The cost of raising a child is nearly $240,000 – before college

Millions of Americans struggle to put money away, leaving them empty-handed as they approach one of life’s most important financial milestones.

No, not retirement – having a child, what a novelty research shows get more expensive every year. Raising a child from birth to age 18 now costs an average of $237,482, according to LendingTree. And as with other major household spending categories, such as health care and colleges, the tab for raising children is rising, with the financial firm finding that the average annual cost of raising children was $21,681 in 2021 — up nearly 20% from 2016.

These dollar figures include only what LendingTree describes as the “bare bones” required to raise a child, including money for food, housing, childcare, clothing, transportation and health insurance, as well as the impact of tax benefits such as the Child Tax Credit. They don’t include enrichment activities such as sports, after-school classes and the like, let alone the sky-high cost of going to college.

“Scared to Death”

The financial implications of child-related costs may be one of the reasons why some adults are choose to delay or even forgo having children, Matt Schulz, LendingTree’s chief credit analyst, told CBS MoneyWatch.

“It’s completely understandable that people are worried about how they’re going to pay to raise that child,” he said. “It’s scary when you consider that we don’t even include the cost of college, for example, in these numbers.”

Schulz added, “Most people’s financial margin for error is pretty small, and a few hundred dollars here and there can be really significant when you’re on a tight budget and living paycheck to paycheck.”

Paying for college can double the cost of raising a child, depending on where someone lives and what type of school a student attends, he added.

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The biggest financial component of raising a child is child care, which LendingTree estimates comes to $11,752 on average per year. The bill is big enough that some parents choose to leave the workforce because their income may not compensate for the cost of childcare.

Geography also matters here. Parents in some states pay far more for child care, with costs in Washington, DC topping $25,000 a year and $21,000 in Massachusetts, or akin to college tuition for many schools.

Location matters

The most expensive state to raise a child in is Hawaii, where parents face annual costs of $30,506, LendingTree found. The most affordable state for parents is Mississippi, where a year of raising children averages $15,555. Nationally, parents spend about $1 out of every $5 raising their children.

“Even in the cheapest state, you’re still shelling out $15,000 to raise a child, and there’s no place in this country where that amount isn’t going to be significant to the average person,” Schulz said.

People considering starting a family can take some financial steps to ease the impact when a child arrives. For example, start saving as soon as possible for these costs and take advantage of rising interest rates by putting money into a high yield savings accountSchulz advised.

Also, research local sources of help, such as government programs or nonprofit organizations, that may be able to offer financial support. For example, some states provide pre-kindergarten and child care assistance, such as Vermont, which has provided one discount coupon for every 3- and 4-year-old to receive 10 hours of pre-k instruction per week.

Once a child is enrolled in public school, parents can use some of their child care budget to save for college, such as starting a 529 plan or other account.

“To the extent that you can adjust your budget a little bit, for a few bucks out of your paycheck to go into a college fund, it can make a lot of sense,” Schulz said.

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