Cost of Raising a Kid Is $240,000? More than 20 Tips to Cut It in Half

A Bentley convertible or a kid? If you believe what you read in the media, they're about the same price. But here's why you shouldn't always believe what you see.

Cost of Raising a Kid Is $240,000? More than 20 Tips to Cut It in Half Photo (cc) by Kevin Lawver

Every year, the U.S. Department of Agriculture announces the average cost to raise a child, and every year it raises eyebrows. Or at least it should.

This year’s number? It’s $241,080, and that doesn’t include the cost of pregnancy or college.

As soon as the announcement is made, journalists far and wide rush to repeat it, publishing articles like CNNMoney’s “Average Cost to Raise a Kid: $241,080” or The Christian Science Monitor’s “Average Cost to Raise a Child: $241,000 Sounds Low.”

What few in the media seem to do, however, is actually read the report, or at least consider its implications. When you do, you’ll probably reach the same conclusion I did: It’s hogwash.

To understand why, start with the following 90-second video, then meet me on the other side for more.

Before we get into the details, consider that the survey results say the more you make, the more you’ll likely spend on raising kids. For example, as I pointed out in the video above, according to the USDA, families earning less than $60,000 a year spend less than half of what those earning more than $100,000 a year spend.

This alone indicates where there’s a kid, there’s a way.

Now let’s take apart the report and see how you can — and probably do — raise your kids for less. The section headings below won’t add up to 100 percent; we’re listing only the top four expenses, which together equal 78 percent of the total. The remaining 22 percent is made up of health care (8 percent), clothing (6 percent) and miscellaneous (8 percent).

Housing: $71,820 (30 percent)

According to the USDA, housing is nearly a third of the cost of raising a child. In this category, they include rent, mortgage payments, property taxes, insurance, repairs, utilities, furnishings and appliances.

But because everyone, whether they have kids or not, incurs these expenses, how do they relate them to the cost of kids? Simple: bedrooms. From their report:

Based on the rationale that over time the presence of a child in a home does not affect the number of kitchens or living rooms, but does affect the number of bedrooms, the average cost of an additional bedroom approach was used to estimate housing expenses.

While it may be true that having kids can certainly lead to extra bedrooms, the mortgage payments supporting those bedrooms may be more an investment than an expense. With the exception of our nation’s recent housing bust, residential real estate has historically gone up over time, not down.

In short, as property values rise, bigger houses with extra bedrooms make a family richer, not poorer. So if having kids means extra bedrooms, and extra bedrooms create more wealth, homeowners with kids may be better off than those without.

If you’re raising kids, the smart thing to do, depending on the market and your ability, is to buy your home. If you can’t, check out some tips to save on rent, like negotiating or offering to do work in exchange for lower rent.

As for the other expenses:

  • Utilities. There are lots of ways to save, from energy-efficient light bulbs to programmable thermostats.
  • Property taxes. Too high? Fight ’em! Call your county and ask how.
  • Insurance. The simplest ways to save are higher deductibles and shopping your policies. But there’s more: See “The 5 Golden Rules of Saving on Insurance.”
  • Furnishings and appliances. Careful shopping, buying scratch and dent, and simple negotiating can radically reduce the cost.
  • Repairs. When it comes to things like changing A/C filters, caulking and other simple maintenance and repairs, do it yourself.

Child care and education: $43,394 (18 percent)

For this category, the USDA included day care, baby-sitting and school costs, including books and supplies. As with other categories, the higher the income, the more parents spent. But get this: Half the households questioned reported no expenses at all.

How did they do it? Stay-at-home parents and relatives. According to, in 2011, only 25 percent of families relied on organized facilities for child care. About half used parents or relatives. The remaining families used “in-home baby sitters, neighbors, friends, school, self care, and no regular arrangement.”

If you can’t do it yourself or find a willing relative, check out “5 Tips for Finding a Reliable Baby Sitter.” And if all else fails, check out a few options, then pit providers against each other to get the best possible price.

Food: $38,572 (16 percent)

This includes food and nonalcoholic beverages purchased at grocery, convenience and specialty stores, dining out and school meals.

How do you save? We count the ways in articles like “30 Tips to Save on Food,” but here are some quick ideas:

  • Stop paying for names. Generics can reduce prices by 30 percent or more. (See “7 Things You Should Always Buy Generic.”)
  • Bulk up. If you know you’ll use all of it, buy it in bulk. Can’t begin to use it all? That’s what friends and freezers are for.
  • Shop salvage grocery stores. You can save 30 percent to 50 percent shopping salvage — stores that specialize in things like dented cans and odd lots. Unfortunately, they’re not everywhere, but here’s a list of salvage grocery stores by state.
  • Use coupons everywhere. Always use an online coupon search engine to find deals before you shop. Another good source is manufacturers’ websites. But the simplest thing to do is to plug the names of the items on your list into your favorite search engine along with the word “coupon” and see what comes up. Learn more by reading “Internet Coupons 101: A Beginner’s Guide to Printable Savings.”
  • Price match. Some retailers will price match any store’s weekly ad. See if yours does. This not only saves on food, but driving from store to store.
  • Substitute cheaper ingredients for expensive ones. Just because a recipe calls for the fancy cheese doesn’t mean you have to use it. You can substitute cheaper ingredients in most dishes — or use substitutions for an ingredient you don’t have on hand. Check out The Cook’s Thesaurus for a list of substitutions.
  • Make your own. Homemade is not just cheaper than premade and prepackaged, it tastes better and is typically healthier.
  • Extend meat. Use less of it in a dish or add another ingredient to it, like canned tuna stretched with chopped hard-boiled egg.
  • Look for budget recipes. Every week we share great ideas to feed a family for under $15 with recipes like gnocchi with summer vegetable ragout.

Transportation: $33,751 (14 percent)

This category includes vehicle costs and payments, along with gas, motor oil, maintenance and insurance.

The simplest way to save on a new car is not to buy one. I’ve managed to reach the age of 58 without ever purchasing a new car. Buying a car that’s only 1 year old can save 20 percent.

As for gas, check out “The Single Best Tip to Beat High Gas Prices.” Some additional quick tips:

  • Use a cash-back gas credit card.
  • Buy at a warehouse club like Costco.
  • Shop around on your phone with a free app like GasBuddy.
  • Keep up on vehicle maintenance for the best gas mileage.

Conclusion: It costs what it costs

My parents both came from large families and grew up in the Great Depression. Think their parents spent the 1930s equivalent of $241,000 to raise their kids? Not a chance.

The fact is when it comes to family, we find a way.

That’s one takeaway from this article. Two more: First, estimates from the government, often quoted in the media as facts, often aren’t. Second, just because rich people spend a bunch of money doing something doesn’t mean that’s what it costs.

What do you think of the government’s $240,000 estimate? Offer up your opinion, experience or tips on our Facebook page.

Angela Brandt contributed to this post.

Stacy Johnson
Stacy Johnson @moneytalksnews
I'm the founder of Money Talks News and have spent the last 40+ years in the personal finance trenches. I'm a CPA, author of a few books and multiple Emmy recipient. I'm ... More


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