In 2017, the Department of Agriculture announced the estimated cost to raise a child from birth to the age of 17 was $233,610. They based that estimate off figures obtained in 2015, so to put that number in 2019 standards, we added three percent annually for inflation (a number obtained by CBS News). This puts the current estimated cost of raising a child somewhere around $263,429. That breaks down to just under $15,000 a year.
Policygenius, an online insurance marketplace, recently released the data from their first annual Parents & Money Survey. The study reveals that 42 percent of American parents say they weren’t financially prepared to have a child. With an estimated yearly $15,000 price tag on items including childcare, food and diapers, it’s no wonder parents are feeling financial pressure.
The survey, which questioned 1,500 respondents across American during the first week of June, chronicled their biggest parenting costs and concerns.
Moms Don’t Feel as Financially Prepared
It appears moms feel a little less financially prepared than dads do. According to the results, 63 percent of men asked said they felt they were in a strong enough financial situation to have children, while only 53 percent of women said the same. That disparity may be due to the ongoing gender wage gap. According to findings published by the Institute for Women’s Policy Research, as of 2017 women were still only making 80.5 cents for every dollar a man made.
Childcare Costs Among the Highest Expense
While there are many factors that contribute to the high cost of raising children, childcare is the biggest financial concern. According to 30 percent of parents between the ages of 18-44 childcare was their biggest expense. Food was a close second at 22 percent, followed by recreational activities and extracurriculars at 15 percent and medical expenses bringing up the rear at 14 percent. Among parents aged 45 and up, those costs restructured a bit and recreational activities and extracurriculars became the highest concern. This is because many parents over the age of 45 are no longer paying childcare costs since their children are older.
Where Parents Put Their Money
According to the parents who did feel financially prepared, 23 percent said they didn’t have any long-term savings plans in place. That is perhaps because so many parents are focused on getting out of debt instead of saving for their future. “One in three parents (32 percent) name ‘paying down debt’ as their top financial goal,” according to the study.
Tips for Moving Forward
The survey offered some tips for parents looking to get a better grasp on their finances in the future. Suggestions including drafting a budget, saving between three to six months of expenses in the event of an emergency and employing the avalanche method (an accelerated debt repayment plan) when it comes to paying off debt.
Many Americans admit to living paycheck-to-paycheck, which may make this advice may seem less attainable, but experts agree any extra finances put towards saving and paying off debt will help long-term financial health and put families in a better situation to take care of any expenses that parenting may present.