Whether you’re adopting a child or welcoming a baby into the world, having kids can be one of the most meaningful experiences of your life. But, from first steps to college graduation, the milestones of parenthood often come with both joy and anxiety — particularly of the financial sort. It can help to have warning, before you take the plunge, about just how much cash it takes.
More than half of aspiring parents polled in a recent Nerdwallet study said they thought costs in the first year of a child’s life would be about $5,000 or less. But it’s typical to shell out far more — from $20,000 to $50,000 in overall expenses, the personal finance site found. A big slice for many is childcare: More than $10,000 a year for daycare or nearly $29,000 for a nanny is typical, according to a 2017 survey of U.S. parents by advice network Care.com.
All told, you might spend more than $230,000 on food, childcare, education, healthcare and transportation by the time your child turns 17, U.S. Department of Agriculture data suggests. That doesn’t even include college, currently ranging between about $5,000 and $16,000 a year for in-state, public school, according to College Board, though free programs exist.
There are ways to get ahead of these staggering figures, fortunately: First and foremost, you’ll want to set up a budget and relatively flush emergency fund. Staying communicative with friends, family or partners can help so you’re not alone in developing a financial plan.
Of course, you can’t prepare for everything. Special needs children, for example, can cost millions of dollars over a lifetime (though there’s potential help in supplemental income programs and tax-advantaged savings accounts). Even just giving birth can require more than you might expect: One Mic staffer said he and his wife were surprised by the double whammy of higher monthly health insurance costs and the four-figure hospital expense of childbirth: “$1,000 is not the largest sum, but it’s scary when your paychecks go down and those bills come in,” he said.
The curveballs of parenthood can come in other forms, too. Mark Chekal-Bain, district director for the California State Assembly, said in an interview that he and his husband quickly reached out to adopt a newborn after seeing on the news that a woman had left the baby at a local hospital.
“We jumped on the opportunity and ended up fostering the baby until the adoption could go through,” Chekal-Bain said.
It ended up being a lengthy process. As they bonded with the child, the couple feared the mother would reclaim her rights at any time, causing stress, uncertainty and sleepless nights. But eventually Chekal-Bain and his husband were lucky, he said, and the adoption went through without cost.
Of course, everyone faces different challenges on the road to parenthood, financial or otherwise. What do you do if your money or family situation is particularly complicated? And what else should you expect — financially — if you’re expecting?
Here are answers to your seven biggest questions about affording children.
1. What’s the best age to have a baby, at least financially?
You are probably already aware of the risks of being an older parent, from increased rates of complications to difficulty conceiving — even if many of those fears might be overblown in the popular imagination.
As it turns out, starting a family too early might actually create financial risk. For women, research suggests having kids while you’re very young — before age 25 — is associated with lower lifetime earnings than if you conceive after age 31. In general, breadwinners might consider peak earning years and work backward from there: If you’re a man, for example, whose salary will peak in your late 40s and drop off afterwards, having kids in your early 30s could save you from a double whammy of college tuition costs and declining income.
Then again, while having kids later in life can come with certain economic advantages, doing so early enough in your 20s might alternatively free you up to work on your retirement nest egg during your peak earning years, as Money points out. (The kids will be in college when you are at your salary pinnacle, allowing you to maximize savings.)
Another case for being a young parent? You may have more job flexibility since you are likely to be working in a junior position during those salad years.
Yet not everyone is able to have kids early, even if they want to, which is one reason some choose to freeze and store their sperm or eggs — to the tune of hundreds or thousands of dollars, respectively.
2. What are the biggest overlooked costs to having kids?
Kids are expensive. Based on averages, you might allocate about 18% of your budget to food, 16% to education and childcare and 9% to health care over time. And on top of the obvious, like clothes, toys, books and car seats, certain costs you might have considered luxuries could start feeling essential to your child’s development — like tutoring, dance, sports or violin lessons.
Don’t be afraid to ask for help, one Mic staffer suggested: “The better your support system, the better you and your child succeed.”
Indeed, when another mom, South Carolina resident Megan Kin, and her husband Chris brought their twins home from the hospital two years ago, Kin said they were lucky to have a community that offered second-hand clothing and baby equipment.
Yet ongoing physical therapy expenses took the family by surprise. “We were prepared for the hospital bills, but what we didn’t expect were the ongoing medical expenses,” Kin said. “A visit to the doctor that isn’t a ‘well check’ is expensive... I’m covering the copay for two children instead of one.”
Fortunately, to free up money for the unexpected, there are a few ways young parents might conserve cash at the outset, said Lauren Kay, deputy editor at the Bump. “Diapers and wipes will be one of your biggest expenses and can’t really be avoided, [so] cut coupons and buy in bulk,” she said in an email.
Keep extra savings to use in case of emergencies, the loss of a job or even natural disasters, Kay said. “Once [your] baby arrives [it is] important to have some additional money set aside for back-up childcare or unexpected medical expenses that may arise for baby or mom.”
Other surprises might include the loss of a salary (if stay-at-home parenting ends up being your choice) or the expenses from feeding your baby, if breastfeeding is unexpectedly not an option: The cost of formula is about $550 in a baby’s first year, Kay said. Even just traveling with a baby can be more expensive if you fly — some airlines still pad ticket prices, even if you don’t buy a seat for your child.
Finally, you may want to start thinking way ahead about your child’s schooling: “Start by taking advantage of a state-sponsored education savings plan or setting up a nest egg for [your] baby’s future needs,” Kay said. Here’s how to start saving for your kid’s education.
3. How do you save money on childcare costs?
Childcare may actually be part of your surprise costs, if one parent planned to stay home but it isn’t financially feasible — or if you are a single parent who needs to work more than you expected.
But once you know you do need childcare, which avenue is best? Your pick among the range of options, plus your income and where you live, will influence your expenses.
Relative to income, daycare is most affordable in North Dakota, Utah and Delaware — and relatively unaffordable in Washington, D.C., Oregon and California, according to the Care.com survey. Nanny costs are on average most within-reach for those in New Hampshire, New Jersey and Maryland — and least affordable in Mississippi, New Mexico and Arkansas.
Of course, if you are lucky enough to have family members or grandparents to handle most of the care, you can save a good chunk of change. Otherwise, here are some other options you might consider:
A daycare setting may be most cost-effective
If you opt for a daycare center, expect to spend about $11,000 per year on average, though costs can be as much as $20,000. “Daycares offer a structured space and hours, vetted professionals, social interaction and a focus on early childhood development,” Kay said.
But be warned: “There are also germs to contend with, fixed hours, which is no help if you’re running late, and turnover in childcare providers,” she said.
A “nanny share” can help cut expenses
Nannies provide in-home, personalized care and may even help with general household chores. Alas, the average cost of a nanny can be as high as $33,000 a year, depending on the number of children the nanny cares for in your home and where you live, according to Care.com.
“The big drawback for hiring a nanny is cost... full-time care can range from $500 [to] $900 a week according to the International Nanny Association,” Kay said. “You’ll also be responsible for some paperwork, too, like W2s and insurance.”
You might consider a “nanny share” where you split the cost of care with at least one other parent or family. Benefits include your child getting more one-on-one attention, but also increased socialization. This plan is ideal for flexible parents who already have a strong relationship prior to the share agreement.
Other types of in-home care can range in costs, from $300 to nearly $1,500 a month for a baby or toddler, according to Very Well Family.
If your office provides on-site care, take advantage
Ask your company about on-site childcare options, as some companies provide those services to employees. If you work at companies like Dow Jones, Johnson & Johnson or at Home Depot headquarters, for example, you may have daycare services right at the office.
But even if you don’t have on-site care, it can pay to ask questions. Companies like Adobe Systems, Colgate-Palmolive and Texas Instruments offer at least some backup childcare to employees with unexpected needs. If your employer doesn’t already have a favorable policy, consider pushing for change — which could arguably help your company retain talent. Patagonia, which offers on-site care, says 100% of its working mom employees return to their jobs after maternity leave, according to Fast Company.
4. How much does being pregnant — and giving birth — cost?
If you’ve read this far and feel ready (or as ready as you can be) for the adventure of parenthood, it helps to know about the most immediate costs of having a baby. For many people, that means getting pregnant — and delivering.
Maternity expenses typically include an obstetrician or midwife’s care during pregnancy, genetic testing, delivery and mother and baby post-delivery care. Giving birth can cost from about $5,000 to $15,000, depending upon where you live and the method of delivery, according to Money. And in more extreme cases, it could cost between $0 and $300,000 — depending on whether you have health coverage and if you experience any complications.
Private insurance may provide the most coverage
If you are covered by private health insurance, the amount you’ll pay out of pocket depends on your carrier and deductible, as the Bump warns. Most carriers cover anywhere from 25% to 90% of the costs after you’ve met the yearly deductible. Keep costs down by staying in-network, trying to keep your hospital visit short (if possible) and notifying your insurance carrier of your baby’s birth early on so the child can be added to your plan.
Caesarian section births are usually more expensive than vaginal births and giving birth is costlier in some states than others, as Money reported. For instance, it costs about $15,000 to have a C-section and about $10,000 for a vaginal birth in Alaska, on the high end.
The Affordable Care Act can help
In some cases, insurance through the ACA exchanges can help you cut costs — though not on everything. One personal finance blogger tracked what it costs to have a baby with the Bronze Basic plan through Healthcare.org. She and her husband did not qualify for subsidies and ended up paying close to $400 for doctor visits and about $200 for labs. She also had to make a down payment of $250 to her obstetrician for the upcoming delivery and spent $125 to take a childbirth education class.
For her (uncomplicated vaginal) delivery she ended up paying about $6,000 — amounting to about $7,500 total in out-of-pocket costs for the pregnancy.
Check out the Children’s Health Insurance Program
The Children’s Health Insurance Program provides medical coverage for those who may earn too much money to qualify for Medicaid — and in some states the program covers pregnant people up to about 205% of the federal poverty level. Unfortunately, depleted funding may affect coverage in your state; you can learn more here.
Medicaid covers hospital births in all states
Medicaid, or health coverage for low-income Americans, covers prenatal vitamins and ultrasounds in all states, but amniocentesis and chorionic villus sampling are covered by only most states, according to a Kaiser Family Foundation survey. You receive coverage in all states for an inpatient hospital birth, and many states for deliveries at a birthing center or at home.
5. What if you need help getting pregnant?
Getting pregnant can be complicated for different people. Some couples or single parents may want to explore options including in-vitro fertilization, adoption, fostering and even surrogacy.
Costs for a single cycle of IVF can be anywhere from $15,000 to $40,000. Families interested in having a surrogate carry their child might expect to spend much more: up to $150,000 or more than $200,000.
Before you dive into any of these options, inquire with your employer about family planning benefits. Some companies cover either all or a portion of the costs for IVF, surrogacy and egg freezing.
Gay or single parents — or those having difficulty conceiving — can try IVF
In vitro fertilization is an option for those who need help carrying and delivering a child. You must take medication and endure a few invasive procedures to be successfully inseminated, which may cost several thousand dollars for a single cycle.
Not all cycles are successful, which makes this method rather expensive. “It really comes down to where you live and your insurance plan,” Kay said. “And ultimately what your needs are... based on your age, medical history and a series of tests. Treatments can cost as little as $10 per month for a drug like Clomid or upwards of $100,000.”
Surrogacy has its own costs
Surrogates are generally well compensated, starting at about $20,000 plus the cost of IVF, which can bring the baby total into the six-figure range, Kay said. “It’s best to work through an agency — often times your fertility doctor can give you a recommendation. Most agencies have strict requirements for surrogates, giving you added protection.” Keep in mind, surrogacy laws vary state by state too, she added.
There are two types of surrogacy: traditional (genetically related to the parents) and gestational (not genetically related to the parents). Broken down, approximate fees range up to $12,000 in legal fees, $45,000 to pay the surrogate, $25,000 to cover surrogate’s costs and $25,000 to cover what insurance doesn’t pick up.
6. How much does it cost to adopt a child?
The road to a baby can take you down a number of paths. If your heart is set on raising a child — and you need to do so economically — fostering to adoption is one of the least expensive options around, costing anywhere from $0 to $3,000. Here are steps you can take to a successful adoption.
Foster to adoption is a good choice for many
Foster to adoption is one of the most effective ways to become a family, with some adoptions being free, like it was for the Chekal-Bain family. However you can spend up to nearly $2,700 with this method, Adoptive Families reports. Associated costs typically include medical expenses, new clothing or furniture the family buys for the child, as well as hiring an attorney if needed.
A private adoption may not be as expensive as you think
You can adopt privately through an agency or independently, according to American Adoptions. The cost to adopt through an agency averages a little more than $42,000 and it’s nearly $32,000 if you’re adopting independently through an attorney. With an agency, they typically handle the process, including communication with the pregnant person. In an independent adoption, the adoptive family does the legwork, connecting with the pregnant person and working through an attorney or using adoption agency services.
Foreign adoptions require learning local laws
Foreign adoption costs vary depending upon the country. Estimates suggest adoptions from China may cost approximately $35,000, in Ethiopia around $30,000 and in South Korea up to $50,000. Each nation has its own legal requirements and potential costs, which may include paying for the adoptive child’s passport, agency fees, document preparation and travel.
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