In the Vigilante’s pre-parenthood investigation to learn about how other FIRE families manage raising their little Liliths,1 the USDA quarter-million-dollar-per-child statistic continually springs up. So, I’ve asked my friend Liz to address it.

Why should we listen to her? For starters, she’s the Chief Mom Officer – and you don’t get a title like that without a proven dedication to detail and cost reduction (and maybe some cutthroat tactics that you don’t like to talk about but, damnit, they get the job done). CMO writes about money, work, and teaching her three boys about finances while having frugal fun. Her mission is to help people, especially working moms, reach financial freedom. She has Facebook, Twitter, and Pinterest pages worth a follow, but you can also check out what she’s buying or baking on Instagram – and who doesn’t want drool-worthy, FIRE-friendly food?


They say a child costs a quarter million. Can you afford that?!

You’ve probably seen the headlines – “Average cost to raise a child now is $233,610!” This is a scary number, and it gets even more frightening when you learn that this cost doesn’t include college – which will run you between $10 and $35k per year, depending on whether your child chooses a public or private college. Add that in and you’re looking at $300 – $400k, or more!

But is it true? Or more importantly, is it true for you? Let’s unpack the statistic.

What’s the annual cost to raise a child composed of? Here’s an example of costs for an “average” child under one year old:

  • Housing – $4,674
  • Food – $2,007
  • Transportation – $2,273
  • Child care – $3,6452
  • Clothing – $953
  • Health Care – $1,499
  • Other – $1,054

According to the USDA’s cost to raise a child calculator, a two-income family in the US making a middle income (between $59k and $107k) can expect to shell out $16,104 for the first year paying for their first child. You can do your own calculations for your own family, income, and region of the US here – or read the entire report yourself – but I’ve already done it so you don’t have to!

Now that you’re scared of the price tag, let’s look deeper into why these numbers might not be true for you, and how you can raise a child for a lot less than the USDA says it costs. For illustration, I’ll use a thrifty family pursuing FIRE with one nine-year-old son.

Housing

This is made up of your mortgage or rent payments, utilities, furniture, and equipment. You’re not buying all of your furniture for your kids, right? Did you buy your house or rent your apartment specifically for your kids? If not, then part of those expenses don’t really go to your kids. So why is this in the calculation? Because the government says! Specifically, what they do is take the cost of an additional bedroom in your area, and attribute that cost to your kids. So if you bought a two-bedroom house so you would have a guest room, and then you have a child, the cost of that second bedroom is attributed to your child.  Also if you have two kids who share a room – the stat doesn’t apply to you. They assume you don’t do that.3

Let’s take our thrifty family – they bought a modest two-bedroom house years ago, before their son was born, and they plan to stay in it for life. Even if they never had kids, they would have bought a two-bedroom house to have an extra room for activities (a gym, a craft room, a home office, etc.). So what was the real extra cost to have their nine-year old live with them? Nothing, in terms of mortgage or rent. Utilities are roughly the same as they would be if their son didn’t live with them. (If you’re raising your children to be aware of their energy usage instead of being self-helpless against Asshole Electric!) The only furniture they bought for him was a crib when he was born, and his bed and bedroom furniture. This was all picked up on Craigslist for $250. Let’s say he uses an extra $120 in utilities per year, but not more because you teach him to turn the lights off and that sweaters are his friend in cold weather.

Plan of attack: Get a home you will use before, during, and after kids. Total spent: $834 per year

Food

Includes groceries, eating out, and school meals. This was calculated by using the USDA Food Plans: Cost of Food at Home data, specifically the Moderate cost plan for our middle income family. I’ve looked into this data before, and if you’re a smart shopper you’ll think it’s ridiculously high. Under this plan, I would be spending $1,268 every month on my groceries for my family of five – which I’m nowhere near.4 And I could do a lot better on the shopping if I had more time.

Plan of attack – Spend at the “thrifty” USDA food plan amount. Total spent: $1,843 per year

Transportation

Includes car loans, gas, maintenance, and repairs, as well as public transportation. To calculate this, the government assumes that each person in the household uses the car equally for family-related trips. So approximately 30% of the cost of transportation was allocated to a single child. You’re different – you’re not spending the average car payment of $493 per month. You’re also not taking a third of your trips for your kids.5

Plan of attack – Buy used. Or, buy new and keep your car until you can sell it to your child as a teenager (helping to make back some of those expenses). Let’s say this family got a $20k car costing $100 per month in gas, and about 5% of their trips were just for their son. Total spent: $115 per year

Child Care

Daycare, babysitting, and other books, fees, and supplies. The key here is that only families with this expense were examined, and made part of the “average”. There are millions of families that don’t pay for child care – they have a stay at home parent, a family member that helps out, or they work opposite shifts so someone’s home to care for the kids. In fact, half of the households in this survey had zero child care costs. For years when my kids were little my husband and I worked opposite shifts specifically so we had no child care costs.

Plan of attack – You can be one of the half of families finding a way around child care. Total spent = ~$0 per year

Or think creatively. Try to find a way to use less care and pay with a flexible spending account, and shop around for good care at a good price. Also, the expensive child care will end after about five years. The nine-year-old most likely has no child care costs. Total spent: $3,645 per year, at worst (less potential tax savings!)6

Clothing

Diapers, shirts, pants, shoes, and other clothes go here. This is an easy category to cut costs, especially with young kids. Diapers are forever going on sale at Target, and can be picked up on Amazon or at Costco for a good price. You could opt for cloth, saving hundreds more like The Simple Dollar.

Plan of attack – Stock up on diapers when they go on sale, and buy clothes/shoes at consignment shops. Total spent: $150 per year

Health Care

Medical and dental care not covered by insurance, prescriptions, and insurance premiums paid by you. Now, you definitely need to plan for kids to get sick, get injured, and need insurance coverage. But you can do it wisely, using an HSA or FSA to save pre-tax to cover the expenses. Let’s say putting the child on your health insurance is an extra $100 per month, and the other $600 per year is medical expenses.

Plan of attack – Use an HSA or FSA to save 25% in taxes on the $600. Total spent: $1,650 per year (less potential tax savings, too!)

Other

Miscellaneous things like haircuts, toothbrushes, entertainment, and books. A thousand dollars per year here is outrageous. You can go for $10 haircuts every two months, get things on sale, and use the library for entertainment.

Plan of attack – Spend wisely in this category. Total spent: $200 per year

Totaling It Up

So how much will our thrifty FIRE family be spending? Only $4,792 per year without child care, or $8,437 with it. Total over 17 years would range from $81,464 to $143,429 – at most nearly $100,000 less than the USDA estimated cost!

As usual, don’t let the headlines scare you! Take the time to work out your family’s real cost of raising a child. It’ll be a lot lower than you think.


Being still childless, it will be at least a year (plus a pregnancy) before The Vigilante Family can verify these numbers. But when that happens, expect a monster of a post offering a detailed account of every penny spent from birth through the first birthday when the time comes – so we’ll see how strong Chief Mom Officer’s power of projection is!

In the meantime, do you find it hard to believe that government and statistics could be wrong? Think it costs way more – or way less – to raise a child? Were you dissuaded from having a child, in part by the thought of this statistic? Let us know in the comments!

  1. As explained in prior posts, a succubus demon-woman who drains life with a kiss, and at least a partially appropriate metaphor for parenthood.
  2. From The Vigilante: Averaged over the course of all 17 years, of course. Which means north of $12,000 on average for about the first five years for those families that use child care. Ouch!
  3. From the Vigilante: The statistic fails to include the possible cost of higher taxes incurred for a better school district – which Root of Good argues is usually unnecessary – and the cost of a bigger yard – which I say is unnecessary thanks to parks, gyms, and the great untamed outdoors. But these are potential secondary costs. Just not of a type that a true Vigilante would incur!
  4. Seconded, on the atrociousness of these estimates. The Vigilante family of two – a male and female each between the ages of 19 and 50 – are right around the mark for a “low-cost plan” despite eating amateur bodybuilder diets (including excessive amounts of high-cost foods like protein shakes, avocados, mixed nuts, and quinoa) and Mrs. Vigilante having a special dietary need (Celiac disease) for needlessly overpriced trendy food (gluten free stuff). How families spend much more than that is unfathomable to me.
  5. Unless, perhaps, you’re already free of the reigns of full-time work that comes with a commute! In that case, your driving might be so limited that your child actually does originate a third or more of your trips – a good problem to have!
  6. About $12,400 per year for five years. A pretty reasonable estimate for infant costs at daycares in my area, and the cost generally declines as the child ages. Even this is hopefully a high estimate for most of us! ($3,645 x 17 years = $61,965 / 5 years = $12,393)

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