You’ve likely read reports from “experts” detailing the cost of raising a child, but how accurate are they? Do you really have to spend $235,000 to raise a child? Below are our thoughts on the subject and some helpful tips to keep costs down for your family.

Every year since 1960, the USDA has released a report called “Expenditures on Children by Families.” Popularly, it’s known as something like “The Cost of Raising Children Report.”

The report details how much families of different income levels spend on their kids in different areas. And it usually creates quite a stir, reminding us all that kids aren’t cheap.

The 2011 report caused more than the usual amount of news because it noted a 3.5 percent increase for middle-income families from the year before. That is a lot of money when you’re talking about hundreds of thousands of dollars.

But here’s the thing: Many get the meaning of this report all wrong.

What the Report Actually Means

When you read about this annual report, it’s usually not referred to by its academic-sounding name. Instead, it’s more likely to be called something like “The Cost of Raising Children Report.”

Do you see what I see when I look at that title?

Cost is how much you pay for something. A gallon of gas, at this moment, costs about $3.60. I can’t change the cost of gas, unfortunately. While you can sometimes negotiate a lower price for something, for the most part in North America, the price on the tag is what you’ll pay.

Expenditures, on the other hand, are things that you can control. Sure, gas costs $3.60, but if I’m on a tight budget, I can fill the tank halfway and drive less. I can choose to spend less money on gas.

And this is the problem with this USDA report. It is meant to be a real-time look at what people are spending on their children. Their expenditures are forced upward as the costs of housing, food, childcare, and other necessities rise.

But that doesn’t mean that if you fall into the middle income bracket ($59,410 to $102,870 for the 2011 report) and had a baby in 2011, you’ll absolutely have to spend $235,000 to raise a happy, healthy child to age 17.

Many people, unfortunately, take the report to mean that if you can’t set aside $200,000+ (per child) in the next 17 years, you’re better off not having a kid at all. But that’s not true. This report shows what people do spend on their children, not what they have to spend on their children.

Otherwise, why would there be such an enormous gap between low- and middle-income families, and an even larger gap between middle- and high-income families?

If you check out the actual 2011 report, you’ll see that from birth to age 2, low-income families spend about $8,000 on a child, while middle-income families spend about $12,500. High-income families spend more than $20,000.

Obviously, high-income families aren’t forced to spend more money just because they make more. They’re choosing to spend more money because they can. (Or because they’re trying to keep up with the Joneses, but that’s a whole different post.)

So What’s the Point?

My point here isn’t to say that kids are cheap to raise. They aren’t. Every little human being comes with needs and wants. But there are tons and tons of ways to reduce the amount you need to spend on each child.

And that message, I hope, brings hope to the many Americans who want to be parents but feel as though they’ll never be able to afford a baby.

As a parent, you make many financial choices when it comes to your kids. While you don’t want to have children if you can’t provide essential health care, good nutrition, a comfortable place to live, and a generally stable environment, you don’t need all the trimmings and trappings to be a great parent raising a healthy, happy and well-loved child.

So if you’ve been putting off having kids because of reports like this one, or if you’re already a parent looking for ways to save money, here’s a quick overview of ways to save on the biggest expenses on the USDA report:

Save on Housing

Housing is the biggest expense on the USDA’s list, taking about 30 percent of the child-related expenditures. But take it from someone who lives in a one-bedroom apartment with a toddler, you don’t have to provide lots of extra space for your child.

Babies, especially, take up next to no room and would prefer to sleep closer to you, anyway. But even older children don’t need a room of their own; it won’t kill them to share with a sibling.

If housing is a big expense for you, consider downsizing. Families in 1973 lived in an average of 1,525 square feet, according to the Census Bureau.

In 2010, the average home was more than 600 square feet larger at 2,169. Our families haven’t gotten any bigger, so there’s no reason a family can’t live comfortably in a smaller space.

Save on Food

There are lots of easy ways to save on food for your family, whether you have an infant or a bottomless pit otherwise known as a 15-year-old boy. Here are a few ideas to get you started:

  • Breastfeed: Even breastfeeding an infant part-time gives great health benefits and can save you a fortune. Consumer Reports says that an exclusively formula-fed baby will drink up about $1,500 worth of the stuff before they can switch to regular milk.
  • Make Baby Food: Making your own baby food is super simple and quick. Steam fruits or veggies and puree them. And most babies can eat whatever their families are eating by their first birthday. It’s cheaper (and usually healthier) than jarred baby foods.
  • Cook at Home: Cooking at home is better for the whole family, and it’s much cheaper than eating out — even if you’re constantly swinging through the McD’s drive-through.
  • Plan Your Meals: Have a plan for your weekly meals and try to keep a backup meal or two in the pantry or freezer. I like to have jarred pasta sauce and dried pasta on hand so we can have spaghetti if I don’t have time to shop.
  • Pack Lunches: If you have older kids, school lunches are probably a big expense. Pack your kids’ lunches instead, and you can get them more nutritious food on the cheap.
  • Choose Cheaper Snacks: Stock the fridge and pantry with cheap, healthy snacks like fresh apples and homemade granola. Again, it’s cheaper and healthier.

Save on Transportation

Transportation expenses for kids make up 14 percent of overall expenditures in the report. Again, this one surprised me. I mean, kids can’t even drive their own vehicles until they’re 16, and the report only goes through age 17.

To save on transportation, don’t automatically buy a typical family car when you have a baby. Our family of three is just fine in our Toyota Camry, and sedans are cheaper to drive than minivans.

As your kids age, you could save a lot on transportation (and miscellaneous expenses) by limiting their extra-curricular activities. Running around and waiting in a million pick-up lines can really drain your gas tank and your wallet. Plus, wouldn’t you rather have a couple of nights each week for family time?

Save on Clothing

Clothing makes up about 6 percent of the average family’s child-rearing expenses. That’s not an outrageous portion, but it’s still an easy place to save money.

Most of my daughter’s clothes are gently-used hand-me-downs from friends and family members. When I do shop for her, I buy things on sale, usually for the next year. Even if you prefer to put your kids in new, brand-name clothes, you can shop the sale racks or use coupons or even credit card rewards to save.

Save on Health Care

This is tricky because you can’t always control health care expenses. But it makes up 8 percent of the overall child-rearing expenses. What you pay for health care will depend largely on your insurance plan, but ensuring that your family has basic health insurance whenever possible can help keep these costs from getting overwhelming.

Also, take your kid to checkups. I know they come around way too often to even keep track of (three months flies by when you have a little one, it seems), but these simple and cheap appointments can catch bigger problems early, before they become huge expenses.

Save on Child Care and Education

Again, this can be a tough place to save, but because it makes up 18 percent of the average family’s child care expenses, it’s worth trying. When it comes to child care, you don’t want to skimp too much, but you can get good value for your money by shopping around.

Once you’re done with daycare, the cheapest option for education is, of course, public or charter school. But if the schools in your area aren’t great, you might consider homeschooling or look into private schools. If you do look at private schools, ask about scholarships that might reduce your costs.

Save on Miscellaneous

Apparently, parents pay as much for miscellaneous expenses — personal care items, entertainment, reading materials, toys, etc. — as they do for health care. Smart spending is the way to cut back on expenses like these.

Buy toys on sale. Do projects at home or go to the park instead of watching cable. Rent movies and books from the library. (Bonus: If you have to take them back to the library, you don’t have to watch/read them 3,000 times.)

Sure, this is just an overview of ways to save when you’re raising a child. Some of these ideas are pretty basic, and some are even a little drastic. But if you want to expand your family or are afraid of the USDA’s $235,000 figure, just remember that there are lots of ways to not spend that much money to raise a healthy, happy and well-rounded child.


  • Abby Hayes

    Abby is a freelance journalist who writes on everything from personal finance to health and wellness. She spends her spare time bargain hunting and meal planning for her family of three. She has a B.A. in English Literature from Indiana University Purdue University Indianapolis, and lives with her husband and children in Indianapolis.