Updated on 10.19.07

Five Reasons Why Having A Child Isn’t As Expensive As You Might Think

Trent Hamm

KidsIn the last week, I’ve received four emails from nearly-panicked people who have recently discovered they’re pregnant, crunched the numbers, and thought “MY GOD WE CAN’T AFFORD THIS CHILD!!!” and fell quickly into panic mode.


There are a lot of reasons why having a child isn’t the financial bomb that it’s made out to be. Trust me – I was in deep financial straits when our first child arrived and we’re now in much better financial shape than we were before.

Here are five big reasons why you shouldn’t panic when the plus sign comes up on the pregnancy test.

Adaptable budgeting Most people can’t believe that they can squeeze water from a rock when it comes to their budget, but you find when you’re responsible for a child, you find ways to make do that you would have never realized before. It simply adapts – it’s hard to explain until you start going through it.

Changes in spending and priorities Do you spend money eating out and going out on the town? That spending is going to drop drastically, as will your other entertainment costs. You’re going to be spending a lot of evenings at home now, and evenings at home are almost always cheaper than evenings out on the town. Your shopping trips will also get more efficient, as you won’t have time to muse slowly through the aisles grabbing consumables – instead, you’ll have a list and try to do it as efficiently as you can. This also saves some serious money – we actually spend less on groceries now with a family of four than we did when it was just the two of us.

Another dependent on the ol’ tax return A child counts as another dependent on your taxes, which means that it’s an automatic $3,200 deduction on your taxes (and likely more in future years). If you’re in the 28% tax bracket, that means your income tax bill just went down by almost $900.

The child tax credit In addition, through 2010, you also get a $1,000 tax credit for each child if you make below $110,000 a year. A credit is not a deduction – it’s literally subtracted from the total amount of tax you owe. This means that between the factor of the child being a dependent and this credit, you’ll likely save almost $2,000 on your income taxes.

Child care tax credit To me, this was icing on the cake. The child and dependent care tax credit states that you can receive up to 35% of the money you pay for child care as a tax credit, up to $3,000 of expenses for the first child (or $6,000 for the second and subsequent children). Thus, let’s say you’re going to be forking over $1,000 a month for child care. That’s $12,000 over a year, but of that $12,000, you’ll be able to claim $3,000 of it as a tax credit, directly reducing your taxes by $840 if you’re in the 28% bracket. Tack that onto the additional savings above, and caring for a child isn’t as expensive as you might have thought.

When you first find out that you’re pregnant, let it be a happy time, and don’t worry too much about the money – it’s not as bad as many doomsayers might lead you to initially think.

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  1. sunshine says:

    Interesting perspective. I’ll share an anecdote: I was in a grad class where the women who were childless (There were a variety of ages in the class) intended to remain so for a while and until they could “afford” it – myself included. My prof looked at all of us and told us we were stupid to wait so long (more than likely he said it more eloquently). He said there is never enough money if you look at it that way and one would never have a child. His point was the same as yours – when you have a child, you just make do and somehow, the money is there.

    I remember my mom made do on very little (she said once that all she needed was $1000/month to survive and that’s in S.FL) when I was young (up to abt 12). I know that she got creative, perhaps utilizing methods that I wouldn’t, but I never starved, was always clothed and went to private school to boot. Today, I continuously marvel at her perserverance and ability to never make it seem like we were deprived.

  2. amanda says:

    What about child care costs? I know that where you live, day care is much cheaper but for those of us in urban areas… well, I think hiring a nanny would pretty much take my entire salary.

  3. Isaac Grover says:


    I would like to thank you for publishing this article. My wife and I gave birth to a beautiful baby girl on Monday evening, and like many new parents I was worrying about how the baby would fit into the budget. There are many new expenses that come with a baby, and most will simply expand current budget categories to squeeze out other categories that will become smaller anyway. Babies incur additional food, clothing, and health costs, but eating out and unnecessary spending costs will go down accordingly. Thank you again.

    Isaac Grover

  4. Amy K. says:

    Another resource to take advantage of, and I don’t know how this interacts with the child care credit, is the Dependant Care Account

    It works very much like a flexible spending account, allowing you to submit receipts, and effectively pay the expenses with pre-tax money, but it is a use-it-or-lose-it proposition.

  5. Rick says:

    Trent, is that your little boy? He’s cute.

  6. Michael says:

    If you WANT a baby, you’ll make it work. Your priorities will evolve – immediately after birth or within a year or so. And you don’t have to conform to society’s or your family’s expectations (i.e., overconsumption via guilt)to raise a happy child.
    I would have started earlier (I’m 44) but I had to meet the right woman first.

  7. !wanda says:

    When people talk about “affording” children, I would think that they mean both money and time. A child is a huge time commitment, especially with the modern, nurturing parenting style. It seems reasonable to me to delay childbearing until you felt that you’ve lived life and would be happy making the sacrifices on your time necessary to raise a child.

  8. Michael says:

    One could deduct $3,300 per dependent in 2006.

  9. Amanda B. says:

    I had this same fear when I was pregnant. Our budget was already tight, so I thought there was no way we could stay afloat. You do find the money and the time. It really is an interesting occurrence.

  10. Dawn says:

    When becoming a parent it is amazing at how flexible our “adapt” muscle will become. As the infant grows so does your ability to adapt. The gifts that a child gives to a parent far outweigh any material goods the parent might miss out on.

  11. HamiHarri says:

    Love this post…thank you.

  12. Money Socket says:

    I totally agree with changes in spending priority. If I was in the position to make purchasing decisions that would benefit the wellbeing of my child, I’ll put that before my own needs but most importantly my wants.

    Also you may not want to go out as often since you have a child to take care of.

    Good stuff.

  13. Zeca says:

    Well, in 2007 a child shouldn’t be an accident. So people shouldn’t “discover they are pregnant”.
    Of course that spending will drop with your quality of life. That’s not a fair comparison.
    I love children just like I love animals. I go to the Zoo to watch them. And that’s enough for me.

  14. Minimum Wage says:

    You gotta love all those taxpayer subsidies. Is this a great country or what?

  15. karen says:

    Just wanted to add if you nurse your baby the first year, you can save about $2,000….

  16. asfd says:

    This is ridiculous. Children ARE expensive, particularly if you want them to grow up healthy and go to a good school to get a good job as an adult. It’s pure fantasy to say that “the money will come.” The money DOESN’T come, I’ve lost my home, my job, everything and still had a child to feed. There’s nothing wrong with waiting until you have savings, a good job, and a decent home with a co-parent who isn’t a pervert. Having a child is nothing to jump into. And if you think it’s not right for you, you don’t have to have one. Try spending time with children first, as in every day, daily care with, say, a relative. If you can hack it, and have the funds, go for it.

  17. Grant says:

    I agree with Zeca. When I read the first paragraph I thought “Are these people idiots?” Shouldn’t you figure out before you have children whether or not you can afford them?

  18. Writers Coin says:

    This is very comforting news, thanks!

  19. Sarah says:

    As one of those who emailed Trent this week, I would like to clarify. Yes, I am pregnant (almost 19 weeks, so this is not a new turn of events). Yes, this baby was planned. My husband and I had crunched the numbers and we are prepared. However, as is the nature with the best laid of plans, things have now changed. One of our major expectations was that my husband was going to be able to work from home full-time and that our child would not need to go into daycare. Now that may not happen. I know that everything is going to work out, but that threw a major wrench into the plans. I simply was looking for a different perspective and I thank Trent for his email and this post. There is no need to attack people for being “idiots”.

  20. !wanda says:

    @Zeca and Grant: Don’t be so judgmental. Even with the most reliable contraceptive methods, there is a small risk of pregnancy. Out of a thousand women who get a tubal ligation, around 18 will get pregnant in the 10 years after the ligation. I have no idea what happened in the families that wrote to Trent, but I bet that at least some of them were using contraception and were just unlucky.

  21. maxconfus says:

    Can anyone explain to me why so many young people, and seemingly a lot of the pf bloggers, have done so poorly with money in their young years that planning for children is such a massive decision? I am truly curious.

  22. Jay Cee says:


    Great reassuring and logical wisdom. Being a professional worrier, it’s nice to read something that purposefully instructs me how and why not to worry!!

  23. Danielle says:

    An alternative view to waiting is the financial costs of waiting too long to have kids. The money that was saved in waiting till the time was right could be spent in trying to have the child in the first place due to infertility treatment. One must keep that in mind. I don’t have kids and am waiting for the right time, but I know that there is a timeline involved. The perfect time may never come so I may have to act and hope for the best.

  24. Kat says:

    Maxconfus- Have you seen the cost of college? Have you seen the housing prices for the last 5 years? Have you seen low little the salaries are to go with these costs?
    Those things alone make having a child a massive decision.

  25. !wanda says:

    @maxconfus: Because people who are happy with their finances don’t read or write PF blogs? Also, are you implying that having children is not a massive decision?

  26. Wendy says:

    For those of you who seem to think that worrying goes away when you plan well, we planned very well, and we’re happy we’re having a baby. However, as Sarah mentioned, things don’t always go as planned, and even if they do, there is never a 100% plan when kids are involved. Also, there’s nothing like finding yourself responsible for a whole other *life* to make you second guess a lot of your choices.

  27. Monica says:

    What I don’t understand is why not preventative measures if a pregnancy would be disastrous (for financial or other reasons). Get a reliable form of birth control and use it religiously. I take the pill and I am very conscientious about always taking it every day at the exact same time. If pregnancy would be very very very disastrous for me, I would use two forms of birth control (pill and condoms). And if you’re sure you’re done with having children or don’t want any ever, a vasectomy might be a good idea.

  28. Susan says:

    Right on Trent! And I agree totally with Michael, your priorities do evolve. Since most of us fall completely in love with our children, it is a powerful force that makes us become amazing whether it is leaping tall buildings to create a better life or drying cloth diapers on a clothesline–our children make us better people.

  29. Bri says:

    I’d like to second that there is a major difference between stupidity (not using birth control) and a statistical anomaly. My company was recently liquidated, so all of us lost our jobs. Luckily we had tons of notice so many of us took the time to beef up our emergency funds and look for jobs. Unfortunately, a dear friend, who had a vasectomy five years ago, found out he and his wife were pregnant. And due within a month of our layoff date. He did find a job (at a much lower salary), but his health insurance doesn’t start for 90-days. So COBRA here he comes. And now they found out that the newborn has a hole in his heart which must be operated on. COBRA will only pay 80% of the cost. Now most of us plan for one disaster, but a layoff, a newborn, and a major surgery all in a three-month time frame? Even the most prudent savers might freak-out in that situation. But even in the midst of it, they are making due, with much help from friends and family.

  30. Kat says:

    Monica- I ask every year to have my tubes tied, the answer is always no. I am too young, I haven’t had kids yet, etc. My DBF has asked for a vasectomy and can’t get one because he is also young. So it isn’t as simple as you think.

  31. partgypsy says:

    I think what Trent is trying to say, is if you are financially responsible (have a budget, live within your means) having a child is not the make or break it situation that people make it out to be. It’s amazing how resourceful one can be once the baby is here! The big ifs are, can one of the parents stay home to do child care (paying for child care is very expensive) does this minimally affect the parents long term career prospects because of being out of the job field (at the very least for leave) and do they have health insurance to cover the mother and child? I don’t think my standards are high, but there have been some people who I have thought, they are not ready to have a child (financial which also go with emotional maturity reasons).

  32. RG says:

    I think it’s important to be balanced when approaching the decision to have a baby – realizing that no matter how prepared you may think you are – you aren’t really prepared! And no matter how unprepared you think you are – you’re not as unprepared as you think you are. There is never a perfect time to have a baby, realize that and just do your best. There’s a leap of faith involved.

  33. Mrs. Micah says:

    To the folks who are shocked by unplanned pregnancies, there is no 100% effective contraceptive except 100% abstinence. I’ve known people to become pregnant on the pill or while using condoms. So unless you think sex is only for procreation, try to be a bit more understanding. They could have an abortion of course, but that takes a lot more reflection than simply popping a pill every morning or putting on a rubber.

    I was talking to a friend about this today. She said that you find money. It’s still a huge investment, of course, but it wasn’t as bad as she’d feared. And yes, her pregnancy was planned and she’s well off by most standards, but she was still nervous.

  34. Sandy says:

    A couple of tips from a “veteren parent”…I was really worried 15 years ago and was pregnant…how could we ever afford this baby? Although she was well planned and wanted, it still was a dilema for me. A couple of thoughts that may help some of you: #1 Definately breastfeed as long as possible. I was able to nurse (yes, I’ll admit to being a breastfeeding Nazi)until they were 3. Sounds like a long time, but the benefits are endless..I’m still reaping them today (my kids are rarely sick, and I haven’t paid a dime for braces, as their teeth are perfect). #2 Do not get your kid hooked on juice…let them develop a taste for water (filtered water is best)…they won’t think that everything has to be sweet, and therefore, you won’t have to buy soda when they are older (thus saving on medical and dental costs). #3 Spend as little as you can on them while they are young. Between the breastfeeding savings ($2000) and shopping thrift stores, etc…for all their clothing and toys, you can save an awful lot. Same with activities…they are young and will likely be happy going to a park or playground or other free places (storytime at the library was one of our funnest things to do!). Organize a playgroup when they are about 2, and this saved money…have your own lttle preschool when they are 3 with 3-4 other little friends their age. We saved loads on tuition, and we could teach the kids whatever we wanted (each week had a different color, simple craft and snack, etc..). It’s a big lie that children need to go to a school when parents could provide the same with a little creativity.
    Now that my girls are 14 and 9, the expensive years have come upon us (lessons in dance, music lessons, martial arts, Girl Scout expenses, etc…) and money has gotten easier to come by. The other main thing is to not buy too expensive of a house. I’ve been able to stay home with my girls nearly the whole time because we bought a house way below our means, so it’ll never be a problem paying the mortagage. In fact, our goal is to have the mortage paid off in 2 years (10 years total) and that then will help out when the older one starts college in 2012.
    Best of luck to all the new parents out there…it’ll all be ok!

  35. Adrian says:

    Don’t forget Earned Income Tax Credit (EITC) if you don’t make very much. Last year we received over $2800 from federal and state EITC programs. As a graduate student with one kid this definitely helps.
    The amount you receive is determined on how much you make.

    Ebay is a great place to get good baby and kids clothes for cheap.

  36. sefner says:

    I’m pretty sure your child care tax credit calculations are wrong as you can only claim a maximum of $3000 worth of childcare costs which you then must take between 20-35% of depending on income to arrive at your credit.

    If I’m wrong I’ll be redoing last years taxes.

  37. debola says:

    I live in London where you get about £20 a month in child benefits unless you are on seriously low income. We have 2 boys and thought we were financially prepared but … the savings soon vanish. I invested in property to pay for their uni but that will probably be sold to fund other unexpected occurrences. Children are physically and financially draining but they give you a hell of lot that money can’t buy. America is so materialistic so a lot of Americans will not get it.

  38. plonkee says:

    Actually, child benefit is more like £20 a week. And many people can take advantage of child tax credit. Children are a serious decision, they take both time and money like its going out of fashion, which I think !wanda pointed out earlier.

  39. Amanda B. says:

    The presumption that unplanned pregnancy happens only to the stupid or irresponsible is remarkably under informed. Babies happen, even if you are careful. I thought when I got pregnant with my son that it was too soon, but it turns out he was right on time. I honestly believe you are never “ready” to be a parent. No matter how much money you save, you will still have to sacrifice something. I didn’t have a job when I found out I was pregnant, so no insurance. I lost my job before my son was a year old, and we made it work. If you commit to your family, it will work. You may look back later (like I do now) and be amazed that you aren’t homeless, but family works. Those who haven’t been there may not believe it, but it does.
    I love the “develop a taste for water” idea. I suggest ice. We only put it in my son’s water and he loves the noise it makes. It keeps him interested in water.

  40. Elizabeth says:

    Sefner is right — you’ve got the child care tax credit info wrong. The maximum expenses you can claim are the $3000, and then it’s 35% of that. And it’s only 35% if your income is $15,000 or less — it phases down to 20% by the time your incoem reaches $43,000. So, if you have a family income of $45,000, pay $12,000 in child care costs, your maximum credit is 20% of $3000, or $600.

    And it’s not refundable so most low-income families (who pay federal payroll taxes but don’t owe income taxes) don’t benefit.

  41. Trent Hamm Trent says:

    I fixed the math on the child care tax credit portion.

  42. Dan says:

    >Babies happen, even if you are careful.

    I thought we’d pretty much established, you know…scientifically, where babies come from…

    Another things that eases the cost of kids is hooking into the “mom’s network”…Between my wife and her friends and family swapping stuff I don’t think I have bought more then $100/year of clothes for any of my three kids (mostly shoes, socks and underwear). Ditto for toys and other kid related stuff (car seats, strollers, diaper bags, etc).

    I agree on the breastfeeding comment – while 3 years seems a bit extreme – you can pretty much go from breast feeding to food, and you will be saving a lot of money and like the other poster mentioned this is great health-wise for mom and the kids.

    Also consider one of you staying home – we did the math when we had our first kid and my wife would have had to make about $35k for work to make sense for her to work anymore.

    Child-care is about 90% of the expense of having kids. On the child care tax bit…I think some of the difference you are seeing here is that some people here have that program through work where you can pay for your child care (and medical stuff) with tax free money.

  43. kathy says:

    Listen, I was a 21 year old, flat broke, college student when my boyfriend and I found out we were going to become parents. We got married, and had to make enormous changes to our lives. I had to quit school and my part time job and move to where he was in grad school, making very little money. We survived. You make a tight budget and stick to it. You become very creative with entertainment, gifts, and family time. We became house parents at one of the local college sorority houses to cover housing expenses, I got a part time job to pay for diapers, I did a lot of sewing, and made a lot of simple meals to get us through it. Eventually, I was able to finish college, and now, 26 years later, our kids are mostly grown and taking care of themselves.
    Sometimes we need the advantage of disadvantage to show us what’s really important and to appreciate any increase in salary or circumstance. It’s really empowering to know that you can live on less.
    Also, remember that while it’s nice to have a college fund for your children, they can still get a very good college education without one. I also agree with Sandy. Breastfeed as long as possible and spend as little as possible on them while they’re young. Seriously, my 15 month old granddaughter would rather play with my Tupperware,or dance to music on the radio than play with all of the toys she’s been given.
    Finally, take ALL the hand-me-downs you’re offered. Your child won’t know or care that they slept in a second-hand crib when they’re 20 years old.

  44. SwingCheese says:

    I once had someone tell me (echoing what I’ve heard above) that if you wait to be financially ready for a child, you will never have one. It annoyed me at the time, and it annoys me now. Surely, when planning a child, it is better to do it when my husband and I have things like insurance coverage, steady job, etc.

    That having been said, I understand the meaning behind it. My only issue is that person speaking to me seemed to think that I was waiting until I had enough savings to support them birth to death. That wasn’t the case, but I did think that I should have more financial options, support, and overall maturity than I did as an 18 year old freshman in college.

    One last thing – I think that, orthodontically speaking, straight teeth are a product of genetics, not breastfeeding. My husband was breastfed, and his teeth could have used braces. I was bottle-fed, and my teeth are perfect. I would never disagree with breastfeeding, especially from a health perspective (to this day, my husband is rarely sick, and has been that way his entire life), but I don’t think it has anything to do with needing orthodontia later on.

  45. Amanda B. says:

    I didn’t say babies spontaneously generate, I said they happen. I know you don’t expect newly married couples who just aren’t “ready” for kids to continue to abstain? I happened while my mom was on the pill and my son happened while I was on the ring. Many a child has come into this world as a result of diligent people and faulty science. I think what I really wanted to get across is even if you are not planning on kids at the time you conceive, they can still be perfectly timed. I also wish that I spent more of my pregnancy glowing and less of it terrified I was going to have to live in a box on the street.

  46. Elizabeth says:

    Sorry to nudge, but the child care tax credit numbers are still wrong. It’s 20% of $3,000 or $600. And that’s a credit, not a deduction, so it’s the full $600. (The 28 percent only applies if it were a deduction.)

  47. Ariella says:

    This whole “you will find the money” attitude is one that assumes quite a few things. How about this scenario: the health insurance comes from the WIFE’s job, the husband has no health benefits offered at his job at all, the husband and wife make equal salaries, and the wife’s work doesn’t offer any type of maternity program (this is OK under the FMLA as long as the company has less than 50 employees).

    So, now you have a situation where the wife can’t stop working because she has to maintain her health benefits, the husband can’t automatically stay home because the wife isn’t the main breadwinner, and there’s no salary offered to the wife during the 12 weeks (or whatever) she might want to stay home with the kid. Yes, you can save for those 12 weeks, and hopefully the job will still be there afterwards, but this attitude seems remarkably naive.

    Not everyone, even people who are frugal savers and are careful with their money, can afford a child or “make it work.” Sometimes, you just have to wait. If an accidental pregnancy occurred in the situation outlined above, that couple would basically HAVE to find an affordable daycare, and the pregnancy/child would almost certainly affect one parent’s ability to earn because of reduced hours at their job. I just don’t think it’s as simple as, “the money will come.”

  48. Macinac says:

    You’re not going to like this. The best way is old dad young mom. Dad makes enough money that mom need not work. The baby is a minor blip in the expenses and dad is quite happy to pay whatever it takes anyhow. The best day care is provided by mom and the baby can be breastfed. So who is a young guy going to marry? Well, his first wife should be an older widow.

  49. Ruby says:

    I think it’s hilarious to hear so many couples whingeing that they ‘can’t afford’ a baby. What about single mums? The major cost of a baby is child care, and/or reduced earnings when a woman cannot work because the little one is dependent on her for LIFE. Until the Australian government recognises that mothering is the world’s most important job, and supplies paid maternity leave like Europe, single mothers will live lives of poverty, and mothers with partners will have to hand their babies over to abusive child carers.

  50. njthinker says:

    So, let’s dust off this thread and fast forward to the present, since there hasn’t been a new post here in over year, but quite a bit has changed since then…

    Given the current state of our economy, does anyone think that it is still a good idea to go ahead and incur expenses for ANYTHING that costs a lot of money, on the belief that “the money will come”? Isn’t this exactly the same sort of thinking that has gotten us into this royal mess that we are experiencing now?

    I don’t care what the commodity is… houses, cars, yachts, vacations, flat-screen TVs, babies… if you don’t think that you can afford it before you buy it, then you shouldn’t buy it until you feel comfortable in that regard. Period.

    And if that means never having a baby, then so be it.

    My wife and I have no children. Our total household income is well into the six-figure range, but when I consider all of the associated overhead, there is absolutely no way that we are in any kind of position to afford even one kid on what we make. I know a couple – the wife is a psychologist and the husband is a general practitioner. They have three children. They once told us that their combined income is well over half a million dollars a year… they do not live extravagantly at all, yet they are still barely getting by.

    So go ahead and call us doomsayers if you want, but we prefer to use the word “realists”… because this is reality, and that’s who we are.

  51. Deborah says:

    I found myself single with an unplanned pregnancy in 2003. I was terrified, but abortion was out of the question. I decided that I was going to be the best mom I could possibly be. My daughter will be 5-years-old next month, and she is doing great! I worried about money at first, but once I had my daughter I drastically cut down on entertainment. It is amazing how much money you can have once you give up or cut back on concerts, restaurants, etc. My daughter is on a gumnastics team and takes swimming lessons that is my entertainment now. I would tell people if everyone waited for a perfect time to have a baby there would not be any babies.

  52. bargainph says:

    I should be agreeing to this post but I can imagine what a first time father and/or mother would feel when they have their first child.

    “More responsibility (and/or happiness)”

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