The Cost of a Baby

The cost of raising a child is high and getting higher every year. According to BabyCenter, you should expect to spend anywhere from $10,000 to $14,000 on your baby during its first year. Costs vary depending on income levels, how many children you have, and what lifestyle choices you make (namely child care), but regardless, it’s safe to say that deciding to have a baby can be a pretty big financial decision.

Raising a child beyond its first year doesn’t get cheaper. Where some baby related costs (bottles, diapers, etc.) disappear as the child ages, others take their place (extra-curricular activities, larger portions of food, etc.). The USDA releases an annual report detailing the cost of raising a child. For a child born in 2011, the report estimates that parents will spend on average $234,900 to raise the child to age 17. These estimates don’t include college tuition costs. As prices increase for necessities like food and gas, so does the cost of raising a child. The 2011 estimate represents a 3.5 percent increase from the previous year.

Where Does the Money Go?

Almost every cost you currently have will increase with a child, sometimes in unexpected ways. You’ll also be taking on additional costs such as baby gear and child care. Here’s what you can expect:

1. Food: The choice between nursing and bottle feeding your child will impact your weekly budget greatly, but you’ll incur some expenses either way—you’ll need to purchase formula and bottles or a pump and nursing clothes. You may also end up spending more on the rest of the family’s food; if you don’t have time to cook once the baby is born, expect to spend even more on take-out or convenience meals.

2. Utilities: You’ll be doing more laundry and dishes to account for the additional member of your family. If you hire a nanny or stay home with the baby all day, your electric and gas bills will increase as well.

3. Medical expenses: The amount you spend throughout your pregnancy, delivery, and your baby’s first year will vary widely depending on your health insurance coverage. If you have health insurance, you’ll want to check to see what pregnancy and baby related costs are covered under your plan, and to what extent. You’ll also face higher premiums on your health insurance plan when you add a family member.

4. Diapers: BabyCenter estimates that you’ll spend about $72 per month for disposable newborn diapers. You can save money by using cloth diapers and washing them yourself, but you’ll still spend about $19 per month. Getting cloth diapers sent out for cleaning will actually cost slightly more than disposable diapers, at $76 per month.

5. Child care: Daycare centers, home care, and nannies all have hefty price tags attached to them. Child care and education are the second largest expense according to the USDA report, coming in at 18 percent of total expenditure. Your cost for child care will depend on what type you choose, how many hours per day your child requires care, where you live, and how old your child is. If one parent chooses to stay home and care for the child, you’ll have to budget for that parent’s loss of income.

6. Miscellaneous costs: You’ll need to buy baby furniture (crib, changing table, swing), baby gear (diaper bag, stroller, car seat), baby-proofing equipment, and clothing. Many parents also decide to upgrade to a larger house or car when their family expands.

The cost to raise a child to adulthood may seem daunting, but keep in mind that the numbers will fluctuate based on how much you earn and how many children you have. The cost of a second or third child is much less than the first because of childcare discounts and hand-me-downs. It’s a good idea to save $5,000 to $10,000 before your baby is born to account for unexpected expenses and talk with a financial advisor to get your finances in order so you’re financially ready to raise a child.