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Article This article is part of the Missouri Saves Program |
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What Does It Cost to Raise a Child?
Lucy Schrader, University of Missouri Extension, Building Strong Families Program Coordinator
What does it cost to raise a child? As an expectant
mother, I was both curious and nervous to find the
answer to this question. The USDA has estimated the
annual costs of raising a child for the past 40 years
and reports the numbers in the Expenditures on Children
By Families report.
In 1960, a moderate-income family spent about
$146,800 (in 2000 dollars) to raise a child to age 18. A
similar family in 2000 spent about $165,600—a 13 percent
real increase. Expenses include housing, food,
transportation, clothing, health care,
education/childcare, and other miscellaneous expenses
(personal care items, recreation expenses, etc). Costs
do not include college expenses or indirect costs (such
as a parent taking work leave to raise the child).
From 1960 to 2000, housing costs increased slightly
(from 32 to 33 percent) and health care increased from 4
to 7 percent of the total of child-rearing costs.
Childcare/education increased considerably, from 1 to 10
percent (the category did not include childcare in
1960). Expenses on food, however, declined as a
percentage of costs (24 to 18 percent) and in real
dollars in this time period. Clothing also declined as a
percentage (11 to 6 percent) and in real dollars.
Transportation and miscellaneous expenses declined
slightly since 1960 as a percentage of total costs,
although in real dollars they increased.
How can knowing the costs of raising a child be
helpful? The USDA report has three main uses. One is
education. Families can use the information to plan
spending and saving. Some schools use the information to
help teens understand how much raising a child really
costs, hoping that teens may wait to have children.
A second use is determining child support. In 1998,
48 percent of children lived with either a single
parent, stepparent, or in another arrangement. Many
single-parent families are in poverty and child support
is one way to reduce poverty. States often consult the
Expenditures on Children By Families report in
calculating typical costs for children for state child
support guidelines.
A third purpose of the report is to determine foster
care rates. By 1998, about 520,000 children were in
foster care (up from 262,000 children in foster care in
1982). About half the states use the USDA report to set
the levels of foster care rates.
USDA bases child-rearing expense estimates on the
Consumer Expenditure Survey. They estimate expenses for
children by age of child, household income level, number
of children in the family, and geographic area. The
expense estimates for the budget categories represent
what is actually spent rather than some standard of what
should be spent.
Will I spend and save my money differently now that I know the costs of raising a child? Probably. But I also know that raising a child takes more than just financial resources. There are hugs, kisses and love to be given, and I will gladly pay these “expenses!”
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Last update: Saturday, March 22, 2008
