Raising a child is expensive. Or is it? This is a topic of discussion for every generation. I'm approaching that same topic myself in baby steps, literally four months into the first year. I often wonder myself, What is the average cost of a baby for the first year? We are going to look into that today.
$$ Show Me The Money$$
Before we get into the red ink, you do get some tax breaks for having a child!
- Qualify for up to $1,000 tax credit for birth of a child
- Qualify for a $600-$1,050 credit for childcare for one child or $1,200 – $2,100 for two or more children
- Your credit depends on your income.
- You might be able to use pre-tax income to cover child care expenses through your employer
How Much Does It Cost To Raise A Child?
The simplest answer to how much it costs to raise a child, is that it costs as much as you want it to. Thank You, Mr. Obvious. Ok this is a non-detailed answer, but there is some truth to this statement. Parents are not forced to put their children in traveling sports or pay for their college education. These are great opportunities to express love for your children, but is it the only way?
Enough on that tangent for now, the focus of this post is about children in diapers being rocked to sleep. The same principle applies to your child's first year of existence as well…the first year can be as expensive as you make it. It can be at least $10,000 if you go all out (new clothes, brand new accessories & furniture, disposable diapers, formula, baby food, & daycare). That doesn't include the doctor bill to deliver your precious child.
Today we are looking at the potential 3 largest expenses of your household budget for baby's first year that amount to approximately $7,200.
As of this post, we are 4 months into parenthood but we have maybe spent maybe $1,000 on our baby. We have been blessed with hand-me-downs, relatives that babysit, & the ability to breastfeed. We purchased cloth diapers that can be used for our future additions, & we bought used items (clothing, strollers, furniture) as much as possible.
I understand everybody has different circumstances. We are unique in that we are able to save money in three different areas that a sizable proportion of working parents do not or cannot for a variety of personal, career, or medical reasons.
Breast-Feed or Formula?
We are able to breast feed, which can have medicinal benefits for baby as well. This means mom has to place more emphasis of being well-hydrated & eat healthy foods. Although everybody should strive to live healthy lifestyles, regardless of nursing a child. For the course of a year of formula you can pay approximately $1200. At the recommended 6-month mark, you can begin feeding your child solid food, store bought baby food costs $342 for these 6 months.
If you use formula & baby food the 12 month combined total is: $1,542
If you choose disposable diapers, it is $1,000 per year. So figure $2,000 before your toddler is potty trained. We chose the “unconventional” approach of cloth diapers for three primary reasons. (1) Didn't want baby constantly exposed to the various chemicals in disposables (2) Cloth is a boatload cheaper & (3) Diapers create a lot of waste that fill up the landfills and nobody really knows how long it takes them to decompose [At least 200 years].
The beauty of cloth diapers is the law of compound savings.
We paid about $500 for all our diapers (on the internet) & they can be reused for future children. So if we use them all on baby #2, our diaper cost for each child will only be $250 each. There are some cons to cloth, you need to wash them every 2 or 3 days & they are inconvenient when traveling. For more information on cloth diapers, I recommend The Kale and the Krunchette's post on cloth diapers.
Don't knock it before you at least consider it. The ones we have, don't have those pesky pins that you might have been poked with! Cloth has reinvented itself for the 21st century.
Total Cost: $1,000 for baby's first year, $2,000 until potty trained (with disposables)
This is the most variable factor in your household budget. According to the Census Bureau 61% of children under 5 are regularly in child care. This same survey shows that daycare accounts for 7% of monthly household income.
We budget $0 for this item, because my wife is able to stay at home & either myself or a relative will tend after the little one when my wife does need to work (2 afternoons a week).
Lots of households need daycare full-time or part-time. There are lots of options (sitter, daycare center, nanny) & prices vary greatly depending on where you live. The national average cost for center-based day care is $11,670 but ranges from $3,600 to $18,770 per year.
Total Cost: $4,608 for 6 months of moderate use at a day care center (Assumes maternity leave, occasional use of family, & living in a cheaper geographic area.)
Money Saving Tips
I hope the above three sections have helped with you planning your budget. These are what I feel are the three largest expenses that a family will encounter & have opportunities to reduce. It is very easy to think the only expenses are the hospital fees associated with pregnancy & delivery, one-time expenses such as clothing & bedding, and the occasional formal picture to hang on your or a proud grandparent's wall.
There are other ways to save money on your baby budget. I cannot stress enough to consider hand me downs, buy used, or simply not get every parenting accessory. Avoid “Boutiques” & shop consignment sales or yard sales. These little expenses add up quickly!
Each baby is different, so there are things you will realize you may need to spend money on something new if it keeps baby happy & the used one breaks or cannot be had used. This is called trial & error.
As I mentioned before, a baby is as expensive as you make it. There are certain expenses that cannot be avoided, but other ones can be controlled. Some of the few things we bought new were an small & more portable umbrella stroller ($30 at Wal-Mart), a baby wrap ($50 from eBay because nobody really resells these things), & diapers because we felt it was easier for us to buy these than request specific ones from a baby shower.
Thank you for reading this article. I hope it has been eye-opening (if you are new to baby budgeting like I was) or motivational in knowing there are money-saving alternatives.
Just think, if you are able to save pennies during baby's first year, you can put that savings toward their college fund or a trip so other relatives can see her.
If you have any wisdom or questions when it comes to raising a child, please express it in the comments section below.
Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.