Retire Young and Wealthy

Children are expensive. According to a 2010 United States Department of Agriculture report, the lifetime cost of raising a child was over $200,000 (a huge jump from 1960, when the average cost was just over $25,000). That number seems a bit high, unless your child is enrolled in the best private school in town and always has the latest gadgets. In reality, though, those numbers quickly climb when you take into account the following:

Housing

Housing is by far the biggest expense for raising a child. Average costs of shelter – mortgage payments, insurance, taxes, utilities – quickly add up for families of any income level. Furnishings are also included here, like action-figure sheets or the perfect princess canopy bed.

Food

One day they’re throwing pureed carrots against the wall and the next they’re devouring entire pizzas in one bite. Buying groceries to fill hungry bellies at home takes up a good chunk of the budget. Parents with school-age children who opt for school-prepared lunches can expect an increase in food expenditures. And as families (and appetites) grow, so does the bill when you enjoy a nice meal at a restaurant.

Transportation

While gas used to transport children to and from school and extracurricular activities is a huge cost, this is but one of many parts to the transportation equation. Vehicle loans and down payments for said vehicles are also factored into transportation costs, as are repair and maintenance expenses. Public transportation is considered for families who choose to go without a car or reside in an urban area. And don’t forget about air fare for that summer trip to see Grandma.

Health care

Annual check-ups, dentist visits and medications are all factored in to the health care costs of having a child. While the percentages paid by employers for health insurance is not considered, other expenses like co-pays, out-of-pocket insurance costs (not covered by employers) and deductibles are.

Child care & Education

It’s not unusual to encounter parents spending at least $1000 per month to have two children in day care. Just spread out over the first five years of a child’s life, this tallies up quite a bit. In addition to day care costs, parents routinely pay for a babysitter for date nights. Education also comes into play here with the cost of preschool and private school tuition. Parents of any school-age child can also expect some costs for books and supplies.

Clothing and Miscellaneous Costs

It’s no secret that children quickly outgrow their clothing. Clothes and shoes are replaced once a year, if not more frequently. The costs of outfitting a rapidly-growing toddler are pretty spendy, especially when diapers and other personal hygiene items are considered here. However, they can easily be rivaled with the more expensive clothing & grooming habits of an adolescent. Throw in video games, reading materials, cell phones and other miscellaneous entertainment expenditures and it’s easy to see how costs quickly add up.

George Gallagher is a writer for all things finance and family related. He also works with private student loan consolidation credit unions.