Zip Breaks It Down: How Much Do Kids Really Cost?

Thinking of bringing a bundle of joy into the world? According to the USDA, it’s going to cost you $284,570 (that’s the average cost of raising a child until they turn 18). Oy vey!

This number is even more staggering for millennials (25–40), who make up the majority of those considering parenthood. Adding insult to injury, the oldest members of this generation are only 80% as wealthy as their parents were at the same age (and it’s not for lack of work ethic, no matter what your gran says). 

The Realities of Millennial Parenting

Despite being maligned as the lazy generation, millennials have worked hard and had to cope with two huge detrimental economic forces outside their control. During the Great Recession they struggled to find entry-level roles and establish themselves in the workforce. 

Fast forward to 2020, and the pandemic hit at the prime moment in their careers, when they were meant to be moving up the ranks into higher-paying roles. You know how that went—not a nice bedtime story!

Of course, there’s another important factor at play when it comes to the prospect of having kids: that ticking biological clock. For older millennials who have delayed childbearing, whether because of economic pressures or opportunities like education and career advancement, there’s the potential added cost of a complicated pregnancy. 

Consider the price tags of infertility treatments, surrogacy, or medical bills for higher-risk pregnancies—the average cost for a premature baby is $55,393 compared to the cost of a baby born without complications ($5,085).

All that to say: the very personal decision to have kids is bogged down by all of these economic and timing concerns. A prospective parent’s first words are now, “How much will this cost us?”

We’ll help you break down this figure and consider ways to lighten your load. Plus, we’ll share some financial planning building blocks to help you navigate through life as an amazing parent.

Breaking Down the True Costs of Parenthood

Let’s take a deep breath: that $300k figure might seem insurmountable, but it’s different for everyone. The best way to alleviate these fears is to face the facts, do the math, and set a strategy for success.

Here’s how that $284,570 gets divvied up:

• Housing: 29%
• Food: 18%
• Childcare and education: 16%
• Transportation: 15%
• Healthcare: 9%
• Clothing: 6%
• Remaining expenses: 7%

Naturally, these figures can vary greatly based on your family income, your child’s age, and where you live. Here are a few additional factors to consider.

As kids grow up, expenses increase. As those adorable little nuggets graduate into ravenous teenagers, they cost a pretty penny more. They eat tons, they want to go places, they might even be driving their own car. Annual expenses average $300 less for kids two and under, and $900 more for teens between the ages of 15 and 17.

Where you live matters. The US is a melting pot of different living styles and scenarios. Families in the urban Northeast spend the most on children, whereas families in rural areas throughout the country spend 27% less.

More is more (but not as much more). Having multiple children is actually an efficient strategy. With each additional child, expenses per child decline: only-child families spend 27% more per child than two-child families. Families with three or more children spend 24% less on each child than two-child families. Thank you, economies of scale! 

College ain’t cheap. Keep in mind that none of these costs factor in college education, and millennials know best of all how expensive that can be.

How to Cut Costs: Change Your Home Base

Since housing makes up the largest share of the cost of raising a child, it’s a great place to start to see where there’s room to cut. There are a number of ways to save on housing costs, from refinancing to DIYing home repairs, but we’re going to focus on the big one: moving. This has some other potential benefits, like built-in childcare and access to affordable and high-quality education, too.

Make a Big Move…

The pandemic motivated 25% of Americans who moved in 2020, some deciding to work from home in more affordable locations. As a result, new and surprising hubs are popping up all around the country as economically attractive places to make a livelihood. 

Not sure where to decamp? The Council for Community and Economic Research recently ranked the 10 most affordable cities in the U.S, which offer a low cost of living along with ample money-making opportunities. 

Number one is Cedar Park, Texas—a suburb outside of Austin with a highly-rated public education system. Here, the cost of living index is 7.2% below the national average and the median income is 17.8% above the national median. Cha-ching. There’s somewhere for everyone on this list, from Utah to Minnesota, but using a cost of living comparison calculator can help you make an informed decision should you decide that uprooting is the right money-saving move for you. 

…Or a Small One

If you’ve got space to spare in your current digs, moving to a smaller home that meets your family’s needs could also save you cash. Alternatively, moving closer to nearby relatives may alleviate the steep costs of childcare (assuming they are willing and able to help out!). 

If this is an option for you, think about the benefits of having grandparents or other family members as your kid’s babysitters. Depending on your family relationship, the work involved to meet your child’s needs, and the health and capabilities of the caretaker, this could be a much less expensive (or free, if you’re lucky!) option. 

Strategize Your Food Expenses

The second largest kid-related cost is food. If inflation hasn’t already pushed you to spend smarter in this category, deciding to have kids definitely will. And if we’re honest with ourselves, there are probably some pretty simple ways we can cut here. For example, how much of your fast-food delivery bill is your actual meal? 

The next time you’re about to place a Seamless order, consider this: according to McKinsey, delivery platforms make their money through commission fees (15%–30% of the price of a meal), customer delivery fees ($2–$5 per order), and service fees (surcharges of up to 15 percent). At the end of the day, that’s what you’re really paying for. Try a better and healthier option: pick up your meal or cook at home. 

Other easy ways to save include cutting down on restaurant visits and taking time to strategize grocery shopping. Things like shopping for groceries less frequently, for example, can help you avoid impulse buys. Try to plan ahead and make a few big grocery purchases per month, rather than making multiple trips each week. Checking out with Zip in-store or online can help you manage this larger, but ultimately money-saving, purchase.

Budget Every Day & Plan Ahead

These are just a few specific ways to save so that you can have the future you want, without the financial burden. If you’re just getting into the budgeting mindset, check out our comprehensive guide to different budgeting methods.

Understanding these numbers and factors ahead of time will help you manage and lower costs in the long run. It’s kind of like eating your vegetables: not the most appetizing prospect, but we promise you’ll be glad you did. Put a plan in action so that when the time comes, you can focus on what you’ll do best—being the best parent ever.