How to Avoid Spending $300,000 (or More) to Raise Your Child

Single mother with babyHaving children can be an expensive proposition. But despite the scary figures in a recent government report on the subject, you shouldn't panic, because there are things you can do to cut the price tag down significantly.

The Department of Agriculture just released its annual survey of how much families spend on their children. For many, the figures will be shocking:
  • The report divided households into three income groups. The lowest group can expect to pay about $212,000 to raise a child, the middle group will pay roughly $295,000, and the highest group can expect to shell out a whopping $490,000.
  • The biggest component of costs was housing, which ranged from about $3,000 to more than $7,000 per year based on income level. Child-care and educational costs came in second for the middle- and upper-income groups, while food came in at No. 2 for the low-income group.
  • Overall, annual costs ranged from $12,290 to $14,320 for middle-income families.
How much we spend on our children

But before you panic, consider a few things. First, the methodology behind the study assigns costs to a new child in ways that may not reflect your true cost. For instance, as far as housing, if your home already had an extra bedroom, then your actual housing costs may not change at all, even though the estimates include an amount that reflects how much others would pay to get a home with an additional bedroom. Similarly, assigning costs like transportation on a per-capita basis can be misleading if your usage patterns don't actually reflect equal use among all family members.

Age and cost of children

More important, there are plenty of steps you can take to cut those costs. Hand-me-down clothes from family or friends can slash the $11,130 to $19,080 clothing figure in the report, and smarter food shopping and eating out less can give you back some of the estimated $31,050 to $47,640 per child in food costs.

In addition, smart moves in one area can cut costs in others. For instance, choosing a home based on the quality of public schools may lead you to pay more for housing, but if it saves you on education costs down the road, it's well worth it.

As much as you might want to spend as much on your child as you can, coming up with $300,000 over 17 years is a stretch for most families. With some effort, you don't have to spend that much to raise your child successfully.

For more on smart family money moves: Fool contributor Dan Caplinger spends enough on his daughter, although she might not always agree. You can follow him on Twitter here.

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