too fast to even think about! Point is…if you’re still in the raising children phase…you provide some great resources and topics to discuss as a couple. Great job :)


Janeen October 3, 2014 at 11:42 am

Great article. I thought those figures were pretty wild too. I’ve got 5 kiddos and we’ll spend no where near those numbers. Just another case of where not following the culture’s ideals might actually be better for a family. I’d hate to think that anyone foregoes having children (or multiple children) just because they read the figures in this study.


JD November 14, 2014 at 7:54 am

We raised three children and I most definitely know we did not spend that amount of money. We never were high income wage earners and managed to live simple and on a strict budget.


Val June 17, 2015 at 4:38 am

Great article. Massive numbers.


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