Everyone knows kids are expensive. But we don’t really stop to think about how much kids cost until we’re in the thick of parenthood. If you’re thinking of having kids one day, this post has answers. We cover how much it costs to raise kids, and provide a starting point for future parents to set themselves (and their family) for financial success. 

PS. Already a mom? Penny launched a money module just for you! Learn about tax credits, accounts to open, and much more. Simplify the money talk and start making financial decisions with confidence.Start here: a free money quiz exclusive for moms.

👀 3min read

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How much do kids cost?

A USDA study says a married couple, middle-income family should expect to spend a *cool* $233,610 to raise a child born in 2015 through age 17. That’s about $12,980 a year. 

With inflation, costs jump to $284,570 or well over $300k – which adds up to about $15-16k a year. 

For reference: that’s the equivalent of 3 Prada handbags, or a 1-week luxury hotel stay with all the bells and whistles in an international tropical destination like Bora Bora. 

And this doesn’t even include college yet! 

Plus, if you make more or less than the “average”, have more children, or live in a more expensive city or state, these numbers will change. 

Which begs the question: Where does the money go?

How much do you spend on kids?

According to the same USDA study, middle-income families spend: 

• 29% on housing
• 18% on food, and 
• 16% on child care & education.

If we take the inflation-based average of $300k, that’s about…

• $4,800 a year on housing
• $3,000 a year on food
• $2,600 a year on child care & education

Again, this is only for ages 0-17, so college hasn’t even made it into the calculations yet! It also doesn’t account for things like health insurance, transportation, or clothing and other miscellaneous items. 

The easiest way to get an accurate estimate for your family? Plug them into a tool like Penny’s free money quiz for moms.

When do you save for kids? 

ASAP! – You could be in the early stages of family planning, or in the midst of counting pennies to save for your toddler’s future college fund. Here are 3 quick tips to help moms at every stage.

1. Start saving. Preferably, tax-free. There are many accounts designed to provide current and future parents an easier way to set their kids up for financial success. For example: when it comes to college funds, 529 accounts are your best friend. Open one, start saving – and save on taxes in the process.
2. Open a Roth IRA. The IRA account family is best known for its retirement benefits. But that’s not all! Some Roth IRAs allow you to withdraw money for birth, adoption, or college expenses without penalty. Add the investing and tax perks to the list, and it’s a great way to both save & build long-term wealth for your family. 
3. Or open an account in their name. Custodian accounts, trust funds, and yes – even investing and retirement accounts like the Roth IRA can be opened by you, on your child’s behalf, from day 1. If managing multiple accounts for you & your kid(s) feels too complicated, start with a savings account at your local financial institution, and go from there. 

Wherever you are on your journey, we invite you to begin. 

Afterall: Yes, kids are expensive. But even on days when they drive you nuts, you know they’re worth every penny (pun intended ;).

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