Raising a Child: Frequently Asked Questions

Table of Contents

• How much will it cost me to raise a child?
• What costs can I expect during the first year?
• How much will I spend on my child during ages one through six?
• How much will I spend on my child during ages six through twelve?
• How much will I spend on my child during ages thirteen through eighteen?
• How can I teach my kids good financial skills?

How much will it cost me to raise a child?

We can't tell you exactly what your child will cost, but we can provide you with estimates. Knowing what to expect will allow you to plan for the future. Here is a breakdown of the items you'll need, and an estimate of their costs.

Note: These estimates are for a first child. Bear in mind that second or third children will cost less than the first, since you will already have purchased many of the items you need.

Government estimates say that a family with an income of $115,400 will spend a total of $298,680 to raise a child to age 17. If you include the cost of college, that cost goes up to $450,000. If your child requires orthodontia, add another $10,000. If you buy your child a car, add that in, too. For an only child, add 25% to the cost.

About a third of the amount spent in the government estimates goes to cover the portion of your rent or mortgage allocated to the new member of your household. It also includes the extra cost you'll incur in making sure you have enough room now that your family is bigger.

What costs can I expect during the first year?

Here are the costs you can expect up to birth and during the first year.

• Hospital Costs. An uneventful delivery costs about $8,000-$10,000, and a Cesarean section $12,000-$14,000. Depending on your coverage, you'll pay anywhere from zero percent to 30% of this cost.

• Layette. Before you bring the baby home, you'll buy a crib, a changing table and a swing or other rocking device. The moderately priced versions of these three things will cost you about $1,200. You'll also need two strollers: a collapsible one at about $150 and a full-size one at about $300. A full-size infant car seat will cost you about $100, and a full-size high chair will cost $150. You'll also need an infant seat, at about $50. Finally, you will spend about $300 on washcloths, sheets, blankets, towels, undershirts and other baby clothes.

• Formula and Feeding Gear. A year's worth of formula concentrate costs about $1,200. If you buy the ready-to-serve type of formula, the cost is even more. You'll also need a year's supply of bottles, at about $30, and you'll have to add another $20 to replace the nipples at least twice in a year. Nursing mothers will have to invest in nursing bras and nursing pads (about $30). Most nursing mothers will need to invest in a breast pump and its accoutrements, at about $200.

• Diaper Genies and the Like. Disposable diapers for the first year cost about $800, and a diaper genie costs about $30.

• Child Care. Child care in a day care center costs much less than a live-in nanny. A mid-priced day care center charges $200-$250 per week for your infant's care, or about $10,000-$12,000 per year.

• Health Care. Your infant will visit the doctor about six times during his or her first year, including well-baby check-ups as well as the inevitable colds and fevers of infancy. How much you will spend for doctor visits during the first year depends on your health insurance. If you are in an HMO, you will pay only the $5 or $10 co-payment. But if you are covered by traditional indemnity insurance, well-baby visits may not be covered at all, or only a percentage may be covered. This means (assuming a doctor's visit costs $60) you will pay $45 to $60 per visit for uncovered visits, and $45 per visits for medically necessary visits. You will also need to pay for prescriptions.

• Toys and Clothes. You'll spend about $500 on toys and clothing during the first year.

• Total For The First Year. Your total expenses for the first year run about $15,000-$18,000. The biggest variables are child care and health care.

How much will I spend on my child during ages one through six?

During these years, you'll spend about $1,000 on toys and clothes, and about $700 a year on food. If your child attends day care or pre-school, add in the cost of these services. Day care will cost you an average of $10,000 per year, while pre-school costs vary widely. Health care costs could run as high as $500 per year--or could be much less, depending on your health coverage.

How much will I spend on my child during ages six through twelve?

This is the time when the overall expenses of child-rearing drop, and families can save more. During these years, your child care expenses will drop drastically. And you won't have to take your child to the doctor as often, since they'll be past the childhood-disease stage. (Of course, if your child begins orthodontia during this stage, you'll have to pay more).

You will spend more than in the previous stage on clothing, toys, and entertainment, but your kids won't be demanding the high-ticket clothing and other items of adolescence. The bill for food will be just slightly more than what it was in the previous stage.

On the negative side, now that your kids are in school, you'll want to pay for all those extras that middle class kids have: dancing and music lessons, sports participation, and so on. And, if you decide to send your kids to private school or to summer camp, these expenses will have to be added in.

How much will I spend on my child during ages thirteen through eighteen?

During this stage, you can expect your child's food, clothing, and entertainment bill to greatly exceed what it was during the previous stage. For instance, food will cost at least $2,000 per year, and clothing at least $1,000 per year.

Once your teen starts driving, your auto insurance will go up. The extra cost could be anywhere from $300 to $1,000, depending on your state of residence and whether your child is a boy or girl. If you intend to buy your child a car, add this expense in.

How can I teach my kids good financial skills?

Once they reach school age, children should start learning rudimentary financial skills.

You might start to teach your kids in the following areas:

Their Allowance. Give your kids control over their own money (their allowance and whatever monies you give them that are not earmarked for some particular purpose). You can make suggestions to them about what they should do with it, but allow them the final say on what happens to the money. Let them see the consequences of both wise and foolish behavior with regard to money. A child who spends all of his money on the first day of the week is more likely to learn budgeting if he is not provided with extras to tide him over.

Savings And Investment. Beyond the basics of budgeting and saving, you'll want to get your child involved in saving and investing. The easiest way to do this is to have the child open his or her own passbook savings account. If you want your child to get familiar with investing, there are various child-friendly mutual funds and individual stocks available.

Taxes And Credit. Kids can start using credit cards at an early age with parental counsel and involvement. They can learn the concepts of incurring and paying off debts both from credit card use and from small loans that parents make them. If children have to file tax returns-as they would with an IRA--allow them to participate in the process; this will get them used to the idea of yearly tax payments.