The Cost of Raising Children

Table of Contents
Introduction
How To Use Monthly Cost Tables 1-7
Summarizing Your Costs Tables 8 and 9
APPENDICES
Appendix 1: Case Study
Appendix 2: USDA Tables
REFERENCES

Introduction
How much of a family's yearly income is spent on the children? As they move through life, many families want to know this so they can:
plan for future costs
prepare for family emergencies
determine support needs at the time of a divorce
purchase adequate life insurance to provide support if a parent should die
Families with accurate spending records can easily estimate out-of-pocket child-raising costs. Many families do not keep records, yet they still have financial and/or legal need to know how much it costs to raise children.

This publication walks through a national set of figures that estimate the cost of raising children of several ages in both two-parent and one-parent families. These national figures were first prepared in 1960 and have been updated over the years.

The dollar amounts in the tables are guidelines based on estimates from the U.S. Department of Agriculture (USDA) of what families spend in each age range to raise a child from birth to age 18. The yearly amounts have been updated to the latest year (2000) using the Consumer Price Index (CPI). The monthly amounts have been determined by dividing the yearly amount by 12 and rounding to the nearest dollar. These are considered guidelines based on USDA data and not exact amounts.

The guidelines are organized into seven areas: housing, food, transportation, clothing, health care, child care and education, and miscellaneous. Information below each table will tell you what is included in the guidelines. These tables have been put into monthly amounts because that is the way most families think about costs. Also, if divorce is a consideration, parents can better compare these monthly costs to the amounts recommended for child support.
The costs for children in a household depend on many factors. The number of children in the family will influence the total cost. Some things can be shared, such as housing and transportation. Other items are exclusive to each child and have independent costs, such as health care. The income of the parents influences the choices made about the spending for children. Higher-income families spend more money on their children than do lower-income families. Families in urban areas spend about the same amount on their children as do families in rural areas. However, transportation and health care cost more in rural than in urban areas.
This publication uses the data available for comparing two-parent costs with one-parent costs for families in urban areas. There is no information available on one-parent families living in rural areas or in the Midwest. Therefore, the tables in the appendix for yearly and monthly costs for rural families and families in the Midwest are calculated only for two-parent families.
Summary Tables 8 and 9 let you compare the costs for your family. If you are using the publication to determine two-parent family costs and want to see what adding a child to the family would cost, work only with the two-parent side of Tables 1-7. Then use Table 8 to figure the cost of adding a child to your family.

If you are a parent contemplating divorce, then you will need to use both the two-parent Table 8 and the one-parent Table 9. If you have more than one child and will also have a change in income, some adjustments are needed. These adjustments are called economies of scale. An adjustment factor table is found in the appendix (Table A).

Use the adjustment factor table if you are actually involved in a divorce or like to work with numbers. Otherwise, the unadjusted tables (Tables 1-7) will give you sufficient information to assist in your decisions.