How Much Does It Cost to Raise a Child?

If you’ve ever seen a headline about the “eye-popping” cost of raising a child, you’ve probably wondered how anyone makes the math work. The truth is, raising kids is expensive – but it’s not the same amount of expensive for everyone, and you don’t pay the tab all at once. The long-term cost of parenting shifts over time, differs by region and lifestyle, and often looks very different in practice than on paper.

That’s why averages are most useful as a starting point. By breaking down where the money typically goes, how expenses change as kids grow and which costs are and aren’t included in common estimates, families can focus less on intimidating totals and more on building a plan that reflects their real lives and priorities.

So ... how much are we talking about? One analysis by Northwestern Mutual recently updated a 2015 USDA report on the cost of raising a child to account for inflation. And – deep breath – the headline number for 2025 was about $320,000. Let’s dig in to understand what that number means.

WHAT IS INCLUDED IN THE COST OF RAISING A CHILD?

HOUSING AND UTILITIES

Of course, you need a place to live – and heat, water and electricity – long before kids enter the picture. But living situations often change once you become a parent. For example, you might move from an apartment to a 3-bedroom house or change to a better school district that comes with higher taxes.

The USDA report said that housing is the most expensive category when it comes to raising a child. They calculated the price tag by using the average cost of an additional bedroom in a given area. If there are other factors driving post-child housing costs higher for you – like the aforementioned higher property taxes – the housing cost differential could be higher. Overall, the updated 2025 average amount your housing costs might increase was about $5k per year.

FOOD, CLOTHING AND TRANSPORTATION

The 2025 update says you should plan to budget an extra $3,000 or so for food every year once you have a kid.

For clothes, it was about $1,000.

And as far as transportation, which can increase because you simply have more places to go (not to mention the cost of a teen driver added to your car insurance way down the line), it’s about $2,500 a year.

As kids get older, food, clothing and transportation all get more expensive on average.

CHILDCARE AND EDUCATION

This category is highly variable – the USDA says more than half of families had no childcare or educational costs at all in a given year. That could definitely be true for many of your child-rearing years; child care usually ends around middle school and the majority of Americans send their children to public school, so this whole budget category eventually disappears.

And of course, some families never need paid child care, either. But if you will, buckle up – The Care.com 2026 Cost of Care Report finds the average parent says they spend 20% of their household income on childcare costs. While the national average for daycare-based child care is around $17,000, one in five families (20%) spends more than $30,000 on childcare expenses per year.

If you average the cost of child care across each year until your child reaches the age of 18, this category adds $2,720 to the annual cost of raising a child. Extrapolating from the annual amount, the overall budget for child care and education would be close to $50,000, weighted heavily in early childhood.

One thing to keep in mind is that estimates don’t account for the reduction in income from a parent who chooses to stay home with young children rather than doing paid work. If you expect that to be your situation, you’ll save on paid child care but need to plan for the lost income.

HEALTH CARE AND INSURANCE

You’ll likely have an uptick in health care expenses when your child is young – in case no one’s told you, little ones get sick a lot. And of course, even if you get lucky with the illnesses, it costs money to add a new baby to your health insurance.

But medical costs aren’t just about sick visits. Later on, they could include braces, mental health treatment or even physical therapy if your kid gets hurt playing sports. Costs to treat an injury will hopefully be covered by insurance, but when it comes to mental health treatment, it can be hard to find an in-network provider. Dental insurance typically covers only a certain percentage of orthodontia or has a relatively low lifetime limit (and it might not provide any coverage at all).

If you have the opportunity to open an HSA – especially if your employer makes a contribution – consider it, even if your current medical costs are low. It's a great way to build tax-deductible savings that you can use to pay these kinds of out-of-pocket costs later.

So, what’s the price tag? In 2025, routine health care for a child was about $1,500 a year. Of course, this is all assuming routine care; if your child has any medical conditions, specialized treatment could add significantly to your health care expenses.

WHAT’S OFTEN EXCLUDED FROM CHILD-RAISING ESTIMATES

COLLEGE AND HIGHER EDUCATION

Because some parents don’t help pay for college (and not everyone goes to college), typical estimates stop at age 18 and don’t include any college costs.

In today’s world, many people feel that college is more of a necessity than an option, and without parental help, it can be nearly impossible for a child to pay for (in fact, federal financial aid formulas usually assume a generous amount of parental contribution, whether it’s accurate or not). So, a lot of families feel the expectation and responsibility to save for college along with other expenses.

How much does that add to the bill? It’s hugely variable depending on the educational institution – public vs. private, northeast vs. southwest, 4-year prestigious university vs. 2-year community college or trade school, etc. And of course, not all (or even most) parents cover the entire cost. As you’re planning, it makes more sense to let this goal be driven by what’s practical for you to achieve, not a theoretical price tag. More often than not, some financial aid (and hopefully scholarships!) will be a factor but don’t assume your child will qualify for all that they need – or at all. Do your homework well in advance to learn how to approach these applications.

INSURANCE

Parents are likely to increase their life insurance coverage when having children. And later on, you may add other types of insurance. For example, you might increase your liability coverage and even add an umbrella policy once your child gets a driver’s license. Those kinds of expenses aren’t directly incurred by your child, so they generally don’t show up in estimates.

TAXES

Your taxes will probably change as well – but on the bright side, this one’s a net positive! There are several federal tax credits for people with children, and they can help offset some of the extra costs you face. You can also use tax-favored accounts like health care and dependent care flexible spending arrangements to get a tax break when you save for those kinds of expenses.

LIFESTYLE ADJUSTMENTS

Like tax breaks, these can help reduce your costs. In reality, most people probably don’t keep spending the same way they did before kids and just tack on a bunch of additional bills. Some of your discretionary spending – your budget for travel, brunch, golfing or whatever you like to spend your time doing – will probably get shifted to other not-so-fun categories. After all, in the early years, not only might you have less money to spend on those types of activities, you’ll probably have less time.

HOW COSTS CHANGE AS A CHILD GETS OLDER

INFANCY AND EARLY CHILDHOOD

In their analysis of the age-based cost of having a child, the USDA found that child care and education spending was generally highest from ages 0-5, which is unsurprising. Conversely, food costs are relatively low.

ELEMENTARY AND MIDDLE SCHOOL-AGE YEARS

Starting at age 6, that relationship flips – child care and education costs drop significantly, while the food budget gets much bigger.

TEEN YEARS

In the teen years, the food budget continues to increase, as do costs for clothing and transportation. Overall, costs are usually highest during these years.

HOW MUCH DOES IT COST TO RAISE A CHILD TO 18 VS. 21?

SUPPORTING CHILDREN BEYOND AGE 18

The trend of continuing to help financially support kids after high school isn’t new – it’s been common for parents to shoulder at least some college costs since the 1970s and ‘80s, for example.

But today’s economic realities mean parents are helping with basic expenses far longer than they used to. It’s not unheard of for parents to keep paying their kids’ medical or cell phone bills for a decade or more, not to mention allowing them to stay on family subscriptions. Some parents even find themselves helping with big expenses like rent or gifting their kids a down payment so they can become homeowners.

That’s obviously a personal choice, and it’s less helpful to look at what parents are doing “on average.” You have to decide what works for your family.

FINANCIAL PLANNING IMPLICATIONS

If it’s important to you to fund college and even grad school, to offer large gifts for a house or a wedding, and to help your kids ease into financial responsibility, you can and should plan for those goals. It might mean saving more or it could mean pushing your retirement timeline back.

WHAT WILL AFFECT YOUR PERSONAL COSTS

When you really think about it, asking how much it costs to raise a child is kind of like asking how much it costs to buy a house. It definitely costs something, and it’s definitely expensive, but beyond that ... it depends.

The USDA study found that the cost varies based on:

• Your location. The cost of living isn’t the same everywhere; we’ll go into a little more detail below.
• Number of kids. The costs for subsequent children were lower as families grew larger and items could be shared or handed down and food could be purchased more cost-effectively. But still, while the average dips, more kids equal more expenses.
• Your income and lifestyle. This is probably the single-biggest driver of potential cost differences. If your plan is for your kids to play on travel sports teams, attend summer enrichment camps, get a new car at age 16, go to private school, wear designer clothes, and have the latest tech at all times, that’s going to cost a lot more than just covering the basics. The USDA found that families in the top third of income spent more than twice as much on a child than those in the bottom third, with “miscellaneous” expenses – including entertainment and sports equipment – driving the difference.

COST OF RAISING A CHILD BY STATE

WHY LOCATION HAS SUCH A BIG IMPACT

A study by SmartAsset using 2025 data from the MIT Living Wage calculator showed a massive difference in the cost to raise a young child depending on what U.S. state you’re in.

In Massachusetts, they found you’d need over $44,000 per year to add a child to your household. But in Mississippi, the cheapest state, it would be less than $20,000.

(Note that these figures specifically included child care for a preschooler, so they’d be expected to decrease as your child got older.)

HIGH-COST VS. LOWER-COST STATES

Overall, the SmartAsset cost rankings were in line with what you’d probably expect – East and West coast states were the most expensive in which to raise a child, and Midwest and southern states were the cheapest. The USDA study had similar findings – costs were most expensive in urban areas of the northeast U.S., followed by the West, South and Midwest, with rural areas cheapest of all.

HOW INFLATION IMPACTS THE COST OF RAISING A CHILD

RISING COSTS OVER TIME

It’s no surprise that costs rise over time, sometimes dramatically. Even at a moderate 2% inflation rate, costs will jump over 40% in the time span from birth to high school graduation. That means you can’t just take the current one-year cost and multiply by 18. You have to account for inflation.

As you do so, keep in mind that your income will likely rise over time as well! So, the numbers, dramatic as they might seem, don’t need to scare you off.

PLANNING FOR UNCERTAINTY

The other thing to remember is that two decades is a very long time, and a lot could happen. Your kid could leave you with new, expensive goals (maybe they’ll train to be an Olympian!) or they could be a social media star by age 10 and pay all the family’s bills.

So, your plan for affording children needs to be flexible, and it’s definitely not a once-and-done activity. You’ll need to check in at least annually or whenever there’s a big change to your income or cost of living.

FAMILY FINANCIAL PLANNING WITH CHILDREN

BUDGETING FOR CHILDREN’S EXPENSES

Having a budget and modeling cash flow are critical if you’re unsure of your ability to afford something. Budgets don’t have to be sophisticated, but the more dialed-in you can get it, the more likely it is to help you plan.

TAX-AWARE PLANNING OPPORTUNITIES

As you’re estimating costs, don’t forget to take into account the tax breaks that could help offset them. Look into tax credits and tax-favored savings accounts that you could take advantage of.

BALANCING CHILDREN’S COSTS WITH RETIREMENT GOALS

The decision to have kids shouldn’t be solely financial, but you do have to balance the expense with other important priorities. It’s easy to put off saving for long-term goals when you have bills staring you in the face right now. The truth is that your budget has to stretch to meet both today’s needs and tomorrow’s. Diligent financial planning can help you find a way.

WE CAN HELP FAMILIES PLANNING AHEAD

Financially preparing for having kids is a lot like planning for retirement. You might think you need a big headline amount, but the truth is that many people get by with much less (and of course, many people have no problem spending more). You’ll make adjustments and tradeoffs in your budget to make it work.

The question of whether you feel financially ready is a personal one, and it can’t be based on national averages, nor can you possibly account for every future potential scenario.

Look into the cost of upgrading your housing to whatever you think you’ll need, keeping in mind potential tax increases that might come with moving to a better school district. Figure out your plan for child care (or staying home) and look into costs in your area if you’ll need it. Plan for increases in food, clothing and transportation budgets. See how much it will cost to add a child to your health insurance, and plan for additional copays. And keep in mind the impact of inflation over time.

Once you’ve done that, you’re about as ready as you can be. If you’d like expert help in stress-testing your finances to see how the budget increases might affect them, a financial advisor can be a great partner.