Having a child is one of the most exciting milestones in life, but it also comes with significant financial responsibilities. A 2017 U.S. Department of Agriculture (USDA) study estimated the cost of raising a child born in 2015 through age 18 at just under $233,610. A later analysis by Brookings, adjusting for inflation and economic shifts, put that cost at roughly $310,605 for a child born in 2015 through age 17. More recent studies show that, with continuing inflation and rising expenses, the total cost of raising a child to age 18 in the U.S. now averages about $297,000–$332,000, depending on geography and income, with some projections pushing totals near $350,000–$450,000 in high-cost areas.
Preparing financially before becoming a parent is essential. Here are the key costs you need to consider.
First-Year Medical Costs
From prenatal care to your baby’s first year of life, medical expenses can add up quickly. Updated 2025 data show that medical costs for pregnancy and delivery can range widely depending on insurance, birth setting, and complications, with estimates falling between $6,000 on the low end to upwards of $15,000 or more in out-of-pocket spending.
Tips to Manage These Costs:
- Review Your Health Insurance: Understand what your plan covers for prenatal visits, delivery, and newborn care—check deductibles, co-pays, and out-of-pocket maximums.
- Plan for Unexpected Costs: Complications can significantly increase expenses, so having a financial buffer is crucial.
- Use Pre-Tax Accounts: Contribute to an HSA or FSA to save on taxes for eligible medical expenses.
Loss of Income
Parental leave policies vary widely, making it important to understand how time away from work may affect your finances.
- Employer Benefits: Many companies offer maternity or paternity leave with full or partial pay for a defined number of weeks, while others provide short-term disability coverage for a portion of wages.
- Family and Medical Leave Act (FMLA): Eligible employees can take up to 12 weeks of unpaid leave to care for a newborn.
- Long-Term Impact: If a parent plans to stay home or reduce hours, consider how this decision will affect household income and long-term financial goals.
Childcare Expenses
Childcare is among the highest ongoing costs for working families. According to the Care.com 2025 Cost of Care Report, weekly and annual expenses continue to rise across most childcare options.
- Average weekly nanny cost: About $827, up roughly 8% from prior years.
- Daycare cost: About $343 per week, reflecting an increase of approximately 7%.
In context, the average annual cost of raising a child under age five in the U.S. is now around $27,743, covering childcare, food, housing, transportation, and healthcare, and continues to rise year over year.
Strategies to Manage Childcare Costs:
- Start researching childcare options early, as high-quality providers often have long waitlists.
- Take advantage of tax benefits such as a Dependent Care FSA or the Child and Dependent Care Tax Credit.
Insurance
Adding a child to your household also means revisiting your insurance coverage to ensure your family is financially protected.
- Health Insurance: Add your baby to your plan and compare coverage options between parents to find the best balance of cost and benefits.
- Life Insurance: Both parents should carry appropriate coverage, with term life insurance often remaining affordable for young, healthy adults.
- Disability Insurance: This protects your income if illness or injury prevents you from working.
Planning Ahead for the Future
Expenses don’t stop at medical bills and childcare, so long-term planning is essential for financial stability.
- Emergency Fund: Aim to save three to six months of living expenses to handle unexpected costs.
- College Savings: A 529 plan offers tax-advantaged growth to help cover future education expenses.
- Budget Reassessment: Regularly update your budget to reflect new responsibilities and evolving financial goals.
Conclusion
Raising a child is rewarding but increasingly expensive. From first-year medical bills to ongoing childcare and insurance costs, preparing financially can reduce stress and help you focus on the joys of parenthood. By understanding current costs, leveraging available tax benefits, and planning for the long term, you’ll be better equipped to navigate the challenges ahead.