Takeaways
- Raising children is one of life’s largest time and financial commitments.
- The average American household has roughly two children under 18 years old.
- The cost of sending one child to a four-year in-state college is roughly $30,000.
- The average cost of raising one child from birth to 17 is over $318,605.
- Expenses such as housing, food, childcare, and healthcare have increased significantly.
Anyone who has been around children knows that having children is expensive. As one of life’s significant milestones, we wanted to know just how expensive having kids was.
A recent study by the Brookings Institution shows that raising a child born in 2025 through age 17 would cost more than $318,605.[1] With increased inflation, especially in core spending categories, the cost of raising a child through high school and beyond has become even more costly.
The bulk of expenses for raising a child can be broken down into seven bite-sized categories for prospective parents to understand. Most of these are simply tacking onto what you already pay for yourself and your spouse, but knowing them ahead of time allows you to save, invest, and plan for your child's future.
Cost of Raising a Child
In the early years of raising a child, the majority of expenses are typically incurred for childcare, housing, and food. As your child grows older, they can take on costly extracurricular activities and eventually head off to college.
>> Need to save more? Learn How to Make Over $100,000
It is easy to get distracted by the large lump sum needed to raise a child. However, studies project it will cost between $12,420 and $25,810 per year for a child born in 2025 (depending on your income), which might seem more manageable.[2]
Luckily, the USDA has broken down the seven main categories to save and plan for as a prospective parent. Here are the expenses to know:[3]
1. Healthcare
New parents are often thrown for a loop when they realize the costs of raising children. Healthcare costs can be expensive and consist of dental, medical, and prescription drug expenses, which include out-of-pocket costs as well as insurance premiums to pay for your children’s healthcare.
These can stack up quickly, so it’s a smart money move to choose the best healthcare insurance provider offered by your employer. You can consult with a financial advisor when it’s time to enroll in benefits to ensure you are getting the best bang for your buck.
You Might Also Like:
2. Housing
New parents are often thrown for a loop when they realize the costs of raising children. Healthcare costs can be expensive and consist of dental, medical, and prescription drug expenses, which include out-of-pocket costs as well as insurance premiums to pay for your children’s healthcare.
These can stack up quickly, so it’s a smart money move to choose the best healthcare insurance provider offered by your employer. You can consult with a financial advisor when it’s time to enroll in benefits to ensure you are getting the best bang for your buck.
You Might Also Like:
3. Daycare and Education
Someone has to watch your children when you aren't there. When your children are young, it's a good idea to save for preschool tuition and supplies. Don't forget to allocate some babysitting funds when your children are young so you can enjoy a night out with your spouse.
As your kids get older, their tuition and supplies needs will start to expand. These costs will include books, enrollment fees, and other related expenses. Escaping these costs will be all but impossible; it's best to plan ahead.
Planning to fund your child’s education after high school? Here are the average costs of tuition, fees, housing, and food for college:
| Year(s) | Public Four-Year In-State | Public Four-Year Out-of-State |
|---|---|---|
| 2024-25 | $24,920 | $44,090 |
| 2023-24 | $24,080 | $42,610 |
Source: Collegeboard.org [4]
4. Food
Feeding more than one person can add up over time, even if you are trying to be conservative on food-related expenses. For new families, it can be incredibly helpful to include your grocery bill as part of your monthly budget.
For a family of four, planning on a weekly or monthly grocery bill is critical, but don’t forget to account for nights off from cooking and dining out at restaurants. For growing children, consider the cost of lunch programs.
Related: 10 Steps to Create a Meal Plan
5. Clothing
Clothing children can seem like an annual chore, especially as your growing children need new clothes, shirts, pants, shoes, dresses, or suits. Additionally, infants and young toddlers will need diapers, a seemingly perennial expense.
As toddlers wean off needing diapers, their clothing needs only start to expand as they continually grow out of clothes. You can help mitigate clothing costs by using hand-me-downs or shopping for brands designed to be "kid-proof."
Read More: 16 Budgeting Tips Anyone Can Follow
6. Transportation
As your family expands, so too will your car or truck needs. Not only will you need additional items like car seats, seat pads, and booster seats, but you will also need to consider larger vehicles to accommodate all the extracurricular sports and activities your children are involved in.
Transportation costs will increase due to larger vehicle loans and car payments. Your peripheral transportation costs, such as gasoline, motor oil, repairs, maintenance, and cleanings, will also increase.
Related: How to Buy a New Car in 7 Steps
7. Miscellaneous
Raising a family comes with surprise expenses that you often don't consider as a new parent. These expenses include items like reading materials, including books and magazines. One of the most significant unexpected (but controllable) expenses includes entertainment, such as soccer, basketball, dance, and other extracurricular activities.
There are also recurring personal care expenses, such as toothbrushes and haircuts, that need to be accounted for as well.
>> Are you saving enough? Calculate your Personal Savings Rate
Where to Stash Savings
You might feel like stuffing cash under your mattress is the best place to store your hard-earned money. However, for long-term savings, there are excellent savings products that can pay you interest and boost your overall savings. Here are some to consider:
- High-Yield Savings Account: These accounts are designed for account holders who want to earn a higher interest income than traditional checking accounts. You can find above-average APY savings accounts to hedge against rising costs, provide passive income (through interest income), and offer easy, on-the-go access to your money. (Read our picks for the Best Savings Accounts of 2025).
- Certificates of Deposit (CDs): CDs are savings products that pay a fixed annual percentage yield (APY) over the life of the CD. The best part about CDs is that you lock in a known interest rate, which means your APY doesn't fluctuate as it does with high-yield savings accounts. You can purchase CDs with terms ranging from a couple of months to a few years. (Read our picks for the Best CDs of 2025).
- Investment Accounts: Online brokerage accounts enable you to start putting your money to work beyond traditional banking products, such as checking and savings accounts. You can invest in dividend stocks, cryptocurrencies, or growth stocks, which can increase dramatically in value through appreciation. (Read our picks for the Best Brokerage Accounts of 2025).
Smart Money Recommendation: Start saving any amount you can. Even $50 a month starts to add up with compound interest. We love the Acorns app, which rounds up your purchases and lets you invest your spare change.
Take the Next Step:
On Acorns Website
Acorns Investing App
Smart Money Rating: 4.9/5
Intro Offer: $20 Bonus Investment
Best For: Beginner Investors
Start Saving for Children
The costs of raising a child in 2025 can seem staggering, especially if you focus solely on the total expenses. Practically, you won't need to pay this all at once, so break it down into manageable pieces.
The best way to plan and play for childhood costs is to create a budget. A budget will allow you to plan out expenses and streamline your savings process. You should focus on savings for college, managing monthly expenses, and saving for a down payment to buy your first home. Read more about our picks for the Best Budgeting Apps of 2025.
Take the Next Step:
On Empower’s Website
Empower App
Smart Money Rating: 4.9/5
Best For: Tracking Personal Finances
Offers: Free Personal Dashboard
Smart Summary
Raising children can be one of the most rewarding parts of adulthood. However, with inflation, the cost of raising children has continued to increase over time. With the average cost growing, it pays to start planning out the cost of children earlier so you can be prepared. Utilizing savings products, such as savings accounts, CDs, and investment accounts, can make your family's financial planning seamless.
You Might Also Like
Smart Money requires our expert writers to rely on trusted primary sources—academic research, government reports, expert interviews, original reporting, and peer-reviewed data—to deliver precise and up-to-date content. All of our content is thoroughly fact-checked. We also incorporate relevant research from reputable publishers when it aligns with our editorial focus. For a closer look at our rigorous journalistic standards, explore our editorial guidelines.
(1) Brookings. Future estimated annual expenditures of raising a child, assuming a higher inflation rate of 4 percent after 2020. Last Accessed June 1, 2025.
(2) U.S. Bureau of Labor Statistics. CPI Inflation Calculator. Last Accessed June 1, 2025.
(3) USDA. Expenditures on Children by Families, 2015. Last Accessed June 1, 2025.
(4) CollegeBoard.org. Trends in College Pricing 2024. Last Accessed June 1, 2025.
