Any parent knows that raising a child isn’t cheap.
For a middle-income family, housing accounts for the largest share of child costs at 28%. Food is the second l argest expense, at 18%. Childcare and education together are the third-largest expense at 16%, followed by transportation at 15%. Healthcare bills (dentists and doctors) account for 9% and clothing expenses amount to 6%.
Those statistics come from the U.S. Department of Agriculture and USA Facts.
Housing costs include any form of shelter (mortgage payments, property taxes, rent, and/or insurance), utilities (gas, electricity, fuel, cellphone and water), and house furnishings and equipment, according to the USDA.
Childcare and education expenses include daycare tuition, babysitting and other childcare costs, and tuition for private schools.
(Note that these costs ex clude college spending after the child turns 18. College expenses have increased in recent years: according to USA Facts Government 10-K, the annual cost of undergraduate education rose 18% from 2011 to 2021.)
Transportation expenses include vehicle payments, fuel expenses, maintenance and repairs, insurance, and public transportation costs. How much does the “average” family spend on childcare?
According to U.S. Census Bureau data, the average family with children spent $7,131 of their income to pa y for childcare in 2020. Childcare costs were 28% higher in 2020 than in 2010.
Families with children under 5 spent more money on care than families with elementary-aged and high school-aged children. This trend has been consistent for the last decade. The average family whose youngest child is preschool-aged spent $8,200 on care in 2021, compared to an average of $4,700 per family whose youngest child is elementary school-aged.
According to USA Facts, the average percentage of household income spent for childcare in 2021 was:
• Oklahoma, 7.9%
• Texas, 6.7%
• Arkansas, 8.6%
• Kansas, 6.1%
• Missouri, 6.8%
• Colorado, 8.4% The U.S. Department of Labor reports that childcare prices are higher among center-based providers as opposed to home-based providers.
For example, among preschool-aged children, center-based childcare prices per child ranged from $6,949 in 2022 do llars in small counties to $12,307 in 2022 dollars in very large counties. Home-based childcare prices ranged from $6,171 in 2022 do llars in small counties to $10,045 in 2022 dollars in very large counties.
Preschool-aged children are more likely to attend center-based providers than are infants and toddlers.
While price is a signif icant factor influencing parents’ decisions about the type of childcare services they use, other considerations also guide these choices, including availability of childcare providers, hours of operation relative to parental work schedules, personal beliefs and preferences, child age, child temperament and disability status and state childcare policies.
Given limited availability and high prices, many families may not have ample choices. Childcare is unaffordable for many families who need it.
Childcare costs peaked in 2020 as the CO VID-19 pandemic hit, but care hasn’t been affordable for many families that need it ov er the last decade. According to the Department of Health and Human Services, childcare is affordable if it costs ho useholds no more than 7% of their income.
The average cost of childcare was not affordable for families making less than $75,000. Childcare was not affordable in 2021 for the average multiracial, Black, or Native American family either, taking up nearly 9% of the average income for each of these groups.
As part of the economic r esponse to the pandemic, the American Rescue Plan Act of 2021 temporarily increased the size of the existing c hild tax credit, made it refundable, and gave families the option of receiving the credit in monthly installments throughout the year.
The child tax credit is based on ho usehold income and the number of dependent children. The American Rescue Plan Act increased credit from $2,000 to $3,000 per c hild older than 6 and $3,600 per younger child. The plan also raised the age limit of eligible children from 16 to 17 years old.
The average benefit per taxpayer receiving the increased child tax credit was $4,380, with families in the lowest 20% of income g etting the largest benefit according to a report from the Congressional Research Service.
But the payments – meant in part to support families with childcare costs – expired at the end of 2021. How have the costs of raising children changed?
In 1960, childcare costs were mostly for in-home babysitting. But as more women joined the labor force, demand for outside care increased.
From 1960 to 2015, the inf lation-adjusted cost of childcare and education rose by 825%, healthcare by 160%, and housing and transportation by 8% each. Meanwhile, clothing costs dropped by 37% and food costs fell by 13%. Miscellaneous spending decreased by 33%.
Childcare and education went from 2% of child-raising costs to 16%, the biggest increase of any category.
Methodology changes are likely affecting that increase, too. In 1960, the childcare and education figure included total costs for all families, even if they spent nothing in this category (in which case, their lack of expenditure would bring the average down). By 2015 the f igure included only families that had some ex penditures within the category.
Childcare costs have risen in recent years, as well. According to Census Bureau data, family childcare costs increased 17% between 2012 and 2021. When in a child’s life do parents spend the most?
For all income levels, expenditures on children were the highest when they were between the ages of 15 and 17. It’s at these ages that spending on transportation, healthcare and food peaks.
What families spend depends on children’s ages. Early in life, childcare expenses are a larger share of the costs. Childcare and education expenses were highest for children younger than 6 for the low- and middle-income demographics. As children reach school age, food costs trend upwards for all income brackets, while childcare costs for low- and middle-income families drop. For higher-income families, the cost of c hildcare and education remained high from birth through high school. Where does it cost the most to raise children?
Married couples in the urban Northeast spent the most on c hildren, followed by families in the urban West and urban South. Child costs for rural families throughout the country were 27% lower than the urban Northeast, primarily due to lower housing and childcare costs. Where did this data come from?
The USDA releases the “Expenditures on Children by Families” report, which “may be used in de veloping state child support guidelines and foster care payments, as well as in public health and family-centered education programs.”
The data is based on ex penditures of married-couple families with two children. Those costs are averaged to estimate the ex penditures on a perchild basis. The report estimates that expenditures for raising an only child are about 27% higher. Families with more than two children pay about 24% less per c hild.