There’s a lot you have to plan and save for when thinking about your future. Saving for retirement should be at the top of your list. But if you’re planning on buying a home or having a family at some point, you’ll need to start saving for those costs as soon as possible, too. It may sound crazy to a non-parent, but the average cost of raising a child in the U.S. surpasses $200,000.

The Average Cost of Raising a Child

According to a 2017 report from the U.S. Department of Agriculture, the average cost of raising a child from birth through age 17 is $233,610. If that made your heart skip a beat, take a deep breath before you read on. Incorporating inflation costs, it will be more like $284,570. Since that’s based on 2015 numbers, we can expect the cost will be even higher babies born since then.

How could such small people cost so much? This average includes everything from housing, food and transportation to healthcare, education and childcare to clothing, personal care items and entertainment. Housing makes up the biggest expense, accounting for about a third of the total cost of raising a child. Food and child care take up the next biggest part of the budget. The USDA estimates that childcare costs an average of $37,378 per child. Parents spend between 9% and 22% of their total income on childcare.

Interestingly, each additional child poses less of a financial burden than the last. You can thank shared bedrooms, hand-me-downs and free babysitting for that. Plus, a bigger family means parents can buy food in more economical qualities.

There’s something important to note about counting costs until your child reaches 17, though. That $284,570 average doesn’t include the cost of college education, arguably one of the biggest expenses a parent will face. CollegeBoard reports that public, four-year institutions in America cost each in-state student $20,770 for tuition and room and board. That figure jumps to $36,420 for out-of-state students. Meanwhile, students and parents at private non-profit four-year colleges pay an average of $46,950.

The Cost of Raising a Child by State

Of course, the USDA average doesn’t reflect what everyone will pay. It’s an average for middle-income, married couples with two children. In reality, families throughout America include a wide range of family types and household incomes. Lower-income families are expected to spend around $174,690 on their child, while the average higher-income family spends about $372,210. Single parents usually spend less than married ones. The following chart can help you get a better idea of how much raising a child costs across the country. Note that “rural areas” includes any town or municipality with a population of fewer than 2,500 people.

Region Average Cost Urban Northeast $264,090 Urban South $232,050 Urban Midwest $227,400 Urban West $245,460 Rural Areas $193,020

How to Save for a Child

No matter how you run the numbers, we can all agree that kids are expensive. To start saving for a child, assess how having one will affect your budget. You’ll definitely have new expenses to tackle, but you may spend less on dining out and entertainment. It helps to check out the specific costs of services and supplies in your area. You can also reach out to friends and family for their advice.

As your children grow, you can sell certain expensive items once they’ve grown out of them. You may also be able to capitalize on work perks for childcare and healthcare. Make sure you take advantage of child tax credits, which exist to help parents and guardians offset the expensive costs of raising a child. Under Trump’s new tax plan, the credit increased from $1,000 to $2,000 in 2018. Unlike a deduction, tax credits are a dollar-for-dollar reduction on your total tax bill. If you qualify, don’t leave that free money on the table!

It may seem crazy, but you’ll also want to start investing for their future as soon as possible. That way your investments will have more time to grow and result in bigger earnings. Look into tax-advantaged 529 college savings plans, which allow you to save toward your child’s education costs. When the time comes to pay for tuition, books and more, you and your child can make tax-free withdrawals. You can also set up custodial accounts like Uniform Gift to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA) to help your child (or another minor) pay for future education or other expenses.

If you can afford it, you may even want to consider opening a Roth IRA on your child’s behalf. The early investment allows for decades of compounding interest and offers tax benefits for when they reach their golden years.

The Bottom Line

Typically, the choice of whether to have a child is not a purely financial decision. But it is crucial to take into account your financial situation and the costs of raising a child. If you do want children, this will help you draft a future budget. Do you plan to pay your child’s way through college? Do you need to save to contribute to their wedding? You can always enlist help from a financial professional if you need. Plus, not only will a good savings plan benefit you, but your child will also have a great example of how to save.

A financial advisor can help set you up for a secure financial future, whether you’re hoping to save for retirement, manage your investments, open a 529 plan for your child or some combination of the above. Finding a financial advisor can be a challenging undertaking but that’s where SmartAsset comes in. Our financial advisor matching tool pairs people with financial advisors who fit their specific financial needs. You’ll start by answering a series of questions and then you’ll be matched with up to three advisors in your area.

Tips for Saving Responsibly

Saving up toward a $284,000 expense is certainly daunting. But not saving at all will hurt you and your finances when you have a child on your hands. Luckily, it’s pretty easy to open a savings account. Find one with a high interest rate for maximum returns. If having a child is further off in your future, consider opening a long-term CD account. These typically have the highest rates especially when you open one with an online bank.

If you’re willing to take on some risk, you can open an investment account in addition to your savings accounts. A common misconception is that you’ll need thousands of dollars to start investing. But that’s simply not true and you can invest any amount of money. If managing investments isn’t your thing, an investment manager like a robo-advisor could really come in handy. That way, you can maximize your returns and avoid any of the stress that can come with investing.

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