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How much does it cost to have a child?

Periodically people talk about the pros and cons of different lifestyles for EA types, including whether to have children. I wrote up a post, originally here, on what it has cost my family this year. I also wrote up a post on other aspects of our experience this year. hope this may be useful to people deciding whether or when to have children.

 

 


 

 

Short answer: about $20,000 for the first year.

baby cost with food

I just did the math on how much greater our expenses were in 2014 than we would have expected if we had not had a baby in March. I did it based on the calendar year because many of the expenses (medical visits, pre-birth purchases) started before the birth. This is all based on living in Boston, Massachusetts and trying to be fairly frugal but not painfully so.

Childcare: We only used a couple of weeks of daycare at $350/week. We’ve since switched to a system in which Jeff works full time and I work part time, and Lily is never in daycare. Our social life consists mostly of things we can bring her to, so we haven’t really needed babysitters at night.

Clothes: we get most clothes from thrift stores or the local children’s resale shop, where they cost about $4/item. We did get hand-me-downs as well, so it would have been more without those.

Gear: includes bottlefeeding stuff, cloth diapers, toys, a crib, a rug, and a series of glider chairs. In our area, it's easy to find many of these things used on Craigslist. Includes $100 for extra loads of laundry done. We got a carseat as a hand-me-down, but I added $100 to the tally in case you needed to get one. We spent $200 in airline fees to take Lily with us on vacation. Breast pumps are now covered by insurance in the US, but bottles and other parts are not.

Medical/hygiene: copays and miscellaneous purchases at the drug store. We paid more for better medical insurance this year, plus more copays for more medical visits. Most of our insurance premiums are covered by Jeff’s work, so if he worked for a less generous company we would have paid more.

Lost wages: I got no paid maternity leave from my job, though I did save up about two weeks of vacation days. I quit my job for five months, then went back part-time. Jeff used 8 weeks of paid parental leave to care for Lily while I was working. My schedule currently dovetails with Jeff’s: he works full-time starting at around 7 am, and I work evenings and Saturday mornings. If we had less flexible work schedules, or if he had not gotten the two months of paid leave, our costs would be higher.

Housing is conspicuously absent on this chart. We did not change our housing this year, though we did start the process of buying a house. Lily slept in our bedroom. This got hairy at times, and we’re looking forward to having a separate room for her. The delay in moving was more about looking for the right house than about trying to save money.

Food: I ate an extra 500 calories daily while pregnant or breastfeeding. This cost about $500 extra in groceries. Lily’s also eating some solids now, but she mostly eats yogurt and bits of what we’re eating.

We did not pay more for transportation because we did not buy a car. Living with family and being able to use their car sometimes was helpful.

Not included: tax breaks. We expect around $350 in the child tax credit (maximum is $1000 if you earn less than we do). We also expect lower taxes in general because of having a dependent. We don’t know how much this will end up saving us; I’ll update after we do our taxes.

Also not included: costs to our careers. Jeff taking the full paternity leave provided by his work probably hurt his job slightly, though not like it would in a more cut-throat business. Taking time off delayed me getting the hours of supervised work I need for the final step of social work licensure, which is essentially a ticket to better jobs.

The federal government’s “cost to raise a child” calculator thinks we (as a two-parent high-income family in the Northeast) would spend about $30,000 during our child’s first year, not including lost income, which I count as an expense. If we had been scrimping, we could have spent less, especially by using paid childcare for more of the time.

Things that could make it more expensive for other families: moving to larger housing; buying a car or better car; formula-feeding (would cost around $1200/year); less flexible work schedules that would necessitate more child care from other people; less of health insurance covered by work; no paid paternity leave; higher initial earnings resulting in more earnings lost from unpaid leave; living in a more expensive area; using disposable diapers.

Things that could make it less expensive for other families: more free care from relatives; receiving food assistance, daycare vouchers, or other benefits; lower income and thus more child tax credit; living in a cheaper area; using daycare more, allowing both parents to work full time; living in any of the 163 countries that provide paid maternity leave.

Comments (21)

Comment author: Denise_Melchin 25 December 2014 11:16:57PM *  4 points [-]

Thank you, my experience has been similar (in the comparable aspects) to Julia's and Bernadette's. My daughter is 4,5 years old by now, so I don't really remember how much exactly I spent during the first year, but I can give general information: Food, diapers and clothing can be acquired pretty cheaply if done right and doesn't pose the main cost. Health insurance outside of the US is not much of a problem. I spent a lot less on gear/nursery. (I didn't feel like I really needed anything besides a baby wrap.)

Housing costs might increase in the first years already if you lived in a not-so-nice area before and want to move or if your previous housing situation was already very crowded. I personally don't consider it necessary for children to have their own room or something like that before they hit schooling age.

The cost is more to be found in daycare/private schooling and opportunity costs career-wise. One part of the latter is lost wages directly due to working fewer hours, others are less obvious. (Foregoing promotions, less time for additional qualifications, etc.)

What you should take into account is that children get a lot more expensive as they age. A baby is pretty cheap. After a while, it's not that easy anymore to find second-hand-clothing, they eat a lot more, you might want to spend a lot on educational expenses (mainly that).

Since I don't earn a wage (and get scholarships for my degree which are a lot higher because I have a child), I didn't lose any money there. Or any money at all, for that matter, since I wouldn't have had the additional money if it hadn't been for my child.

For me, the costs of a child have mainly been opportunity costs. I can't easily put a number on those, though. This stems mostly from the unusual situation that I had my child very young (<20 years).

Comment author: Jeff_Kaufman 27 December 2014 11:43:13AM 1 point [-]

I spent a lot less on gear/nursery. (I didn't feel like I really needed anything besides a baby wrap.)

Looking over our gear/nursery category, here are some sample expenses:

  • blackout curtains and velcro
  • baby bottle, nipples, sleeves
  • outlet covers, childproof cabinet fasteners

I personally don't consider it necessary for children to have their own room or something like that before they hit schooling age.

We're currently all in the same room, which mostly works. The main problem is that when she's napping in her crib we pretty much can't get at anything in our room without waking her, so anything we might need we need to store outside our bedroom.

you might want to spend a lot on educational expenses

This one seems really variable. Daycare around here and private school are similarly expensive, while homeschooling is something we could do pretty much on our current shifted schedule. If we're happy with the public school, however, then this is comparable to free daycare.

Since I don't earn a wage (and get scholarships for my degree which are a lot higher because I have a child), I didn't lose any money there.

What have you been doing for childcare? Can you look after your kid while you're in school or doing schoolwork, or has that been someone else?

Comment author: Denise_Melchin 27 December 2014 05:54:37PM *  2 points [-]

Hi Jeff, yeah, I didn't have those expenses in the nursery/gear category. We either had the things you mentioned already or didn't use them.

My daughter never napped in the bed when she was a baby or slept alone at all in the bed, for that matter. When she was sleeping and I wasn't going to bed yet, I always had her in the baby wrap for sleeping. Glad those times are over! The advantage of that was that she didn't awake from me moving, though. Have you tried playing background noise when she falls asleep, so she gets used to it not being silent?

Yeah, the daycare/private schooling thing is really different in Germany. Daycare here is very cheap, private schools are a bit more expensive, but still very cheap by UK and US standards. I want to keep the homeschooling option open too, that's why I intend to move away from Germany soon-ish (homeschooling is illegal here).

For almost the first 2,5 years I stayed home with my daughter and homeschooled myself until I was done with schooling. That was pretty exhausting and I don't particularly recommend it. After that, I started my degree and first had my daughter in daycare until the afternoon, it was a group setting for about eight children aged 1-3 and three child-care workers. She stayed there for a year and now she is in what we call kindergarden for children aged 3-6 with about 15 children in one group and again 3 child-care workers. Both solutions were private institutions and expensive in comparison, especially where she went to first, but I got reduced fees.

Comment author: Jeff_Kaufman 27 December 2014 10:29:50PM *  1 point [-]

We either had the things you mentioned already or didn't use them.

A minor example: you don't need outlet covers in europe because the outlets are designed in a safer way.

When she was sleeping and I wasn't going to bed yet, I always had her in the baby wrap for sleeping.

We did that for the first maybe three months, but as she got older and less good at sleeping through everything we found that crib naps worked better. We'll still do that occasionally when she needs a nap and we're out.

Have you tried playing background noise when she falls asleep, so she gets used to it not being silent?

We do that, and it helps. Noise outside of our room (piano, bagpipes, etc) doesn't wake her up, but noise inside does. I'm not sure how that works for her, but I guess she can tell there's someone there.

Comment author: Bernadette_Young 24 December 2014 10:21:55PM 7 points [-]

Very interesting, thanks for sharing. At exactly the halfway point tomorrow, our first year experience is similar: our housing and furnishing costs have been low, feeding her has been nominally free so far (though you are right there is an increased grocery bill for the nursing mother!), and between hand me downs and gifts, we have only bought about 4 items of clothing! Travelling costs have been low - £90 for an ergobaby carrier was well spent as we haven't needed a pram. We were handed down a car seat but got rid of our car as it wasn't needed.

I'm not sure disposable nappies have been very costly: we spend about £15 a month by only buying when they are on special (which is about a third of the time). The laundry costs and initial outlay would have to be quite low to better this.

A few country specific differences arise for us. There are no insurance premiums or costs associated with her birth. I get free prescriptions and dental care during pregnancy and the first year of her life. In the UK we get £80 pcm in child benefit (this disappears if one of us earns over £50k). My paid maternity leave means the lost wages so far total £2400 post tax, this will increase to roughly £9k for the next six months. (Paid childcare would be cheaper if I returned to work now, but I've decided that since my return to work will be full time, it's better to have another 6 months at home. ). This is a combination of employer maternity pay and a universal (statutory) one.

An aside: while those lost wages are in one sense a baby cost, I'm reluctant to tally them up that way mentally. Staying home with her has often been a joy for me, and has mentally rebooted me in unexpected ways. It's kind of analogous to taking a sabbatical to mentally recuperate. I suspect this is the sort of thing that varies with the parent and also how easy going the child is, but it hadn't struck me that way beforehand.

Comment author: RyanCarey 24 December 2014 03:10:42PM *  3 points [-]

$20k for the first year, overwhelmingly coming from lost wages. Not bad, and it's pretty useful to know that it can be done so cheaply.

Comment author: Diego_Caleiro 24 December 2014 04:33:29PM 0 points [-]

According to the income calculator in GWWC: You are in the richest 7.5% of the world's population.

Your income is more than 14.7 times the global average.

Also notice Julia is extremely well trained in finding cheap alternatives and saving money in general, whereas for most people the natural drive is to spend extra on their babies and infants, since they are among the people they most love.

Comment author: Jeff_Kaufman 24 December 2014 05:03:12PM *  4 points [-]

The $16k in lost wages is pre-tax while the other expenses are post-tax, which means the $16k cost is effectively more like a $12k cost.

EDIT: I'm wrong, the $16k Julia gave is a post-tax number.

Comment author: Larks 24 December 2014 05:43:12PM 0 points [-]

This is a sufficiently big difference it might be worthwhile Julia updating the original post?

Also, could you go into a little bit of detail about taking paternity leave off work - how your colleagues viewed it, and so on?

Comment author: Jeff_Kaufman 24 December 2014 05:53:41PM *  1 point [-]

Could you go into a little bit of detail about taking paternity leave off work - how your colleagues viewed it, and so on?

Everyone was very supportive. My work had just raised paternity leave from 7 to 12 weeks, and several other coworkers have taken leave recently. My boss did say several times that he was very glad to have me back, and that it was hard to schedule work when people disappear for months at a time, but there was no pressure to take less leave.

(More details on the different childcare arrangements we've tried: http://www.jefftk.com/p/childcare)

Comment author: Pablo_Stafforini 24 December 2014 05:39:55PM *  2 points [-]

According to a study cited by Julia in another blog post, the costs of raising a child are roughly constant over his or her childhood and adolescence (see image below). This would suggest that the total parenting costs for Julia and Jeff will be around $360,000, or $245,000 in present value (at a 5% real discount rate). For comparison, Brian's estimated present-value cost of parenthood is $300,000, while Bernadette's is $184,000 (thought the latter is expressed differently and doesn't take into account opportunity costs; see here for discussion).

Comment author: Jeff_Kaufman 24 December 2014 06:02:40PM 0 points [-]

During this period Julia was off work entirely for the first five months after the birth, which made for a lot of lost wages. Since then, however, we've changed our schedules so Julia's working 70% as much as she was before the baby. My guess is that over the next year lost wages will be lower, around $8-$10k. Then once they're in elementary school this will decrease even more.

Comment author: Pablo_Stafforini 24 December 2014 07:08:56PM *  1 point [-]

How do you explain the discrepancy between your predictions and those that would follow from the study cited above?

Comment author: Jeff_Kaufman 25 December 2014 01:31:25AM 4 points [-]

The study you link to isn't considering lost wages, and lost wages are by far the biggest expense for us.

Comment author: Pablo_Stafforini 25 December 2014 05:50:28AM *  2 points [-]

Yes, you are right:

In addition, expenditures on children made by people outside the household and by the government are not included. Indirect costs involved in child rearing by parents (time costs and foregone earnings and career opportunities) are also not included in the estimates.

It's remarkable that you managed to spend so much less than the study estimates: less than half of those in the lowest income bracket, and about a fifth of those in your income bracket.

Comment author: Jeff_Kaufman 25 December 2014 07:35:29PM *  2 points [-]

Let's look at it by category. The numbers for the situation most similar to ours seem to be the ones in "Table 2. Estimated annual expenditures on a child by husband-wife families, urban Northeast, 2012" on page 27. Looking at age 0-2 and average pre-tax income of $38,920 I read:

  • Housing
    • study: $3,620
    • j+j+l: $0
    • Our baby is small enough that she's in the same room as us, so we haven't increased our housing expenses. At some point, though, we'll probably move some place larger and then she'll have her own room. That will probably cost something like $6k/year ($500/month).
  • Food
    • study: $1,270
    • j+j+l: $500
    • Lily spent most of this year exclusively breastfeeding, and we estimated that Julia is eating $500/year more in food. She's now also eating a small amount of what we're eating, but not enough to notice. Many people in the study are probably using formula which is surprisingly expensive.
  • Transportation
    • study: $1,130
    • j+j+l: $0
    • We don't have a car, and take our baby on the bus and subway with us in a front carrier. Trips to doctors appointments etc are covered by our public transit passes, which we'd have regardless.
  • Clothing
    • study: $740
    • j+j+l: $150
    • Julia enjoys looking around at thirft shops, and found a lot of baby clothes there. We also got some clothes as hand-me-downs, and if you didn't have access to these it would be more expensive. On the other hand, we'll be able to pass these clothes along to other babies as ours outgrows them, and we have about three times more clothes than we really need.
  • Health care
    • study: $580
    • j+j+l: $3,150
    • We switched to a more expensive health plan that would cover more, and we were adding another person to our health plan. This would be much more expensive if my employer didn't cover most of our health insurance. This also includes various other expenses, like copays, diapers, and baby bottles (for pumped milk). I included our whole "gear" category here, even though some of it would fit better under "misc".
  • Child care
    • study: $3,250
    • j+j+l: $1,600
    • We haven't used daycare much (details) but in our area the going rate is about $290/week ($15k/year).
  • Misc:
    • study: $440
    • j+j+l: $0
    • I included this in other categories.

We saved $3k on housing and $1k each on food, transportation, and childcare. We did spend a bit more in other places, though.

Comment author: Denkenberger 11 April 2015 02:29:44PM 1 point [-]

I recently realized that the opportunity cost of taking off work is not just the lost wages in the present year, but reduced future wages. This is because salaries are generally based on experience. This applies if you plan to work up to a certain age. If you take a year off, you will have one year less experience for each of the futures years you work. From a couple sources, I have found this experience premium to be about 2% per experience year. Therefore, taking off early in a career results in lost future salaries roughly equal to the lost salary in the present year. This doubles the opportunity cost. Does anyone know if someone has posted on this topic more rigorously?

Comment author: RyanCarey 11 April 2015 04:37:52PM 0 points [-]

Yeah, this is a pretty key point that it would be nice to see covered, here or on the 80k blog.

Comment author: tomstocker 29 January 2015 12:06:48PM 1 point [-]

My child has been more expensive so far, but this is partly because the love of my life is not on a thrift drive and values convenience, and because I and other family haven't been around as much to help out because of work. I think these estimates rely on both parents having a commitment to reducing spend well below the rest of society. Otherwise I think double the gear, food etc. and its still very easy, but factor in a large loss in expected wages for the primary carer over the long term.

Comment author: TrentonWhitlock 17 June 2017 08:50:34AM *  0 points [-]

Remember, adding a new member in your family will definitely put a strain on your finances. You need to spend money on baby clothing, food, toys, health and other necessities as available at https://www.petitluar.com/collections/all every day. Pre-planning can be helpful, but you can’t predict all events early, so always be prepared for worst too.

Comment author: Larks 24 December 2014 05:39:48PM 0 points [-]

Thanks for this, this is a really interesting post. I think in general when doing EtG it's important to avoid escalating consumption with income; one of my freinds was very suprised that we intended to use hand-me-downs, "even though you you can afford to buy new clothes!"

Things that could make it less expensive for other families: more free care from relatives; receiving food assistance, daycare vouchers, or other benefits; lower income and thus more child tax credit; living in a cheaper area; using daycare more, allowing both parents to work full time; living in any of the 163 countries that provide paid maternity leave.

Presumably if you made less money it would also be cheaper, as the opportunity cost of your salary would be lower.