The birth of a first child can be one of the greatest moments in a person’s life, but it doesn’t come cheap. It costs a middle-income, married couple $233,610 to raise a child through age 17, according to the U.S. Department of Agriculture.
That figure may end up being even higher, as it underestimates the cost of raising a baby in many urban areas of the country. Also, it’s important to be aware that some expenses can be especially concentrated in the child’s first few years. Of course, after age 17, there’s college tuition to think about—a big-ticket item if there ever was one.
Here are a few surprising infant- and toddler-related expenses you may want to prepare for, as well as tips on how to get ahead of some of them.
Child Care & Day Care
Expenses for child care and day care vary widely. You may be fortunate and have a relative who can devote their days to watching a young child. Or perhaps you work for a company with a generous leave policy. But most people must make hard financial decisions on this front.
Childcare is astoundingly expensive. Before the pandemic, childcare already cost around $1,230 per month in 2019, according to the Center for American Progress. During the pandemic, the D.C.-based thinktank released another report estimating that childcare costs have increased by 47%. Even other options could end up being just as expensive. Nannies earn an average of $14.13 per hour, according to Care.com.
Keep those factors in mind when calculating the financial impact of staying home vs. continuing to work. The result could be one parent leaving their job and losing the income it provides. If you choose this route, make sure to consider hidden costs; it also means giving up Social Security contributions and contributions to retirement savings accounts.
It could mean hiring a full-time nanny, or paying for day care while the parents work. Regardless, you should draw up a budget and start saving before the child is born. The loss of income, or the price of child care, is often the single largest cost in the early years.
The House
Getting your home ready for a baby will also involve making many purchases, such as a crib and changing table. Adding this new furniture may draw attention to a substantial problem: your house or apartment may be too small, especially when the newborn starts crawling and walking. While you may be able to put off moving for a while after your child is born, you should at least start planning to put a down payment on a house. Upsizing your home means higher monthly mortgage or rent payments, but you also must prepare for steeper utility bills, increased homeowners’ insurance premiums and higher costs for general upkeep. You may also be thinking about relocating for the sake of a better school district. A decision like that typically comes with high tax rates.
That’s not all. You’ll need plug protectors for electrical outlets, protective pads for sharp furniture corners, and child-proof gates (if you have stairs). These one-time expenses may seem small, but they add up.
Remember with childcare there are usually items that you can avoid buying. It’s very common to acquire hand-me-downs from family members or friends whose babies have outgrown their clothes, crib, etc. There are also some products you may think you need and end up not using.
Healthcare
Children, of course, require checkups and preventive care; plus, they’re susceptible to a wide variety of illnesses. That means trips to the pediatrician, which means co-pays at the very least. In 2020, the U.S. Department of Agriculture estimated that healthcare accounts for 9% of the cost of raising a child.
Pediatric visits can also result in trips to the drugstore, for either over-the-counter or prescription medicine. Sometimes your health insurance provider will cover these medications, but sometimes it won’t. And until you fulfill the insurance plan’s deductible, the costs may fall on you.
Even those with excellent medical insurance often find their dental coverage has, well, no teeth. And you’ll need a dentist sooner than you may think: Dentists recommend that you bring your child in when his or her first tooth appears, and no later than the first birthday. And remember the potential dental costs as they age; for example, the cost of braces averages at $5,000 to $6,000.
Transportation
To take your newborn around town—and even just home from the hospital—you’re going to need a car seat. And if you’ve been jetting around town in a two-door coupe, you may find you want to trade it in for the convenience of a four-door. Even then, if it’s a compact or subcompact vehicle, it may not have enough space for everything: the fold-up stroller, portable crib, myriad toys, diaper bags, and other gear. Plus, where will the groceries go? The tricycle? How about the grandparents? You should also think about safety and reliability in choosing your car, which could mean add on features like lane assists and backup cameras that may increase the cost.
If you add a second car, either you’ll have to pay cash or take on another monthly loan or lease payment, and you’ll also have to insure and maintain both automobiles. Also, you can expect the gas mileage to suffer with a larger car. If you live in a major metropolitan area, that larger car will be harder to park on the street, so you might find yourself paying for parking more often. In some places, parking can cost hundreds of unexpected dollars a month.
The new costs also extend to air travel. Until the age of two, children usually fly free if they’re sitting on an adult’s lap. However, outside of a few exceptions, airlines charge children over two years old the same price as an adult.
Utility Bills
Newborns are small, but when it comes to using residential utilities, they punch above their weight—and your bills can skyrocket.
Putting on a sweater indoors may work for you in winter, but keeping the heat low may not be the best decision with a baby or toddler in the house. The same goes for using the air-conditioning on a hot day; open windows may not be sufficient for a baby’s comfort. If you choose to upgrade your home, a bigger house means a bigger utility bill. Also, while you may be used to turning off the heat or the A/C when you go to work, that will change if your child and a sitter are home throughout the day. You can expect your water bill to rise dramatically as the volume of laundry increases and the dishwasher gets more use, especially as your baby grows up.
To save money, try skipping the extra washer rinse, and run your appliances at night if your local utility institutes a lower rate during non-peak hours.
Savings Strategies
There are ways to offset many of the unexpected costs of child-rearing, but not all of them. The best way to prepare for surprises is to start saving as early as you can. If you don’t need the money immediately, you will as your child ages, for things like sports teams and equipment or a 529 college savings plan.
Keep having these financial conversations with yourself and your partner as your child ages. Remember that their needs and yours will change as they grow up. For tips on how to save more efficiently, visit mymoney.gov.
Andy Sobel is a freelance writer and editor. He has held senior editing positions in The Wall Street Journal's New York and Brussels newsrooms and was managing editor of American Banker.
Read how to prepare for the high cost of family leave.