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Can You Afford to Start a Family?
Updated: February 05, 2021 |
Taylor Kovar, CFP

Budgeting for a New Family: Figuring out What Raising a Child Costs

On average, people are starting families a few years later in life. Compared to 2000, women wait an additional 4-5 years before having children, and that number looks to be steadily rising.

There are plenty of reasons for this change, and one of the most prevalent is people waiting to feel financially prepared to start a family. The question is, how much do you actually need? There’s no specific figure that will cover the cost of raising a child. Experts have floated plenty of estimates, but you won’t know how much everything costs until you’re in the thick of it. That can be a scary reality for a lot of people.

We were married for 4 years before we started building our family. We didn’t necessarily wait until we could “afford children”, but we had a plan going into it and were both in agreement that we would be ok with making any changes to our finances if it meant we were going to become parents.

I can’t tell you whether or not you and your spouse are ready for kids. However, I can address some of the costs associated with parenting and help you start making calculations. As we go through this, just remember: you can talk at length about the cost of raising a child, but you can’t put a price tag on starting your family.

The Early Months

Before you think about saving for college, paying for preschool, and taking your child on his or her first trip to the beach, you have to pay for (and survive) the first couple of months. I’ve heard people talk about spending $50,000 in the first 18 months, which sounds a bit excessive, but isn’t really that hard to do.

‍There are medical bills to pay right out the gate, so your insurance is a very important factor in deciding if you’re ready or not. Once you get home with your bundle of joy, there are a few things you’ll definitely have to buy:

  • Diapers
  • Formula
  • Car seat
  • Bottle
  • Stroller

Those are the obvious immediate necessities, but there are a few others that will undoubtedly creep up, such as:

  • Bibs
  • Baby utensils
  • Playmats
  • Changing table
  • Nursing pillow
  • Infant bathtub

And on and on and on. These items aren’t going to add up to $50,000, but you should expect to get into the thousands relatively quickly. As long as you aren’t paying for the most expensive daycare and buying every toy under the sun, you should be able to avoid breaking the bank the way some parents tend to do.

The Early Years

Young parents typically find that the cost of raising a child rises dramatically when it’s time for childcare. If you and your spouse both work full time, this is an expense you absolutely have to prepare for. In some cases, depending on the wages being earned, couples find it’s more cost-effective to have a stay-at-home parent so they can avoid the price of daycare or a nanny.

As kids get older, growing bodies and changing diets start having a bigger influence on how much money your child drains from your bank account. Another shock comes when you first see preschool prices, as these programs can range between $5,000 and $15,000, depending on where you live. Before you let those figures affect your heart rate, remember that there are many schools for families with varying incomes.

The cost of schooling is a big reason why some people advise parents to save a full year’s salary before having kids. I think this isn’t always feasible and isn’t always necessary, though the more you save, the less you’ll struggle when it’s time to pay the preschool piper.

Since the cost of raising a child changes so much from one city to the next, I think it’s a good idea to talk with other young parents in your area. Get some firsthand information about fees and programs that could offer assistance.

The Future

College? Cars? 15 years’ worth of summer camps? Looking ahead, the cost of raising a child seems astronomical, and in some ways it is; you don’t just stop paying for your child after his or her fifth birthday.

Fortunately, these costs become relative as you go. As the child-related bills start piling on, other expenses go down. Your hobbies and activities change, and the ways you spend your money will reflect that. Your tax returns also adjust to factor in your new dependent(s), which can be a big help for some families.

Frankly, there’s no good reason to think about paying for 18 years of a child’s life before said child has even been born. You’ll have all of those years to earn income and pay as you go. I generally don’t plug this strategy (just typing “pay as you go” made me shudder a little), but it really isn’t feasible to plan every parental expense before you have your kids.

More often than not, you’ll hear people of all incomes tell you how they “made it work” after they had children. I think the majority of parents kick into another gear when a child is on the way and become more driven and responsible with their money. If you can plan ahead, start putting money away and have faith in yourself to rise to the occasion, I think you and your growing family will do just fine.


Taylor & Megan Kovar

The Money Couple

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