How much does it cost to raise a Child? It’s more than you think.

The Cost of Raising a Child is now estimated to be $233,610 for a middle-income family from birth to when they turn 18. That figure can jump up to $372,210 for families with higher incomes according to a report from the United States. I think the cost of raising a child is significantly higher; about three times higher. Let’s take a closer look.

$233,610 is a lot of money. I don’t care if you’re in the Lower, Middle, Upper-Middle or Upper class. I’ll concede that $233,610 isn’t that much for the upper-class, but we both know those families are going to spend well over that amount to spoil, I mean raise, a child. No matter how you look at it, raising a child is a huge expense in your life.

Some couples will look at the $233,610 cost and think to themselves that’s about $13,000 more per year. If each of us can pick up some extra shifts throughout the year we can each make $6,500 more and we’ll cover the cost. Do you really think the parents are going to pick up some extra shifts with a newborn in the house? I don’t either.

The average family in the US now has 2.4 children. That means parents are spending, on average, $560,664 on raising children in their lives!

$560,664 can buy you:

23 Toyota Camry’s

150 Business Class Flights to Europe (yes, the ones where the seats lay flat and turn into beds)

50 Years of eating at a fancy restaurant with your partner 2 times per week

30 Years working out with a Personal Training 3 times per week

140,000 Starbucks Lattes

1 very nice house (depending on the area of the country of course)

Clearly $560,644 can go a long way. It can have a long-lasting impact on your life.

So why do I think the cost of raising children is significantly more? I have two reasons.

Reason #1: Taxes.

$233,610 is the amount of money it costs to raise one child. That’s about $13,000 extra per year you need to spend on your child for 18 years. If you negotiated a raise at work for $13,000, you’d still have to come up with extra money. Why? Because the Federal Government wants their share of your income and most States do too. You would need to go back to your boss and tell her that you actually need a $20,000 promotion in order to raise your child to net $13,000 of pay after Uncle Sam takes his share. Oops. (Yes, the Government will kick in a couple thousand for the Child Tax credit, but the politicians in Washington DC could change that down the road.)

The cost starts to skyrocket when you have multiple children. This can be very scary for families that are not financially stable and prepared. Are you prepared to ask for boss for a $48,000 bump in pay to raise your 2.4 children? What luxuries would you have to give up to pay for a child?

Vacations?

Cable?

Gym Membership?

Shopping?

Having the newest iPhone or Samsung Galaxy?

Reason #2: What if you took that money and invested it?

Here’s the real kicker that reports like these don’t consider. What’s the opportunity cost? If you took the $13,000 per year needed to raise one child and invested it, that money could grow to over $525,000 over 18 years.

If you had 2.4 children and invested the money need to raise them, you could grow that money to $1.25 million over 18 years. $1.25 million! If you had $1.25 million saved in the bank right now, would you live your life differently? Would you have less stress and more freedom in your life? You wouldn’t have to worry about how much a latte at Starbucks costs. You wouldn’t have to worry about ordering a second glass of wine at a nice restaurant. You have much more freedom in your life when you don’t have to worry about spending $10 on a glass of wine.

The major realization I had is that people with children are having to spend money and they’re not able to save money to increase their wealth. It drains your bank account and prohibits you from investing to gain wealth to someday retire at all, more comfortably, or early. The bottom line is that raising one child will cost you $233,610 and you won’t have the ability to build $525,000 in additional wealth. Here’s the big question you need to ask yourself:

Is the cost of raising one child worth $758,610?

For some people the answer is yes and for other people the answer is no. Either way, I would encourage you to take some time and think about it. Ask your parents if they considered it before they were pregnant with you. Have discussions with your friends about being a parent. One caveat: I can guarantee you if you ask someone who has popped out a child, their answer will be “Absolutely yes! It’s priceless to see my baby smile and giggle for the first time.” There’s no way they’d admit it wasn’t worth it and confess if they could go back in time and make a different decision they would. Ask them if they had a child because it was the next thing to do in their life or if they put a lot of thought into it. Ask them if they realized the financial cost of raising a child and proactively made different lifestyle choices. Ask them how they think their lives would be different if they didn’t have children. You’ll get some weird looks and people thinking you’re crazy for even suggesting no having children, but don’t let that stop you. Find the truth for yourself. Is the cost of raising one child worth $758,610 to you?

Money doesn’t buy happiness, but it can sure help. (Don’t agree? See my post on how money can create happiness.) Before we get too far ahead of ourselves I don’t necessarily think you should take all of the money and invest it. In fact, I think it’s important to spend money on yourself as well as to give back. Giving can be to charities, friends, family, or other organizations you support. Part of living a Child Free Life is to have the freedom and ability to spend money on a few luxury items while also putting money away for retirement that otherwise would have been needed for raising a child. For my wife and me this includes things such as:

Going on an extra vacation

Driving a car I like (notice how I didn’t say minivan)

Treating my parents out to a nice restaurant

Upgrading to an oceanfront hotel room

Buying a round of drinks for my friends

Giving to a cause I support

Investing in 401k and IRAs

The Child Free Life is all about freedom. The financial burden of raising children is so high and I’m afraid that parents-to-be don’t understand the true impact.

It’s the difference between living paycheck to paycheck and living comfortably.

It’s the difference between working until 70 or retiring early and traveling the world.

It the difference between driving a 10 year-old car that’s in the shop all the time and a new car you actually enjoy driving.

It’s the difference between being stressed about your bills and living free.

Obviously, money doesn’t solve all problems, but it can certainly make life easier. I would encourage you to really think objectively about having children. It’s one of the two biggest financial decision in your life.