Lifestyle

Cost of Raising A Child 2011 to 2023

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Recently, a reader asked what kind of activities our son does and how much they cost. That’s a great question. We try to limit RB40Jr to 2 activities. This year, he is doing Ultimate (Frisbee) and Wushu. The Wushu class costs about $200 per month. Ultimate costs $100 per season. He used to be in soccer, but the rec team was full and we had to find an alternative. Ultimate is a lot of fun. Kids get plenty of exercise and there are fewer injuries. It’s a no-contact sport. There are 2 seasons per year. Cleats, jerseys, and a Frisbee cost about $100 per year. So $300 for Ultimate and about $2,500 for Wushu. Oh, we also signed him up for a week of wilderness adventure camp in the summer. That’s about $450.  Total kid activities expense for 2023 will be around $3,250.

I never did any activities when I was a kid. My parents were too busy to take me to any of these things. Also, we didn’t have this kind of money to spend on kid activities. We were immigrants and struggled financially for many years.

Anyway, I thought it’d be a good time to see how much it cost to raise a child. In 2015, the USDA estimated the cost of raising a child to be around $250,000. With inflation factored in, raising a child will cost over $300,000 for a middle-income family. This does not include college. Yikes! This is why young people hesitate to have children. Kids are expensive!

When our son was born, I thought this USDA estimate was way overblown. Kids don’t have to be that expensive. RB40Jr is 12 years old and we’re 2/3 of the way done. Let’s add it up and see how much we spent so far.

Cost of raising a child

Here is a chart for a quick overview. The first year was expensive due to daycare. Then the child expenses dropped because I became a SAHD. A few years later, RB40Jr started preschool and pushed up our childcare expenses again for a few years. Now, he is going to a public school and the cost has been steady for a while. Here are the year-by-year details.

Baby: $5,000

Mrs. RB40’s insurance covered almost all of the birthing expenses. From what I recall, we paid very little. I heard this process is more expensive now even with insurance coverage. For the first 6 months, we didn’t have to pay for childcare. Mrs. RB40 took a maternity leave of absence, her parents came to help, and I took a sabbatical from my engineering job. We both went back to work after RB40Jr turned 6 months old and put him in childcare. It cost around $1,000 per month in 2011. He was in childcare for 4 months that year. The other expenses were diapers, a crib, baby formula, toys, clothes, and other baby stuff. The total cost for that was around $500 for the year. We’ll round it up to $1,000 in case I missed logging anything in my monthly cash flow spreadsheet.

1 year old: $7,100

2012 was a big year for us. I decided to retire from my engineering career to become a SAHD. The childcare was good, but we didn’t like other people raising our son. RB40Jr was in daycare for 6 months in 2012. That’s about $6,000. The rest of the kid stuff was around $1,100 that year.

2 years old: $2,300

This was a pretty cheap year for us. I took RB40Jr to do a lot of free activities. We went to summer concerts, explore parks, hiked, and played with other kids. Toward the end of the year, RB40Jr started preschool. It was just a few hours on Tuesdays and Thursdays. That cost $430 per month in 2013. He also grew out of diapers and baby formula that year.  

3 year old: $5,160

We changed to a co-op preschool for about 6 months. The co-op preschool was a bit cheaper, but you needed to volunteer occasionally. RB40Jr didn’t like it so we went back to the previous preschool. It was also harder because he seemed to act out more when we were at the school for our volunteer stints. This year, he spent 3 days per week at the preschool. The price of preschool went up to $500 per month. No school in the summer. Food expenses for RB40Jr were minimal because he ate so little. I assigned 10% of our grocery expenses to him and increase the percentage as he gets older.

4 years old: $5,450

This year, he went to preschool 4 days per week and some additional classes afterward, like cooking and tumbling. The price increased to $600 per month. We didn’t do many other organized activities at this point. I think we already had plenty of free things to do.

5 years old: $4,260

We had preschool for 5 months before summer. Then, RB40Jr started kindergarten at the local public school. It was awesome. No more paying for preschool! He started doing more activities this year. We signed him up for soccer, swimming, and some other stuff. Two activities at a time max.

6 years old: $5,259

RB40Jr had more extracurricular activities this year. He did Wushu and soccer. We also started to travel more. That year, we went to Hawaii, California, and Cancun. I assigned 1/3 of the travel expense to RB40Jr.

7 years old: $5,098

He quit Wushu because he got frustrated when he couldn’t get things right on the first try. That year he switched to basketball and continued soccer. Basketball was at the community center so it was relatively cheap at $100 per month. He quit basketball after a season, though. He just got too frustrated when he missed the basket. We visited Iceland and Thailand.

8 years old: $3,190

This year was pretty low-key. RB40Jr did soccer and a couple of summer day camps. This was 2019 and Covid was brewing. Some activities were canceled near the end of the year. We helped my mom move to Thailand this year.

9 years old: $2,957

Yeah, 2020 was not a fun year for anyone. All activities were canceled and the school went online. We spent a ton of time at home. Like most people, we purchased frivolous things to have more fun at home. We got a badminton set, baseball gloves, pop-up soccer goals, a tablet, a kiddie pool, and various other toys. We went to visit my mom in Thailand and took a side trip to Vietnam.

10 years old: $2,500

2021 was another lockdown year. We got more stuff – tennis, a pickleball set, water guns, a baseball bat, and more.  We went to Yellowstone for our family trip. We spent a lot of money on groceries this year for some reason. I guess because we ate pretty much every meal at home.

11 years old: $7,681

2022 was way better. Life was starting to get back to normal. RB40Jr went back to school. They had various fundraisers and we helped with that. He started Wushu again near the end of the year. We visited Thailand and the Maldives. Mrs. RB40 took a sabbatical that year and we traveled a lot.

12 years old: $7,300 estimated

He is doing Wushu and Ultimate. We visited Disneyland and California.

Total: $63,255

Oh wow, that’s a lot of money to spend on a kid. But it’s still below estimate. We’re 2/3 of the way done so I think we should be able to stay below estimate for the rest of the way. In the next section, I’ll share how we did it.

*Note: I apportioned a percentage of our grocery bill to child-raising expenses. I started at 10% when he was 3 and increased it to 33% when he is 12. He is eating a lot! Also, I assigned 1/3 of our travel expenses to RB40Jr.

Frugal child raising

Childcare

Childcare is very expensive these days. We paid about $1,000 per month for just one year. I think it cost more now and most families need childcare for 4-5 years. Becoming a SAHD saved a lot of childcare expenses, but it had opportunity costs too. I could have made a lot more money if I didn’t quit working full-time. I don’t regret it, though. The last 11 years were great. Much better than my engineering years.

Housing

Housing is the biggest expense for most families. When a couple has a baby or two, they usually need to move to a bigger place. This is one of the largest expenses of raising a child. However, we haven’t upgraded to a bigger home yet. We lived in a 2 bedroom condo before RB40Jr was born and we kept the same footprint. Currently, we live in a 2 bedroom unit in our duplex. I think we’ll ask our tenant to leave when RB40Jr is in high school. RB40Jr can live in the upstairs unit and we’ll all have some breathing room.

Transportation

We got a new car when our son was born. However, we only own one vehicle. We live in a walkable area and don’t drive very often. I think most families own two vehicles.

Conclusion

We are spending less than the USDA estimated, but way more than my parents ever did. We travel internationally more often and signed RB40Jr up for various activities. It’s all good, though. Every parent wants to give their children a good childhood.

I heard kid expenses will increase during the teenage years. We are already seeing this in our chart. We are traveling more, RB40Jr is doing more activities, and he is eating a lot more. Also, our housing expenses will increase when our tenant moves out. Housing expenses will double for a few years. After that, it’ll be the college years. I’m not looking forward to that at all. Hopefully, he’ll get some scholarships and financial aid. Higher education isn’t even part of the USDA estimate for child-raising expenses.

I hope I didn’t scare you out of having a kid. They can cost a lot of money even when you’re frugal. I’m surprised at how much we spent already. I thought we spent less than $63,255. But I guess we’re doing okay in the grand scheme of things. It all adds up.

What about you? Do you know how much raising a child costs? Heh, maybe I’ll send RB40Jr a bill when he’s rich.

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.

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