Just How Much Does It Cost To Raise a Child These Days?

From childcare to food and housing, families in some areas of the country can spend more than $30,000 a year according to an eye-opening new survey. Find out where your area ranks.

When a family decides to expand and have a baby, it can be such a joyous and momentous occasion. We can't wait to become parents for the first time, or for our first child to have a sibling on the way, and then to watch that child grow up. Sometimes the overwhelming excitement overshadows the reality of having a child—the cost.

The cost of raising a child in some parts of the country now tops $30,000 a year. Yup. You read that right. According to a new study from SmartAsset, the average cost across the country is $20,813 annually. But when they looked at 381 specific metro areas, the cost varied greatly. SmartAsset considered the prices of food, housing, childcare, healthcare, transportation, and other necessities. It is important to note, they only looked at two-adult households.

The Rising Cost of Childcare

It's no surprise one of the biggest expenses when it comes to raising a little one is childcare, accounting for about 50% of the cost. The study showed the average cost of childcare is $9,051 per year. But of course that depends on where you live. In Sumter, South Carolina it'll cost you just over $4,800. But if you live in Ann Arbor, Michigan, that number jumps to more than a whopping $22,000 a year.

Childcare is a necessity for working parents. But sometimes the cost is hard to swallow. According to the Department of Labor, the price of childcare represents between 8% and 19.3% of family income per child. Obviously, parents of infants and toddlers pay more for childcare than those who live in areas with Pre-K programs and school-aged children. But then you also have to factor in either early or after-school care for elementary-aged children.

Related: How to Afford a Baby as a Single Parent

The Related Costs of Raising a Child

The survey not only looked at childcare but also the costs of food, health care, housing, and transportation. For example, in Northern California, researchers factored in more than $12,600 in housing costs per year. In Fayetteville, North Carolina it costs a tenth of that at $1,250.

There isn't as much of a disparity when it comes to the cost of food. Families can expect to pay between $1,760 and $2,111 in food costs for a child. The average cost of transportation is just over $2,100.

What's not in this survey? The cost of youth activities. Once your child is school-aged, they may not need as much childcare. But that's just replaced by sports, dance, music lessons, art classes, and other extracurricular activities. The cost of those activities just grows as your child gets older and gets more fully invested in a competition dance team or travel soccer program. Other than the cost of the training itself, keep in mind hotel stays for long competitions or tournament weekends plus costumes, uniforms, food, etc. But I digress...

The Most Expensive Places to Raise a Child

The majority of metro areas in SmartAsset's top 10 are in California. But Massachusetts isn't that far behind. In San Francisco, Santa Cruz, and San Jose, it can cost families more than $33,000. On the East Coast, Barnstable Town and Boston follow closely behind at $32,000.

Here are some of the other metro areas around the country where it costs the most to have a child.

You see a lot of metro areas on the East and West Coasts, with Michigan areas also ranking high. So what about other areas of the country? Colorado has two metro areas in the top 25. Boulder is number 11 and Denver is number 23. You have to go down to number 51 before you find another state in the interior west—that's Reno, NV. For the upper Midwest, Milwaukee-Waukesha, WI ranks 44th. For the Mid-Atlantic states, Washington, DC comes in 25th while the Philadelphia metro area ranks 45th.

The Least Expensive Places to Raise a Child

You have to head to the South to find the least expensive places to raise a child. Tennessee towns take two of the top three spots. But it's South Carolina that makes up half of the ten most affordable areas.

The Carolinas, Alabama, Georgia, Arkansas, Louisiana and Mississippi all have metro areas ranking for low cost as well.

Related: A Nine-Month Plan for Getting Your Family's Finances in Order Pre-Baby

How Parents Can Save for the Future

When a new baby enters the picture, it's easy to get wrapped up in all of these added expenses. But parents can't put their own finances on the back burner once the baby arrives, or even as their child grows up.

"I think it's much more important for the parents to take care of themselves first and their children second," says Richard Habib, a certified financial planner in Staten Island, New York. "Psychologically, that's not what you see. A lot of it is—take care of my kids no matter what, and I get the emotion, but financially, you can't take care of your kids properly if you don't take care of yourself."

Invest in a 529 plan

These are college savings plans that you can start for your child pretty much right when they are born. "If the parents wanted to do something to benefit the child very quickly, and to benefit themselves, putting the money into a tax-free vehicle, as long as they follow the rules of that [do it] at the earliest date they can possibly do it," says

So what are the rules? You would take the money out to be used to pay for qualified education expenses. This can include college, K-12 tuition, apprenticeships, and sometimes student loan repayment.

There are tax benefits to a 529 plan. "Anything that's under the criteria of what's a legitimate higher education cost, which doesn't have to be college, it just has to be higher education, is a tax-free withdrawal as long as you use it for that purpose," adds Habib. Some states also have tax incentives if you invest in a 529 plan that's based within the state in which you live.

Put money into an emergency savings account

This is also sometimes called a rainy day fund—money you set aside in case you have an unexpected expense. It could be new brakes for your car, or a sink backs up and you need to call a plumber.

"Parents are trying to survive because money is tight. They want to build a family, they want to go places with their kids," Habib says. "I think the most important thing that they can do is build their savings account up so they get it to a level that will cover at least a lot of the emergencies that may catch them by surprise."

Most financial experts recommend having three to six months' worth of living expenses available. "Take smaller amounts of money if you can't do it with bigger amounts and just sock it away every month before you pay your bills, just make it a ritual," Habib adds. "My advice is to find a way to put 50 or $100 somewhere.

Don't forget about your own retirement plan

You may have a retirement account through your employer, but if not, make sure to have one on your own. Habib says while everyone should be building up their savings account, not to forget about retirement. He says accounts with liquidity may be the way to go.

"They should try to build a separate liquid retirement, not retirement account, but a long-term account that if they needed to use it, they could use it," explains Habib. "I have never bought into the theory that you should max out your retirement plans at work before you do anything else because of the tax-deferred, compounded growth. I do think they're a great idea. So I don't want anybody to misunderstand that, but I don't think that's the one thing you do if you can't do anything else."

Related: Should I Talk to My Kids About Our Family's Money Problems?

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