It’s not just your imagination, raising a kid is expensive these days. According to a recent study by Lending Tree, the lifetime costs for raising a kid over 18 years has gone up 25.3 percent since 2023.
The company looked at the cost of rent, food, day care, apparel, transportation, and health insurance to arrive at its conclusion.
It found that, given all of those expenses, minus the state tax exemptions or credits parents receive, it costs $297,674 to raise a child. In 2023, that number was significantly less at $237,482.
Overall, parents spend an average of 22.6 percent of their income on the basic expenses associated with raising a child. That’s up from 19 percent in 2023.
Year-to-Year Child Expenses Are on the Rise Too
As one would expect, year-to-year expenses are up too. In 2023, the average yearly cost of a providing for a kid was $21,681. Two years later, that’s jumped to $29,419—a 35.7 percent increase.
Most responsible for the increase in cost is the price of day care. That rose 51.8 percent—from $11,752 to $17,836—in two years.
“Most Americans are on a budget and don’t have a ton of wiggle room from month to month,” Matt Schulz, LendingTree chief consumer finance analyst, said. “When a big cost like child care shoots up by 40 percent-plus, it can be a real crisis. That extra money has to come from somewhere, so it forces families to make some difficult decisions.”
He added, “No one should be surprised that costs have risen in recent years, but the type of growth we’ve seen in child care costs is on a whole other level.”
Jennifer Seitz, a certified financial education instructor, agreed in a statement to Good Morning America.
“[Child care expenses] have soared over the past few decades, and recent Department of Labor data shows that day care costs in some areas can be close to 30 percent of median family income,” she said.
Food and health insurance premiums, which went up 29.6 percent and 25 percent, respectively, are the next two most costly expenses.
“New parents can sometimes underestimate out-of-pocket healthcare costs, as insurance doesn’t always cover everything,” Seitz told GMA. “Copays for unexpected medical procedures, specialist visits and higher prescription costs can add up.”
Making matters worse is the fact that the value of federal tax credits has shrunk by 44.4 percent since 2023.
“There are plenty of reasons for the growth, including inflation, growing labor costs and rising demand,” Schulz said. “However, whatever the reason, this growth is making an already challenging aspect of parenthood that much worse.”
What States Are the Most and Least Expensive?
In terms of a state-by-state breakdown, prices of raising children year-to-year are the most expensive in Hawaii. Massachusetts and Washington are the next two most expensive states. On a lifetime basis, Hawaii once again leads the pack, and is followed by North Dakota and Washington.
“While families in these states have some of the highest incomes in the country, they’re also three of the most expensive states to live in,” Schulz said. “Higher overall income doesn’t always equate to more expendable income, so it’s important to make sure high-income people are planful and thoughtful with their budgets, too.”
On the other side, Mississippi is the least expensive state to raise a kid, followed by South Carolina and Alabama. Only the District of Columbia, Oregon, and North Carolina saw a decrease in costs since 2023.
As for how parents can combat rising prices, Schulz has one big piece of advice—save.
“It can be hard to save when you’re a young parent and child care is crazy expensive. It’s so important, though,” he said. “Even if you’re only putting a few dollars per paycheck in a high-yield savings account, it will add up over time and give you a much-needed cushion when the next unexpected expense happens. And as every parent knows, they will happen.”
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