Updated on 04.15.13

Money and the Two Year Old Child

Trent Hamm

Almost a year ago, I wrote a summary of the day-to-day costs of having a one year old child, and I concluded that it cost us about $40 a day to maintain our son. I thought it would be worthwhile to note how that spending changes over time, so here’s an overview of the costs of a two year old child.

Clothing: At this point, clothes last him for about six months or so. He’s currently wearing a mix of 24 month and 2T clothes, which are slightly big on him (he’s on the small side for his age, but not worryingly so – 30th percentile or so). Because of that, clothes costs are actually much less than when he was younger and needed baby clothes replaced every few months. I would estimate that overall, his clothing costs are now down to an average of $1 per day.

Food: As he has grown, so has his appetite. He now eats a bigger portion of the food prepared for dinner than he did a year ago, and his beverage consumption has gone way up. He primarily drinks water, with milk and some fruit juice. Altogether, his food and beverage consumption add up to about $2 a day, up substantially from where he was at a year ago.

Child care: Our daycare (like many) offer graduated rates, so he now qualifies for a lower rate at daycare. As a result, we now spend only an average of $16 a day on child care for him alone, though he is receiving an additional deduction thanks to his sister attending the same day care.

Hygiene: His diaper costs have gone down a bit, as he doesn’t dirty as many as he did at age one, plus he’s on the road to potty training. His laundry costs have also gone down, thanks to our moving to a home that has a washing machine, and his other costs (soap, shampoo, water, toothpaste) have largely stayed the same. Thus, overall, I would estimate his hygiene costs at only $2 per day at this stage, and when he’s fully potty trained, they’ll go down even more.

Entertainment & education: He has a set of about ten books that he likes to read over and over again (seriously, we read him almost all of them every single day), and it takes some time to add a new book to the rotation, so we have not been buying him nearly as many books as before. Most of his other toys are gifts from his family or homemade (he likes playing with pots and pans, for example), so his entertainment costs are actually lower than a year ago, once again, at roughly $0.50 a day.

Child health care: This has held pretty steady, with insurance costs staying the same and his copay staying the same – it’s still an average of about $5 a day.

His future: I have doubled my commitment to his 529, so this has increased the money we’re putting away for his future to about $7 a day.

Totaling up all of the costs, a fair estimate of our daily cost for our two year old child is $35 a day, cheaper than the child cost of just a year ago. Meanwhile, our two month old costs substantially more than that, primarily due to higher child care costs and hygiene costs (she goes through diapers at about three times the rate of her big brother). Obviously, we could make many additional choices that could reduce these costs, but breaking it down makes it clear which areas you could reduce for your own child.

After a few years’ worth of these estimates, I plan on plotting the data. My belief is that the valley will be between the ages of three and five, and then start rising again after that.

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  1. Rick says:

    While this analysis is certainly valuable, I think you would agree that having children is so much more than just the dollars and cents. It may cost $35 a day, but I’m sure your fulfillment in life through raising these kids is much greater than this.

  2. You do great to figure that out… Goodness! That had to have been work! I do agree, the older they get the more expensive certain things become (toys, clothes, food), but then its great when they start using the potty…. CUTTING OUT DIAPER COSTS!!! Yeah!

  3. Frank says:

    Interesting analysis. That’s a great idea to track something like this.

    When your kids ask for expensive toys you can pull out the chart and show them how much you have already spent on them. :)

  4. Marie says:

    They should give your article to students in sex ed! Definitely something to think about before you start a family.

  5. Lisa says:

    Actually, for my family, the 3 – 5 years were the most expensive due to preschool costs. They were not in daycare as infants/toddlers, and attend public elementary school currently.

  6. T says:

    It’s unfortunate that you send your kids to daycare. These are the prime growing years for a child. How viable is it to have your wife work at home or not work at all?

  7. Fecundity says:

    From my perspective that was an extraordinarily helpful breakdown of costs. Care to do an assessment of what your 2-month-old costs for those of us who will have one within the year?

  8. KJC says:

    I also have a two year old child. While I haven’t done a breakdown of costs in this way, I don’t think I have spent $1/day for clothing. I was fortunate enough to have several people offer gently used clothing, and have only had to supplement from time to time with specific items, and the ones I thought were too cute to pass up.

    My childcare costs are slightly less (if weekly fees are divided by 7), and entertainment is probably less too, since he also has received most of toys in the form of gifts on birthdays and Christmas, and he really likes the “homemade” toys.

    Everything else is probably comparable, with the notable exception of the Future expense. Unfortunately, with our current financial situation, we are not able to save anything toward his college education. I hope to be able to start in the next year or so.

  9. lazysaturday says:

    I think the breakdown is really helpful as well, I had absolutely no idea! Just out of curiosity though, and I don’t know if you’ve already done this in a previous post, what’s the breakdown for you and your wife (i.e. adults)? Is it comparable?

  10. FIRE Finance says:

    Nice break down of the essentials for raising a 2 year old kid. But do acquiesce with Rick that children give back more joy which can never be equated with $, nickels & dimes.
    Curious to see the cost of maintaining an adult (say the dad / mom of a 2 yr kid) per day. That will give an idea how the cost of living grows or falls with age.
    For people planning to start a family, Trent’s post along with KJC’s tips will be very helpful :).

  11. Writers Coin says:

    Yeah yeah it’s special to have a kid and it’s more than money. But this is data you can’t get anywhere else and it’s very valuable for people who are responsibly trying to figure out if they can afford to have a kid.

    No use bringing a kid into the world if you can’t properly care/educate him/her.

  12. Michael says:

    Writers Coin: Then it’s good children have value beyond usefulness, isn’t it?

  13. Mrs. Micah says:

    I’ll bet the cuddle value is (most days) equal to more than $35.

    I jest, of course, since you can’t really put a number on a person. ;)

    Very cool breakdown.

  14. Christine says:

    I don’t have children, and won’t be having any for at least a couple of years, but this information is absolutely fascinating to me. This post isn’t talking about the value of a child, but raw data that could tell us a lot about raising a child. Taking your information and comparing it to the same data collected from other states or countries could reveal a great deal about our culture.

  15. KJC says:

    No one has mentioned the tax breaks you will get. The additional deduction, the child credit, and the child care credit will all reduce your annual tax bill. The amounts would depend on your situation, of course.

  16. MK says:

    Am I the only one who finds it incredible that the second-largest cost for a young child is his/her COLLEGE FUND?? There’s something about that that’s just not right.


  17. Dina says:

    Just as a data point, I’m paying $31/day (by 30 days per month)for daycare my potty-trained 3 year old (the lowest rate possible!) In an expensive area. It was 43/day before potty training.
    But getting rid of diapers was great for the budget!

    We’re contributing about $1/day to 529. :(

  18. John says:

    I thought you’re wife was still on maternity leave? Has she gone back to work and thus forced daycare?

  19. Gene DelMato says:

    The commenters who remind you of benefits to raising kids completely missed your point. Doubtless, you could post a complementary piece about the upsides to parenthood. But I thought you were clear: this post was about costs–not benefits. And you covered it spectacularly.

    On a critical note, I would love to understand how you justify all the personal blogging (and surfing) when your kids are in day care. Outsourcing is great, but you are a parent. Maybe instead of spending time with your kids, you prefer to pinch pennies online (although honestly, do you take in more $ from your blogging than it costs you? I doubt it.)

    The frugality rationale is dangerous. Yes, frugality is a good thing (as you suggest, people tend to appreciate more of what they purchase when they are frugal) but it is no panacea. You seem to have forgotten how important cash flow is. First you build cash flow, then you work on saving it. Start by 1) actually making money and THEN 2) expend energy trying to maximize it. Most westerners spend too much (obviously), But do not tell me the answer is (as you suggest) to focus zip on actions that will produce income. That’s…lazy.

  20. Gene DelMato says:

    By the way, your PayPal donation link is broken. When I clicked on it (yes, I was going to give you a couple bucks), it said the certificate cannot be decrypted. Just FYI, you might want to look into that. Keep up the impressive analysis. And if you’re not taking good care of your kids (bloggers/surfers who outsource childcare are highly suspect) at least reassure us that you are.

  21. Ruth says:

    Don’t forget furniture and bedding. As a child grows, they will need a new bed, new car seat, etc.

  22. George says:

    “It’s unfortunate that you send your kids to daycare. These are the prime growing years for a child. How viable is it to have your wife work at home or not work at all?”

    If you have your child(ren) in a GOOD daycare, the experiences and socialization they receive are invaluable. My daughter’s daycare is one of the best in the area, offering far more crafts, music, and fine/gross motor development activities than we could possibly offer at home.

    The key goal is to find a daycare that offers a wide range of developmental activities and opportunities for play, rather than one that simply warehouses children and plonks them in front of the TV all day.

  23. Trent Hamm Trent says:

    For one, this blog is a side enterprise that I do when the children are asleep. I generally do things in the late evenings, in the middle of the night, or in a few brief pockets of time before or after my real job. This blog is not my employment. If I were to become a stay-at-home parent, I would continue to do this blog in my spare time, much as I do now.

    As for the daycare, I’m going to address that in a post tomorrow that’s going to get some fire going, I’m sure.

  24. Michelle says:

    Cloth diapering would lower the cost even more!!

    I’m a SAHM and it seems to me that the socialization arguement for daycare is based on the idea that all a SAHM does is plunk her kids in front of the TV all day, and doesn’t interact with them, doesn’t take them anywhere, which couldn’t be farther from the truth!! I have a 2 year old and a 7 month old, and we are always going somewhere, or doing something. There are playgroups, and storytime, and my 2 year old has a toddler gymnastics class that she goes to. She gets plenty of social interaction, and for my family, we save a lot of money. Plus I get the benefits of being a stay at home parent. So the idea that a child whose parent stays home with them is going to be a social misfit is just completely wrong.

  25. Alexis says:

    I am just curious about the medical costs. From birth to age 2 there are well-baby visits that occur every few months, which often include immunization shots as well as the co-pays and whatnot. But at age 2 the well-baby visits are over the child then only goes for a regular check-up once a year.
    Assuming your kid is fairly healthy – which I think is reasonable given his diet and daily exercise with Mom and Dad typical of a 2 yo – why haven’t the health costs gone down?

    I can’t really comment on many of the other sections – I am a SAHM – no childcare, my 2.5 yo is potty trained, we don’t have a 529, I am fortunate that we have only spent about $20 in her lifetime on clothes due to hand-me-downs and gifts (the same with toys). But I think that the medical costs should subside (or maybe that is more noticable by the 3 yo analysis) :)

  26. Eric says:

    “Cloth diapering would lower the cost even more!!”

    Yes it does – IF your child doesn’t go to day care. No day care will take a child in cloth diapers (maybe a home day care who also does cloth diapering). Think of the health issues of 10 buckets with each child’s soiled diapers!

    We cloth diaper and save a ton of money but that is because our son doesn’t go to day care, that is the only way to make it work.

  27. Eric says:

    Ok so you are spending $150 a month – per child on health care? $300 a month just for kids? Is this an insurance plan through work? My family payment is $50 a month at work (the actual insurance is of course much high but work picks up the rest). And that doesn’t change if I have 1 dependent (wife) or a dozen. I am sure you are right but I just find that amazing and yet another good reason for universal health care. While you can afford that millions of Americans can’t

  28. silver says:

    Alexis: I don’t know about Trent, but my insurance covers the well baby visits 100%. We don’t even need to pay a copay for them. My husband and I also get an annual exam with no copay.

  29. Gene DelMato says:

    Your argument is “A stranger with better toys can take care of my babies better than I can.” It is hard to imagine you do all of your blogging and surfing during their sleep time. This post is dated 12:30PM on a Tuesday…Just admit it, this blog is your “job.”

    MSN wrote an article about the “(Real) Cost of Love.” Maybe your next post should borrow from the idea, Trent. Tell us how much your wife costs you! But, in keeping with your baby cost analysis, you should go further than MSN and include intrinsic costs. Again, make no mention of the benefits. You didn’t afford your babies that respect.


  30. Sharon says:

    Wow, is it be crass to Trent again? Yes, this post could sound cold, but if it is taken in context of his blog, you would realized that his love of his child takes precedence over anything.

  31. J says:

    As a parent, I found this economic analysis very interesting and informative. And children certainly are worth more than the dollars and cents (as are many things we spend money on).

    As for the “unfortunate you have to send your kids to daycare” comment, we have had the same experiences with a quality daycare — our daughter has many more experiences and interactions than we could provide. We also are in the situation where we must have both parents working to make ends meet. Really. We don’t live quite as frugally as Trent does, but we certainly aren’t using our two incomes to take expensive vacations, buy giant-screen TV’s or expensive automobiles. Most of our income goes towards mortgage, food, daycare and the essentials of life.

    I also find it interesting that the assumption is that the wife always stays home, while the husband goes out and brings home the bacon. Also little consideration is given to the mother’s career, professional development, personal development, etc. It’s all mommy, all the time. It doesn’t matter that the kids will be home a few years, but that can set you back 8-10 years career-wise, or make you entirely unemployable. Not to mention the huge risk in today’s economy of having a one-earner household — with a dual-income one, you have some insurance against layoffs and so on.

    It also doesn’t matter that study after study has shown that it’s not the quantity of time you spend with your kids, but the quality that matters — to this effect, we make what time we have count for a lot. Daycare is just pure evil for some people.

    Perhaps the larger question of why (in the US), the family is trumpeted as the building block of our society and culture, yet dual-income families get shellacked with extra taxes, mothers are guaranteed no (paid) time off (by law), fathers are guaranteed no time off at all (by law). It’s quite a double-standard that is set up. I would love to have taken more time in the first year of my daughter’s life. Luckily my company offers paternity leave, but it’s not on-par with maternity leave. And maternity leave in some instances is only the FMLA — no pay for mommy while she’s out. It’s hard to be out three month’s wages.

  32. LC says:

    Trent has mentioned in previous posts that he does a lot of the writing in advance in order to be able to make regular posts (several a day). Seems as though he has an arsenal of material built up and decides to post them whenever he gets a moment, such as on his lunch break.

    I don’t think his argument was that SAHP’s do not provide stimulating activities for their children, but that it is difficult for them to provide the variety of crafts, games, toys, etc as they do in day care, not to mention the interaction with peers.

    Just as T would not like anyone critizing the choice that s/he feels is best for her family (presumably staying home), s/he should not feel obligated to criticize others for doing the same.

    My husband and I are planning for children, and they will most likely be put in day care. We can afford for my husband to stay home, but in my opinion, the overall experience that day care provides is superior to what he could get at home. Also, we both love our jobs so much that we would not be as fufilled without them, which will teach our children the value of education, work, and finding something you enjoy.

    Every situation is different, so please don’t think that the option you have chosen is the best for everyone.

  33. Erin says:

    The best daycare in your area costs only $16 a day??!!! Wow. I’m not sure if you were figuring 30 days a month, 20 work days a month or what, but we pay $1135 per month for a toddler at our company-subsidized daycare (would be over $1300 a month if I didn’t get the company discount) in Greater Boston. Consider yourself lucky to live where you do!

    As far as some of the other comments, we are very happy with the quality of care our daughter receives at daycare. I don’t think she would be better or worse off if one of us stayed home, it would just be a different experience for her and we are happy with the one she is getting.

  34. Kiri says:

    Very interesting cost analysis; thanks for posting.

    You might consider including housing costs in your estimate: if a child has his or her own room, the additional square footage (in terms of rent or mortgage payment) is an additional expense.

  35. LC says:

    Unless you move to accomodate your child, I don’t think you should include added rent/mortgage payment, since you would have been paying it already. However, I know that we currently keep our house a lot cooler than is recommended for an infant, so your heating costs may go up.

  36. Rebecca says:

    i’m with the couple of other parents on the daycare cost bit… consider yourself lucky if all you pay is $16/day… my son will start next week, only 3 days a week and that will be just under $500 a month, for 1 child!… that breaks down to about $40/day… where do you live????!!!! I want to move there! That’s all the time I have to write… I’m going to spend quality time w/my kids!

  37. Trent Hamm Trent says:

    The $16 a day is averaged over ALL days, whether we take him to daycare or not.

  38. tejas says:

    Hi Trent, I guess you had mentioned about “Brown bear, brown bear!”. I brought it from library and my daughter loved it. In this post, you mention your son has set of 10 books, which he loves to read over and over again. Can you please share some of the titles? I’m kind of confused, being raised in India and having introduced with english literature only as a grown up.
    Your help is much appreciated!

  39. Tyler says:

    Interesting analysis. I can guarantee that we don’t spend anywhere near that much on our 16 month old. If we spent $35/day on our child, then that would be more than 75% of our monthly income. Impossible!

  40. PiFreak says:

    I liked your idea of cost valleying at 3-5, although for me I don’t think it was.
    Food for me is quite cheap : $5/day
    throughout the year entertainment (clubs/teams, swim pass in summer, once-in-a-while movies and such) $1/day
    I’m incredibly cheap on insurance, I’m covered in my families plan whether they had me or not, occasional hospital visit, and one major surgery averages $1/day for the last few years
    clothing for me is incredibly cheap, I’m a huge fan of thrift stores, and my entire wardrobe (including my rather large collection of shoes [they all fit me, and I get a new pair every few months]) $1/day
    I’m sure there are other things but between medical, food, clothes, and entertainment (including winter formal/prom) I’m less than $10 a day to maintain. (the extra money can factor in to Christmas presents)

    I’m a 16 year old girl, so my parents always get comments about how much money they must spend, and they always just laugh.

  41. L says:

    Two things I applaud, Trent:

    You read the same books over and over and over. As a reading specialist, I know that is TERRIFIC. You are teaching your child so much by doing that, as well as building lifelong love of reading by the association of books and your undivided attention.

    Second: If I had to do it all over again (my kids are adults now), I would have saved more for college. In our urban school system, the local community college was not a good environment. I wish I had saved enough to send them where they were accepted.

    Great post

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