By: Janet Harrah
That “little bundle of joy” that new parents welcome into the world is not only the focus of their love and affection, although that is indeed a vital part of raising a family. That new baby is going to have an enormous impact on the family’s finances, and for a very, very long time. If we look at the cumulative cost of raising a child from birth through age 17 (and we more experienced parents know that the expenses do not stop there), the figures involved are truly remarkable.
Let’s begin our analysis here: Since 1960, the U.S Department of Agriculture (USDA) has provided estimates of annual expenditures on children from birth through age 17. According to the latest estimates released in mid-2012, a middle-income family with a child born in 2011 can expect to spend about $234,900 for food, shelter and other necessities to raise that child over the next 17 years. Family income affects child rearing costs – as family income rises, child expenditures rise as well. A family earning less than $59,410 per year can expect to spend a total of $169,080 (in 2011 dollars) on a child from birth through high school. Similarly, middle-income parents with an income between $59,410 and $102,870 can expect to spend $234,900; and a family earning more than $102,870 can expect to spend $389,670.
Remember the old adage two can live as cheap as one? Well that may be true, but apparently three cannot live as cheap as two. The single largest expenditure on a child, averaging $70,560 or 30 percent of the total cost over 17 years, is housing. Child care and education and food were the next two largest expenses. However, costs per child fall as family size increases – call it the double-up, hand-me-down affect. On average, families with three or more children spend 22 percent less per child than families with two children. In larger families, savings arise from items such as children sharing bedrooms and from clothing and toys being handed down.
Costs per child also rise as children age. A two-parent, middle income family can expect to spend $15,488 per year for a five year old child. That same family can expect to spend $25,600 per year for a fifteen year old child, an increase of $2,412 or nearly 16 percent.
Not surprisingly, as family size increases, the percentage of total household income spent on children increases, too. For husband-wife families with one child, the USDA estimates “27 percent of total family expenditures are spent on the child; for two children, 41 percent; and for three children, 47 percent.”
Table 1: Annual Estimated Costs for a One-child Age 5, Family
So far we have discussed the costs of raising a child. But the parents have living expenses as well. The latest consumer expenditure survey published by the U.S. Bureau of Labor Statistics shows that a husband and wife with a child under 6 years have total average annual expenditures of just under $66,000 per year. Given that the average earnings per job in 2011 nationwide were $53,768, most families need two incomes to make ends meet. For low income workers the challenge is even more daunting. In 2011, the poverty threshold for a family of three (two adults and one child) was $18,530. If it costs $11,375 to raise one child, that leaves only $7,155 to cover all other family costs. The typical family of two spends $6,900 a year on food alone leaving less than $300 per year for clothing, health care, etc.
There is an obvious disconnect between the average cost of raising a child, the average expenditures of a family with one child and the U.S. poverty thresholds.
 These estimates do not include the cost of a college education or education beyond high school.
 Expenditures on Children by Families, 2011, United States, Department of Agriculture Center for Nutrition Policy and Promotion Miscellaneous Publication Number 1528-2011.