The Real Cost of Raising a Child in the U.S.

The cost of raising a child in the United States can differ greatly depending on where you live — in some states, it can be as much as $439,000 more than in others.

Raising children has never been cheap, but inflation and regional cost differences have made it even tougher for families to stay financially stable. While parents can’t control rising prices, being aware of where the money goes — and planning ahead — can help ease the pressure.

Michigan mom Jennifer Yuen, who has twins, told Good Morning America that her family has had to make major adjustments to manage the high costs of childcare and daily expenses.

“We had to get creative with our budget early on,” she said. “We rely on day care, family support, and flexible work hours to make things work.”

Her experience reflects what many families across the U.S. are going through. Essentials like housing, food, and child care — already the largest expenses for parents — continue to rise, pushing families to rethink their budgets and long-term plans.

A Brookings Institution report found that a middle-income family with two children could expect to spend around $310,605 (adjusted for inflation) to raise one child born in 2015 through age 17.

Breaking Down the Biggest Expenses

The costs of raising a child can vary widely depending on location, income, and lifestyle, but studies from LendingTree and SmartAsset reveal where most of the money goes. These are general estimates — actual expenses can differ based on your state and household situation.

Housing — 29% of total costs

Housing remains the largest expense for families, accounting for nearly one-third of the total cost of raising a child. In high-cost states such as Hawaii and California, the financial strain is even greater. In Hawaii, adding a child increases household housing costs by about $6,188 per year, while in California, that figure is $5,573 annually. Rent, mortgage payments, and utilities are all impacted as families seek larger homes or additional rooms.

Child Care and Education — 16%

For working parents, child care often ranks second only to housing in cost. Jennifer Seitz, a certified financial education instructor and Director of Education at Greenlight, explained that “child care expenses have soared over the past few decades,” and in some regions, day care costs approach 30% of a family’s median income.

According to SmartAsset, Massachusetts tops the list with average annual child care expenses of $21,503, followed by Hawaii ($19,592), Connecticut ($19,554), and New York ($17,821). In contrast, Mississippi families pay just $4,725 per year, highlighting how much location can influence affordability.

Food — 18%

Rising grocery prices are putting pressure on every household. The U.S. Department of Agriculture (USDA) estimates that a family of four now spends between $983 and $1,599 per month on food, depending on where they live and their eating habits. Whether it’s groceries, school lunches, or the occasional takeout, food represents one of the most consistent and unavoidable child-rearing costs.

Transportation — 15%

Transportation costs are another significant burden. Families often need larger vehicles as their children grow, adding expenses for car payments, insurance, fuel, and maintenance. With gas prices fluctuating and insurance rates climbing, transportation can quickly become one of the more unpredictable parts of the family budget.

Health Care — 9%

Even with health insurance, medical expenses can add up fast. Routine checkups, vaccinations, prescriptions, and emergency visits are all part of raising children. Seitz noted that many parents underestimate out-of-pocket medical costs, especially when insurance doesn’t cover everything. Unexpected copays, specialist visits, or prescription fees can easily stretch a family’s budget.

Miscellaneous — 7%

This category includes everything from sports fees, summer camps, after-school activities, and birthday parties to small but frequent purchases like toys or entertainment. Seitz pointed out that “families with multiple children often notice an exponential increase in grocery, entertainment, and event costs — expenses that start with one child tend to multiply quickly with more.”

Clothing — 6%

Children outgrow clothes at a rapid pace — and sometimes wear them out just as fast. Even thrifty parents who buy second-hand or shop sales often find themselves constantly replacing wardrobes as their kids grow.

How Parents Can Manage Costs

While these numbers may sound intimidating, families can take practical steps to manage and reduce expenses through planning, budgeting, and smart financial decisions.

1. Know Your State’s Costs

Where you live has a massive impact on the cost of raising children. The difference between Massachusetts and Mississippi can reach nearly half a million dollars over 18 years. If your career or family situation allows for flexibility, moving to a lower-cost region could bring major savings over time.

2. Take Advantage of Tax Breaks

Many families overlook valuable tax benefits designed to help offset the high costs of raising children. These include:

1. Child Tax Credits, which reduce the amount of federal tax owed per child.
2. Dependent Care Flexible Spending Accounts (FSAs) — pre-tax benefit accounts that can be used for eligible childcare services such as preschool, summer day camps, and after-school programs.
3. Other deductions and credits that apply to education, adoption, or healthcare expenses.

Properly utilizing these programs can save families thousands of dollars per year.

3. Plan for the Long Term

Financial expert Jennifer Seitz emphasizes the importance of long-term planning:

“Parents may not always consider the full picture when budgeting for a child. By accounting for future expenses, families can create a flexible financial plan that evolves as their children grow — and helps avoid costly surprises.”

This means regularly reviewing your household budget, setting aside savings for future education or healthcare costs, and adjusting spending as family needs change.

Preparation Makes All the Difference

The cost of raising children in the U.S. continues to rise, driven by housing, child care, and inflation. But while these numbers can seem daunting, awareness and preparation can make the journey more manageable.

By understanding where the money goes, exploring lower-cost living options, and making full use of tax breaks and savings tools, parents can take control of their finances and provide their children with a secure, stable upbringing — no matter where they live.

More recent numbers show that the cost is still going up. According to a 2023 LendingTree study, the average yearly cost of raising a child in the U.S. reached $21,681, a 19% increase since 2016. Over 18 years, that adds up to roughly $389,000 per child.

Location plays a huge role, too. A 2024 SmartAsset analysis found that raising a child in Massachusetts — the most expensive state — costs almost $36,000 per year, while in Mississippi, the least expensive, it’s less than half that. Over 18 years, that’s a $439,000 difference.

The question for parents now is: What’s behind these growing costs — and how can families adapt?

Start Saving for College Early

Financial expert Jennifer Seitz emphasizes that starting early makes a big difference:

“The earlier you start saving for college, the more time your money has to grow.”

A 529 college savings plan allows families to set aside funds tax-free for future education expenses. Even small, consistent contributions can accumulate significantly over time, easing the financial burden when your child is ready for college.

Look for Cost-Saving Alternatives

Families can stretch their budgets by making smart spending choices:

1. Buy secondhand clothes and baby gear — kids outgrow items quickly, and gently used products can save hundreds.
2. Meal plan and buy in bulk — planning meals in advance and purchasing essentials in larger quantities reduces grocery costs.
3. Consider childcare alternatives — nanny shares, co-op arrangements, or employer-subsidized programs can significantly lower childcare expenses.

Seitz advises parents to optimize spending wherever possible:

“Take advantage of high-yield savings accounts, cash-back rewards, and bulk purchasing for essential items to stretch your dollar further.”

For Michigan mom Jennifer Yuen, meal planning has been a game changer:

“We bulk cook on Sundays, and we've cut our grocery bill down significantly by sticking to a strict list and avoiding impulse buys.”

Plan for Unexpected Expenses

Children often bring unpredictable costs, from school trips to growth spurts and extracurricular activities. Yuen stresses the importance of setting aside funds specifically for these situations:

“We keep a separate savings account just for the ‘extras’ — school trips, activities, even unexpected growth spurts. It helps us avoid dipping into emergency funds.”

By planning ahead and creating dedicated savings for both expected and unexpected expenses, families can better manage the financial challenges of raising children while maintaining stability in their household budget.

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cost of raising a child in the US, how to save money for kids, parenting budget tips, college savings planning