The High Cost to Raise Kids: 7 Tips That Can Help
The cost to raise kids is staggering these days, to say the least. As soon as you arrive home from the hospital with a new bundle of joy in your arms, your household budget increases. You’ll need to buy diapers and food, and that doesn’t include the costliest expense for most parents — childcare.
But costs vary from one family to another — not just because different parents have different lifestyles. A recent report from the Economic Policy Institute shows where you live can make a difference in the cost of raising kids.
Which places are the least and most expensive, and what can you do if you live somewhere that’s increasingly unaffordable? We’ll break it down below.
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Cost to Raise Kids Across the U.S.
If you hope to raise a family on a budget, the report deems the Southeast section of the country is the place to go. Of the top 10 least expensive cities, nine were in that region. The most affordable cities for raising kids, according to the study, are:
- Orlando, Florida
- Nashville, Tennessee
- Atlanta, Georgia
- Charlotte, North Carolina
- Birmingham, Alabama
- Raleigh, North Carolina
- Salt Lake City, Utah
- New Orleans, Louisiana
- Jacksonville, Florida
- Tampa, Florida
The most expensive cities are more spread out. They are:
- Milwaukee, Wisconsin
- Rochester, New York
- Minneapolis, Minnesota
- Buffalo, New York
- Hartford, Connecticut
- Los Angeles, California
- Las Vegas, Nevada
- San Francisco, California
- Denver, Colorado
- Boston, Massachusetts
If you live in a pricier city, don’t hire a moving van just yet. We have some tips below that can help you keep costs low while staying in your current location.
7 Tips for Reducing the Cost to Raise Kids
The cost to raise kids is only going to increase over time, but you can do some things to reduce expenses. These expert tips can help you better manage the additional line items on your budget.
1. Plan Ahead
From the time you find out you’re expecting, parenting expenses are inevitable. But as Riley Adams, licensed CPA and financial advisor at NewEdge Advisors, points out, planning ahead is more than half the battle.
‘If you take stock of your finances before having kids, you’ll have a much better idea of how much you can afford to spend on your kids when they arrive,” Adams said. “Proactively plan to build their expected costs into your budget ahead of time while making any necessary lifestyle changes to accommodate your soon-to-be-upsized family budget.”
2. Create a Budget
Emily Luk, CFA/CPA and the CEO and founder of Plenty, emphasizes the value of setting and following a budget. She recommends tracking every dollar you spend for a full month. Then you should divide your spending into the following categories:
- Needs (like food and bills)
- Wants (like entertainment)
- Savings
“Set clear limits for each category and stick to them,” Luk advises. “Don’t forget to plan for kid-specific stuff like extracurricular activities or occasional day trips. It helps to revisit your budget regularly to make sure it still works for your family as things change.”
A good place to start? Our list of some of the best budgeting apps out there.
3. Find Budget-Friendly Activities
As your kids get older, keeping them busy becomes the next challenge. Jennifer Seitz, certified financial education instructor (CFEI) and director of education at Greenlight, has some great suggestions for affordable family-friendly activities.
“Leverage free local events, such as library story hours, community festivals and park activities,” Seitz advises. “At-home activities like DIY crafts or backyard camping are cost-effective and fun. Museums, zoos and other attractions often have free or discounted admission days.”
Our list of more than 100 free activities has many that are child friendly.
4. Be a Thrifty Shopper
It may not seem all that significant, but even the smallest savings can add up over time. To cut the cost of raising kids, Luk recommends steering away from name-brand products. Often you’ll find little difference between name-brand and generic when it comes to items like diapers, wipes and baby formula.
“Buy secondhand when you can,” Luk adds. “Things like strollers, cribs and clothes are usually in great shape and way cheaper.”
We put together a list of where parents can find freebies for young children.
5. Rely on Relatives
Adams makes no bones about it. Childcare expenses are going to hit your budget hard. But there are things you can do, including opting for before- and after-school care instead of in-home nannies and taking advantage of multi-child discounts at daycares.
But nothing compares to local relatives. If you’re fortunate enough to live near someone you can trust to take care of your child, saving money will only be one of the benefits.
“Grandparents, siblings, cousins and any family you can trust to do well watching your children on a regular basis can not only save a significant amount of money, but they’ll also provide your children with a loving, supportive environment,” Adams said.
6. Search for Help
Plenty of programs exist to help families who need them. Luk suggests looking into the following to see if you might be able to offset some of those child-rearing costs:
- The Child Tax Credit: Qualifying households can earn up to $2,000 per child
- Earned Income Tax Credit: This tax credit is available to low to moderate income taxpayers, and dependents can increase your tax savings
- Supplemental Nutrition Assistance Program: The SNAP program is designed to help low-income families with grocery expenses
- Women, Infants and Children: Abbreviated WIC, this program helps pregnant and breastfeeding women and children up to the age of five with healthy foods and referrals to other services
- Children’s Health Insurance Program: This Medicaid program offers health care assistance for children in households that qualify
“Check out local resources too, like food banks, parenting classes or subsidized childcare programs,” Luk adds. “Make sure to check your local government’s website too to see what’s available.”
7. Instill Solid Financial Habits
One common mistake Seitz sees from parents is avoiding financial conversations with their children. Kids can pick up bad habits or misconceptions from friends or social media, so she stresses the importance of being open and honest with your children.
“Having open discussions at home about money helps shape a healthy financial mindset from an early age,” Seitz explains. “You can set your kids up for long-term success by teaching them about budgeting, saving and investing. Try involving your kids in real-life financial decisions, such as planning a family grocery budget or planning an outing. These mini-money moments can be effective examples of teaching these skills without extra cost.”
Parenthood can be an expensive endeavor. But with some careful planning and cost-saving measures, you can enjoy the family you want while also living a reasonably comfortable lifestyle. Of course, where you live plays into the cost to raise kids. It’s important to be aware of the typical price tag that comes with raising a child in your area so you can offset the extra cost.
Stephanie Faris is a professional finance writer with more than a decade of experience. Her work has been featured on a variety of top finance sites, including Money Under 30, GoBankingRates, Retirable, Sapling and Sifter.
