Credit: Drazen Zigic/Getty Images
Key Takeaways
Raising a child from birth to age 18 now costs an average of $303,418, with Hawaii being the most expensive state.
Families typically allocate about 22% of their income to cover basic expenses for young children, with significant disparities by state.
To alleviate financial strain, parents can benefit from early saving, utilizing workplace benefits, and making cost-effective purchases for baby essentials.
Raising a child can be quite an expensive endeavor. Various stages of development bring different financial responsibilities, from diapers and daycare to sports and other activities. In addition, parents must budget for essential needs such as food, housing, and clothing.
A recent report by Lending Tree reveals that the total cost of raising a child from birth to age 18 has surged to $303,418, factoring in tax exemptions and credits. This marks an increase of nearly 2% over the past year and a staggering 28% rise when comparing the 2023 and 2026 reports.
Breakdown of Child-Rearing Costs
This is the first instance where the expense of raising a child has surpassed $300,000 since Lending Tree began tracking these figures. On average, this translates to about $16,857 annually over 18 years. There is a bit of good news: the cost for the first five years of a child’s life has decreased slightly, by 0.3%, thanks to a minor decline in daycare expenses, which still remains among the largest costs at over $17,000.
Most Expensive States for Child-Raising
If you reside in Hawaii, brace yourself for the highest costs, with expenses estimated at $40,342 for the first five years and a staggering $412,661 over 18 years—almost $50,000 more than the next state on the list. Here’s a glance at the top 10 most costly states:
1. Hawaii – $412,661
2. Alaska – $365,047
3. Maryland – $326,360
4. California – $312,300
5. New Jersey – $312,295
6. Kansas – $303,250
7. Washington – $297,341
8. Arizona – $294,982
9. Nebraska – $294,926
10. Montana – $293,926
Notably, Kansas, Alaska, and Montana experienced over a 20% increase in long-term child-rearing costs this past year.
States with the Lowest Raising Costs
Contrastingly, if you live in New Hampshire, the anticipated expense for raising a child is approximately half that of Hawaii, totaling around $201,963 over 18 years. Below are the 10 states with the lowest projected costs (including Washington, D.C.):
51. New Hampshire – $201,963
50. Washington, D.C. – $202,115
49. South Carolina – $204,213
48. Mississippi – $208,621
47. Alabama – $212,121
46. Iowa – $215,443
45. New Mexico – $218,588
44. Georgia – $222,713
43. South Dakota – $222,976
42. Ohio – $224,228
Financial Percentage of Raising a Child
Families generally spend about 22% of their total income on annual child-rearing expenses during the first five years. Parents in Hawaii are at the higher end, spending 27.4% of their income, while those in Washington, D.C. contribute the least at 13.9%. Overall, Lending Tree reports that in 22 states, families devote over 20% of their income to young children’s expenses.
Strategies for Managing Child-Rearing Costs
Lending Tree provides several valuable tips for parents to better navigate the costs associated with raising a child:
Start saving early: Parents are encouraged to establish a dedicated savings account for future expenses if planning for a child. Allocating a small portion of each paycheck into a high-yield account can help build a financial safety net.
Utilize workplace and government benefits: Discuss potential benefits with your HR department and consider a dependent care flexible spending account (FSA) to manage childcare costs tax-efficiently.
Smart shopping: Remember that expensive doesn’t always mean better. Seek out deals through consignment shops, clearance sales, and accept hand-me-downs when possible. But always ensure safety and quality when it comes to baby gear.
Avoid debt: Paying down credit cards and other debts can free up more funds for child-related expenses. Consider options like a 0% balance transfer credit card or a low-interest personal loan to assist with this.
Raising a child is a significant financial commitment, but with proper planning and resource management, parents can find ways to make it manageable.
