The Cost of Raising a Child (and the Baby Checklist You Really Need)

If you just assumed that having children must be an expensive proposition, last year’s “Cost of Raising a Child” report from the U.S. Department of Agriculture removed all doubt. The cost for a middle-class family to raise a child to the age of 18 comes in at around $245,340, according to the report — and that doesn’t even include the cost of college.

That figure represents a 1.8% increase over the year before, but it’s merely representative of the “average cost.” If you delve deeper into the report, for example, you’ll find that the USDA provided adjusted numbers for certain regions of the country: $230,610 in the urban south, $193,590 in rural regions, and $282,480 in the urban northeast.

Those numbers are intimidating indeed, but they shouldn’t necessarily scare you off. The fact is, almost anyone who has had children will tell you that, when you have kids, the financials have a tendency to “work themselves out.”

Meanwhile, many people would also argue that having kids isn’t nearly as expensive as they make it seem. The three biggest costs associated with having kids, according to the USDA report, include housing (30%), child care and education (18%), and food (16%). And those, at least, are all areas where you might have some control over what you pay.

For example, there are many ways to eat well without spending a fortune. You can pass on the dream house and buy a simple, sturdy home to save money. And when it comes to child care, you don’t always have to go with the most expensive daycare you can find.

A Pre-Baby Financial Checklist

The truth is, there are plenty of ways to whittle down the cost of having kids to something you find acceptable. What’s more, there are also plenty of ways to financially prepare yourself for the challenge.

You don’t necessarily need to have all of your ducks in a row when the time comes, but it never hurts to figure out how you might be able to afford kids without forsaking your other financial goals. This pre-baby financial checklist can help you figure out what you really need:

Quality Health Care

The passage of the Patient Protection and Affordable Care Act (PPACA), also known as Obamacare, was disastrous in some respects, but not for would-be parents. Prior to the passage of the law, pregnancy was considered a pre-existing condition and maternity wasn’t covered in many of the health insurance policies offered on the open market.

But now things are different. Obamacare made pregnancy, maternity, and newborn care one of the 10 essential benefits that must be included in all health insurance plans – with no waiting periods.

If you don’t have health insurance now and haven’t experienced a qualifying life event, you’ll need to wait until the next open enrollment period to apply. For 2016, open enrollment begins Nov. 1.

If you don’t qualify for Medicaid, but earn less than around $95,000 per year for a family of four, you may also qualify for subsidies that can help you afford coverage. Check out for more information.

If you don’t like your coverage options for some reason, you could always consider health care sharing ministries instead. Maternity is also included in these plans, although waiting periods may apply and you must meet certain criteria to qualify.

No matter which option you choose, it’s also important to make sure that you understand your financial liability – and plan for it.

For example, if you have a $2,000 deductible, you may have particularly healthy years where you don’t owe that much. But if you give birth and stay a couple of nights in a hospital, you’re definitely going to rack up a tab and owe your full deductible. You could plan on saving $250 per month for eight months of pregnancy so that you have the cash in hand when the time comes.

The bottom line: Having a baby requires having quality medical care of some kind, even if it’s just seeing a midwife or doctor and preparing to have your baby in your own home. Some of your options may not cost a lot, but it’s always best to know what they are and prepare the best you can.

Safe Housing

When preparing for baby, you don’t need a huge house with a separate bedroom for everyone. Babies actually need very little in that respect – a corner nursery in your bedroom could work, for example. All they really need for the first year is a safe and sturdy crib, a dresser, and room to roam.

Young kids often want to share rooms anyway – even when they have their own. The most important things you can do to provide safe housing don’t cost money at all – things like plugging your electrical outlets for safety, picking up small items off the floor so your baby doesn’t choke on them, and keeping your baby’s room and body clean and dry so that he or she doesn’t get rashes or sick unnecessarily.

Baby Essentials

When you head out to Babies ‘R’ Us for the first time, it’s easy to become overwhelmed with all the “essentials” that fill it from floor to ceiling. Fortunately, about 75% of it is a huge waste of money that you can ignore altogether.

You’ll never need a baby wipe warmer, for example, nor will you need a $40 outfit with matching shoes.

This is where a lot of people fall under the assumption that kids have to be crazy expensive. When you see new strollers for $299 and new car seats for $400, it’s easy to think that’s the way it has to be.

Fortunately, your baby will survive without almost all of that fancy, pricey stuff. For the most part, your baby will only need the real essentials: things like bottles, some simple outfits, a baby bath, and diapers.

The big stuff – car seats, strollers, cribs, swings, and bouncers – can all be purchased secondhand. Look for local parents’ groups on Facebook or search online resale sites like Craigslist. (Make sure to check for safety recalls, however, before buying used cribs, car seats, and strollers.)

You can also ask your friends and family if they have any baby stuff to get rid of. When I was pregnant, I bought my sister’s car seat, high chair, and swing at a steep discount. Even better, I knew where it came from, so I could rest assured that the car seat had not been in an accident and that everything was in clean, working condition.

An Emergency/Maternity Fund

The U.S. Family and Medical Leave Act (FMLA) guarantees 12 weeks of unpaid leave after the natural birth or adoption of a child. But, there are no laws guaranteeing paid leave of any kind in the U.S. (a distinction we share with such countries as Papua New Guinea). So when you’re getting ready to have a baby, it’s important to make sure you understand your employer’s maternity policy.

This is where an emergency or maternity fund can come in handy. If you aren’t being paid for maternity leave, you might want to consider saving up several months of pay ahead of time. If you plan on taking the standard 12 weeks off, for example, you’ll need to save up three month’s salary. That may sound like a lot, but it becomes a much more realistic goal if you start saving early.

Having a little savings cushion can also make bringing your baby home a simpler, less stressful experience. Meanwhile, if you are carrying any high-interest debts, now is the time to pay them off. New babies have a tendency to consume some of your expendable income at first, so the fewer liabilities you have, the better off you’ll be.

A Plan for Childcare

With the average cost of childcare spiraling out of control, it’s no wonder that so many families are struggling to keep both parents working – and make ends meet.

A quick look at the statistics explains it all. According to Childcare Aware of America, the average cost for one year of full-time care for an infant can run anywhere from $5,496 in Mississippi to $16,549 in Massachusetts.

Although many families get assistance through Child Care and Development Block Grants, the TANF program, and various state programs, the cost of full-time care often makes working itself cost-prohibitive.

It helps to have a childcare plan in place before you have children, and it’s important to know that you do have options.

For example, some families find success having each parent work a different shift. That way, at least one parent is home at all times and they can reduce the need for childcare or eliminate it altogether. Meanwhile, other families choose to keep one parent at home full-time.

You could also consider working only part-time, trading childcare with a friend or family member so you each can work, or asking family members to watch the kids for a certain number of hours each week. A work-at-home-job may also be an answer if you have a specific skill that is marketable online, although competition can be fierce for these positions.

Regardless, exploring your childcare options — and career options — ahead of time is the best way to find a reasonable solution that you can both afford and live with.

Life Insurance

If you’ve been childless for some time and have enough savings to cover your final expenses, you probably haven’t given life insurance that much thought. But all that should change once you bring a new life into this world. Now that you have a dependent, you need enough life insurance to make sure your son or daughter will be taken care of if you die.

Unfortunately, many new parents fail to plan in this regard. According to a recent report from LIMRA, an association that provides research and consulting to the life insurance industry, a full 30% of American households went without life insurance in 2013. Meanwhile, out of families polled, 50% stated that they knew they needed more life insurance.

Here’s the good news: You can buy a term life insurance policy for next-to-nothing if you are young and healthy. My husband and I bought our first term policies when we were 25 years old, and our premiums are less than $20 per month.

If you don’t have life insurance, the time to apply is now. If you’re able to secure a 20-year or 30-year term policy while your child is young, you will have the peace of mind that comes with knowing your child will be cared for in your absence.

Don’t know how much life insurance you need? Read this post for guidelines on figuring out how much life insurance to buy.

Can You Afford to Have Kids?

Reading through some of these details can probably feel overwhelming, but it’s important to remember that none of this has to happen overnight. Most people who have kids take care of a few items on this list a time and do as much as they can, yet still enter parenthood with a few emergencies hanging over their heads.

The most important thing you can do to financially prepare for baby is to think ahead as much as you can. Ask yourself what your baby really needs – and what you can sacrifice – and then create a plan that puts saving for baby first.

You don’t need to be rich to have a baby, but a little bit of saving – and a whole lot of planning – can go a long way. So don’t be discouraged by the statistics; raising a child doesn’t have to cost a fortune if you can avoid buying every adorable outfit and toy you see.

Your baby doesn’t need all that stuff anyway, and the most important thing you can give them – your love – is already free.

What financial steps did you take to prepare for parenthood? What do you wish you would have done differently?

Holly Johnson

Contributing Writer

Holly Johnson is a frugality expert and award-winning writer who is obsessed with personal finance and getting the most out of life. A lifelong resident of Indiana, she enjoys gardening, reading, and traveling the world with her husband and two children. In addition to The Simple Dollar, Holly writes for well-known publications such as U.S. News & World Report Travel, PolicyGenius, Travel Pulse, and Frugal Travel Guy. Holly also owns Club Thrifty.