That new bundle of joy – who is sure to enrich your life – also comes with a very hefty price tag. New parents have many financial decisions to make right from the start. One thing to consider includes whether a parent should stay at home or return to work after a child is born.
The average cost of raising a child (from birth to age 18) for a middle-income family is $233,618. And that doesn’t include the cost of college, which is on the rise and outpacing inflation.1 In fact, the cost of raising a child has increased greatly — by 40 percent from 2000 to 2010 — within a relatively short amount of time.2
The cost of child care
Everyone knows that child care isn’t cheap. But the majority of working parents who start a family (70 percent) say the high cost of child care is the expense that surprises them the most.3 The most expensive place in the U.S. when it comes to child care is Washington, D.C., with costs coming in at $22,631 a year. Conversely, the least expensive state for child care is Mississippi at $4,822 a year.2
Some mothers and fathers decide to stay at home after doing a cost/benefit comparison of the income earned to the cost of child care. The U.S. government defines affordable child care as being no more than 7 percent of a family’s household income. However, most Americans pay more than that; in fact, more than 40 percent pay 15 percent, more than twice the recommended amount.3