How to Avoid Spending $300,000 (or More) to Raise Your Child

Single mother with babyHaving children can be an expensive proposition. But despite the scary figures in a recent government report on the subject, you shouldn't panic, because there are things you can do to cut the price tag down significantly.

The Department of Agriculture just released its annual survey of how much families spend on their children. For many, the figures will be shocking:
  • The report divided households into three income groups. The lowest group can expect to pay about $212,000 to raise a child, the middle group will pay roughly $295,000, and the highest group can expect to shell out a whopping $490,000.
  • The biggest component of costs was housing, which ranged from about $3,000 to more than $7,000 per year based on income level. Child-care and educational costs came in second for the middle- and upper-income groups, while food came in at No. 2 for the low-income group.
  • Overall, annual costs ranged from $12,290 to $14,320 for middle-income families.
How much we spend on our children

But before you panic, consider a few things. First, the methodology behind the study assigns costs to a new child in ways that may not reflect your true cost. For instance, as far as housing, if your home already had an extra bedroom, then your actual housing costs may not change at all, even though the estimates include an amount that reflects how much others would pay to get a home with an additional bedroom. Similarly, assigning costs like transportation on a per-capita basis can be misleading if your usage patterns don't actually reflect equal use among all family members.

Age and cost of children

More important, there are plenty of steps you can take to cut those costs. Hand-me-down clothes from family or friends can slash the $11,130 to $19,080 clothing figure in the report, and smarter food shopping and eating out less can give you back some of the estimated $31,050 to $47,640 per child in food costs.

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In addition, smart moves in one area can cut costs in others. For instance, choosing a home based on the quality of public schools may lead you to pay more for housing, but if it saves you on education costs down the road, it's well worth it.

As much as you might want to spend as much on your child as you can, coming up with $300,000 over 17 years is a stretch for most families. With some effort, you don't have to spend that much to raise your child successfully.

The 7 U.S. Cities That Spoil Their Kids the Most
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How to Avoid Spending $300,000 (or More) to Raise Your Child

The most expensive city in America to live in is also the most expensive place to raise a child. In fact, according to Bundle, bringing up a kid in the city costs 90% more than the national average.

Diapers and onesies are more expensive in New York than anywhere else, but the standard necessities aren't the only thing driving up costs in the Big Apple. The city also has a stunningly pricey childcare and education industry. For example, the median tuition at New York's top 41 top private schools is almost $37,000 a year, and several charge more than Harvard University.

(As a side note, Bundle ranked Manhattan specifically first, and named Brooklyn as the second-most expensive city to raise a child. That's a distinction we rejected. Since 1898, Brooklyn has been part of New York City, not an independent city. Don't tell the Brooklynites.)

Given its position as the seventh most expensive U.S. city, it's a bit of a shock to see Miami coming in second when it comes to raising kids. According to Bundle, however, bringing up a kid in the Florida city costs 58% more than the national average. Even worse, Miami parents apparently aren't getting what they pay for: According to a 2009 Men's Health study, out of 100 cities, Miami ranked 99th as a good place to raise a family, landing it a hair above worst-choice Detroit.

Apparently baby showshoes are expensive: Bundle notes that  raising a child runs over $330,000 in the City of Lakes, a price tag that is 46% higher than average. On the bright side, it appears to be a much better deal than Miami when it comes to quality of life: According to Men's Health, Minneapolis is the 18th best city to raise a family.

Given that it is often ranked as one of America's most liveable cities, it shouldn't be that much of a surprise that Tulsa attracts many parents -- and that it is one of the most expensive places to raise a child. According to Bundle, child-rearing in Tulsa costs 35% higher than the national average.

But that Men's Health research gave Tulsa a fairly dismal ranking -- 60th place out of 100 -- when it comes to raising kids, so buyer beware.

It's only the 11th most expensive city in America, but it probably isn't surprising that Dallas comes in higher as an expensive place to raise a kid. As anyone who grew up watching the Ewings might surmise, Dallasites have a reputation for living large. Unfortunately, according to Men's Health, high prices don't necessarily translate into a high quality of life: It ranks Dallas as No. 80 out of the 100 best cities in which to raise a child.

Atlanta is also one of the most expensive cities in the U.S. -- and, not surprisingly, one of the most expensive places to raise a child. But at least with a No. 42 ranking on the Men's Health's list, it may be a reasonably good deal.

The second most expensive city in the U.S. is only the seventh most expensive place to raise a child. Even so, according to Men's Health, it's not that great a deal -- the magazine ranked L.A. 68th when it comes to the best places to raise a family.


For more on smart family money moves:Fool contributor Dan Caplinger spends enough on his daughter, although she might not always agree. You can follow him on Twitter here.
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