Report: Cost of raising a child born in 2012 is more than $240,000
A middle-income family can expect to spend $241,080 over the next 18 years on housing, food, education and other essentials to raise a child born in 2012.
That’s a 2.6 percent increase from last year, according to a report from the U.S. Agriculture Department conducted annually that is intended to give families a sense of the cost of raising a child.
Housing expenses represented 30 percent of that $241,080 total, with child care and education covering 18 percent and food representing 16 percent. The 2.6 increase from 2011 to 2012 outdoes the broader inflation rate for goods and services.
With a fragile economic recovery, a couple just starting to raise a family should especially be mindful of the increasing cost to raise a child in 2012, said Virginia Peschke, executive director of the Consumer Credit Counseling Service of McHenry County.
“The best thing people can do is work out a budget,” Peschke said. “People are always amazed to find where they are leaking money.”
Peschke and her counselors assist many couples in their early 30s who often are seeking advice as they move from renting to owning a home to make room for newborns.
Many of the child-rearing costs detailed in the USDA report likely will start to escalate when children enter their teen years, making early financial planning all the more critical, Peschke said.
“It’s difficult to know when you have a little kid how bad it is going to get when you’re older,” Peschke said. “The best thing we recommend to all of our clients is get a budget and stick to it.”
The USDA report did find that the annual cost of a child generally increased with age. A typical middle-income couple spent between $12,600 to $14,700 on each child depending on age in 2012, the report determined
But household income also played a factor in the money available to spend on children. A lower-income family earning less than $60,640 a year can expect to spend $173,490 on a child from birth through high school, the report found.
Poorer households spent more of their resources on basic necessities such as food (18 percent) than services such as child care and education (14 percent) because low-income families may rely on relatives or neighbors for care to conserve cost, the USDA noted.
Susan Owslany, child care director at Sage YMCA of Metro Chicago, sees more and more cash-conscious families focusing their resources on the necessities since the economic recession.
Owslany has seen more parents do one year of preschool under Sage YMCA’s two-year preschool program, while her department also has had to consolidate locations for the group’s before- and after-school care programs.
“Parents are finding different ways to work with neighbors and relatives rather than pay so much for child care,” Owslany said.
The cost of raising a child
• Low-income parents earning less than $60,640 a year can expect to spend $173,490 total during the next 18 years on a child born in 2012.
• Middle-income parents ($60,640 to $105,000) are projected to spend $241,080 total.
• High-income parents (more than $105,000) are projected to spend $399,780.
Middle-income families can expect to spend $241,080 on: housing (30 percent), child care/education (18 percent), food (16 percent), transportation (14 percent), health care (8 percent), miscellaneous (8 percent) and clothing (6 percent).
Source: U.S. Agriculture Department’s “Expenditures on Children by Families” report