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How much does it cost to raise a kid?

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NEW YORK (CNNMoney) — From day care to the monthly grocery bill, the cost of raising a child is climbing at a rate that many families can’t keep up with.

It will cost an estimated $241,080 for a middle-income couple to raise a child born last year for 18 years, according to a U.S. Department of Agriculture report released Wednesday. That’s up almost 3% from 2011 and doesn’t even include the cost of college.

At the same time, wages aren’t keeping up. The country’s median annual household income has fallen by more than $4,000 since 2000, after adjusting for inflation, and many of the jobs lost during the recent recession have been replaced with lower-wage positions.

The USDA’s latest estimates include expenses for housing, food, transportation, clothing, health care, education and child care, as well as miscellaneous expenses, such as toys and computers.

The biggest price tag is for families in the urban Northeast earning $105,360 or more. They will spend $446,100, much more than the national average, according to the report. Meanwhile, families earning less than $61,590 a year in rural areas will spend the least, at $143,160.

While expenses in all categories rose in 2012, health care, education and child care spending increased the most.

Health care spending made up around $20,000, or around 8%, of the USDA’s estimated child-rearing expenses for a child born in 2012. Meanwhile, child care and education expenses represented nearly 18% of the total costs for middle-income parents.

Since 2000, the cost of child care has increased twice as fast as the median income of families with children, according to the most recent report from Child Care Aware of America. In 2011, the average cost of full-time center-based care for an infant ranged from about $4,600 a year in Mississippi to more than $15,000 in Massachusetts.

“Many families are priced out of licensed child care services,” said Lynette Fraga, executive director of the nonprofit group. “If they are priced out, then the health and safety of those children are at risk.”

Amanda Holdsworth, who lives outside of Detroit with her husband and 22-month-old daughter, pay more than $1,000 a month for their daughter’s day care center — or nearly 15% of their monthly income. The costs are so high that they think twice about having a second child.

“To think about paying two day care rates, it’s shocking,” she said.

Another factor hurting families: rising transportation and food costs. Gas prices almost doubled between 2000 and 2012, even after adjusting for inflation, according to AAA. Meanwhile, food costs have spiked.

Turlock, Calif., resident Jason Hicks, a father of 10- and 13-year old sons, said his family has seen their monthly grocery bill grow from $500 to $800 in the past few years.

“As prices are going up and our kids are reaching teenage years, it’s compounded quite quickly,” he said.

There are ways to ease the cost burdens, said Stuart Ritter, a T. Rowe Price financial planner who teaches a money management class for new parents. Many employers, for example, offer tax-advantaged accounts that let parents pay for health and child care expenses with before-tax dollars.

“I have to reassure everybody there are other people who successfully have children,” he said. “I personally have three. People figure out ways to make this work.”

The-CNN-Wire
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