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Raising a kid costs $241,000? How to cut that 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.

By MSN Money Partner Aug 28, 2013 12:09PM

This post comes from Stacy Johnson at partner site Money Talks News. 


MTN logoEvery 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.

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


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, 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%; we're listing only the top four expenses, which together equal 78% of the total. The remaining 22% is made up of health care (8%), clothing (6%) and miscellaneous (8%).


Housing: $71,820 (30%)

According to the USDA, housing is nearly a third of the cost of raising a child. Included in this category are 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, see if you can negotiate your way to lower rent  or offer 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.
  • 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%)

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.


Baby with money © Creatas, PhotolibraryHow did they do it? Stay-at-home parents and relatives. According to Census.gov (.pdf file), in 2011, only 25% 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 and don't have a willing relative, we've provided advice on how to find 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%)

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


How do you save? Here are some quick ideas:

  • Stop paying for names. Generics can reduce prices by 30% or more.
  • 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% to 50% shopping salvage -- stores that specialize in things like dented cans and odd lots.
  • 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.
  • 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. You can find recipes online that cost little but are nutritious and delicious.

Transportation: $33,751 (14%)

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 a year old can save 20%.


As for gas, check out these 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 $241,000 estimate? Offer up your opinion, experience or tips.


Angela Brandt contributed to this post.


More on Money Talks News:

86Comments
Sep 9, 2013 3:36AM
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The word "no" repeated often and firmly will save a bundle of money. 
Aug 28, 2013 2:51PM
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My husband and I raised 4 boys on 1 income + extra odd jobs for both of us. We never had fancy cars, but we did have 2 vans. We lived in a 3 bedroom house where we still live today. We didn't eat out much. My youngest 3 boys were homeschooled and the oldest attended private school for his last 2 years. We may have spent that kind of money for all 4. My boys played baseball and basketball and were in Boy Scouts. It can be done and no one has to be rich to have kids and give them a decent life.

Sep 9, 2013 8:16AM
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How to cut some major expenses:  You do not need a separate bedroom for each child - same sex children share, and you don't need a large home.  Do not go out to eat and do not use prepared foods.  Simple at-home cooking is cheaper, healthier, and doesn't have to take lots of time.  Thrift stores and yard sales are good for inexpensive clothing they'll outgrow quickly anyway.  Books from the library beat fancy electronics.  A ball or Frisbee in the neighborhood park is healthier and cheaper than video games.  And as one post stated: "NO" saves lots of money.
Sep 9, 2013 9:40AM
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My sons shared a room, and we did not have cable tv.  We had cheap pizza and rented movies on Friday nights.  I told them they could have a cell  phone as soon as they were able to pay their own bill.  We were involved in scouts and sports and they went to park sponsored day camps in the summer as well as scout camps.  They always had good food to eat (prepared at home), a decent place to live and activities.  I was a single parent working, not on welfare or receiving support.  It was not easy, but it was worth it.  They are grown men now and successful.  My oldest son has thanked me for exposing him to many things.  The best thing you can give your kids that is free is time
Sep 9, 2013 9:45AM
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Mr. Corporate Avenger:  My parents were raised during the depression.  My mom was born in 1918.  She had me at 44, in 1963.  I am now the mom of a 10 year old and a 14 year old, at the age of 50.  I can tell you that the lessons I learned from my depression-era mom have saved my family a fortune on the cost of living.  We have a weekly grocery budget that we stick to.  I shop the fliers from the grocery stores.  We plan our dinners for a whole week at a time, shop to the plan, and we go out very little.  My girls have learned that the clothes at Penney's are just fine and they don't need to go to Nordstrom, because I tell them how much money they have to buy clothes for back to school, and they would rather get more things than less.  We already have the expenses of college for our kids all worked out.  My parents were careful, but I always had nice things to wear and good food, and most importantly, LOVE.  And love means telling your kids, "no," because it teaches them self control. 
Sep 9, 2013 8:25AM
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Raising a kid costs $241,000? How to cut that in half.
Simple, get married or stay married. 

Sep 9, 2013 3:17AM
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such a lie, takes no where that amount. Take account housing them? what , without kids you would have stayed in a tent?
Sep 9, 2013 5:19AM
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If you want to be able to comfortably afford children, you have to start thinking about saving money for them long before they're conceived.  Once you're married you have to exercise your ability to be frugal and that may include not spending a huge chunk of change on a lavish wedding/reception/honeymoon.  We had a strict rule about using credit cards; they were for emergencies only; our car needed major repairs or purchasing an airline ticket to see our parents if they were very ill etc. We saved for everything and paid cash.  You would be amazed in how much money you save yourself in interest and finance charges by always paying cash. We had a rule about indulging our children. We weren't going to go into debt at Christmas or birthdays.  We found creative ways to purchase gifts through the internet at half the cost (even with shipping).  We shopped for groceries at places like Walmart and purchased what was on sale in bulk.  There are a lot of ways to cut corners and I having the money to put your child through college without stress is worth all the little sacrifices you have to make along the way.
Sep 9, 2013 10:25AM
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Well, infants sure don't care about designer clothes.  Or even if the clothes are brand new.
My infant lived in nice, clean garage sale baby clothes.  A neighbor thought this was over the top frugal, but hey, it's not like baby clothes WEAR OUT. 

Sep 9, 2013 8:22AM
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my husband and i began a garden shortly after our daughter was born.  i grew, pureed and froze quite a bit of veggies for baby food.  a 50-cent seed package verses grocery store "by-the-pound" prices on things like squash...well, you do the math.  

i also shop ebay and garage sales for shoes.  i avoid colors like white, which show wear much sooner than grey or black.  of course, garage sales are also great for toys and equipment. 
Sep 9, 2013 7:30AM
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Also, there is no need to buy all the stuff we usually buy when we have babies and kids. Have family and friends share the cost of the crib and car seats at the baby shower. A hand-me-down stroller is good if there were no re-calls and it is in good condition. Kids don't need as many toys and electronic things as we give them these days.
Sep 9, 2013 10:49AM
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I shared my bedroom with two siblings.  Spoiled children today think they each need their own room.  Bedroom sharing leads to closer sibling relationships and gets you ready for dorm mates when you get to college. 
Sep 9, 2013 10:17AM
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The problem with this study is the government did it.

They had to get 3 bids and overpaid by 50%.

 

Typical!

 

Sep 9, 2013 10:03AM
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Make your kids clothes?
Ok,  hand me the glue and stapler.

Sep 9, 2013 9:35AM
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Don't spend hard-earned dollars on name-brand clothes or shoes when your child is young.  Try second-hand shops, you can find never-been-worn, still-with-tags name brand items for $2-5 if you just have to have that GAP sweater.  Wait until your child is in high school before buying her first pair of Nikes or Skechers, that way she won't grow out of them three months later.  (My niece and nephew were 3 and 5 when my brother bought them Nikes, I could've slapped him upside the head for that). 
Can't suggest looking for quality, "Proudly Made in the USA" clothing, can't hardly find those around here anymore without spending a pretty penny.  Even the low-quality made in a sweatshop by a five year old costs $14 for a pair of jeans at WalMart.

Sep 9, 2013 10:49AM
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Definitely the way to bring down that number would be to not have any kids.
Sep 9, 2013 10:55AM
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You are very correct in your assessments, however, you have overlooked at least one avenue to spending less on raising children.  Many states, counties, cities, programs, etc, include 'scholarships'
for children in homes with lower incomes.  This can save a great deal of money while offering the children excellent opportunities.  The reverse is, that at a certain income, you have to pay for it, making it difficult or impossible  to afford those same programs, or at least as many of them.  

Lower income families are sometimes supplemented in many ways that help to bring their income levels up to, or higher than those who do not qualify for those programs.  It can be frustrating to not be able to afford a program, while someone else gets a 'free ride'  and perks that you cannot afford. 
Sep 9, 2013 11:51AM
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Don't have kids you can't afford.  The 7 billion population doesn't need to grow anymore than it has.. We already can't employ everyone or feed nearly everyone as it is.  Stop being so selfish and don't have kids.  
Sep 9, 2013 8:22AM
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How to cut that in half
Raising a kid?

STOP USING THE LAME EXCUSE THAT USE GOD WILL TO MAKE CHILDREN BY THE DOZEN.

Sep 9, 2013 9:39AM
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If  your kids are all of the same sex, then you've got a leg up on saving on the cost of raising them.  Fewer bedrooms and the cost of clothing saves a large potion of the costs.
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