The Duke and Duchess of Cambridge have a lot on their plates these days with the arrival of Prince George. Unlike most people, William and Kate do not need to worry about the financial costs and the 1,200 royal staff should also help ease the burden. For the rest of us, starting a family can be a huge financial challenge. Between home preparation, long nights, diaper changes, and feedings, parents can easily overlook the endless tab they are about to rack up thanks to their new little bundle of joy.
A million dollar baby is probably a stretch, but over the 18+ years you raise your child, you might come close. In the U.S., the average cost for a baby’s first year comes out to about $26,000 if you upgrade your house, use daycare, have insurance and buy the typical things parents buy. This report will present these costs throughout the United States to help prepare you for the financial side of raising a baby.
In our analysis, we broke down costs into five main categories:
Accommodating a kid or two will require something more than your two bedroom condo at the center of the the city. We have calculated the average cost of upgrading from a two-bedroom home to a three-bedroom home in your city. The average cost of an additional bedroom is about $86,000 or about $7,600 per year in additional mortgage payments (on a 30-year fixed 4.5 percent loan). San Jose is the most expensive place in the nation with an additional bedroom costing $225,000 or $20,000 per year. On the other end of the spectrum, an additional bedroom in Las Vegas will only run you $44,000, or $4,000 per year.
Childcare is another hefty bill. Redfin combined National Association of Child Care Resource and Referral Agencies childcare costs by state with childcare worker salaries by metro from the Bureau of Labor Statistics to get a more localized estimate of childcare costs by city. Since childcare doesn’t typically start until the baby’s third month, we estimated childcare costs for nine months of the year. Throughout the nation, infant childcare costs on average around $1,000 per month, or about $9,000 for the first nine months of care. Boston leads the country in childcare costs at $14,400 for the first year, and Atlanta is the most affordable at around $5,000 for the first year of care.
Healthcare costs are the great wildcard for babies in the United States. Your geographic location, choice of maternity hospital, insurance status and medical complications can all have a huge impact on the cost of pregnancy and childbirth. Costs can vary from hundreds of dollars for the well-insured to tens of thousands of dollars for the less-insured or uninsured. For the purpose of this analysis, we have chosen a flat $3,000 out-of-pocket cost for a new baby based on a study by Childbirth Connection from January 2013. Although healthcare costs will vary by city, it was difficult to decipher the magnitude using publicly available data. The best data we could find was courtesy of the Center for Medicare & Medicaid Services, but unfortunately it does not include any obstetrics related healthcare costs.
Now we’re getting to the costs with which parents are most familiar with. These costs are incurred when you go to the store and pick up a few items for the baby’s new room, or head down to the drugstore to stock up on diapers. Once again, we chose a flat cost here based on Baby Center’s cost calculator. The cost of baby items during the first year is estimated to be $5,500, but can vary based on how many gifts or hand-me-downs you get, as well as general costs of goods in your area.
Energy costs might not be too substantial compared to the costs above, but they can add up depending on the season, and your location. You’re going to be home more, and you’ll probably have the heat or the air conditioning on a bit longer to keep things comfortable for the baby. You’ll also be making a few extra trips to the store or to see grandma and grandpa. We’re estimating this cost based housing costs supplied by the US census. For the first year, these costs vary from $500 to $1000 depending on your city.
Some cities cost more than others for housing, childcare, and energy, while baby items and healthcare are constant. We’ve broken out these first year baby costs by city to give you an idea of what a new baby will cost in your area.
As you can see, having a baby is an expensive endeavor. If you’re not lucky enough to have a staff of 1,200 help you out like Kate Middleton and Prince William, you can still possibly look for a city to call home that tops this list of first year baby costs order by affordability. While this analysis might be a shocker for those sans bébé, as most parents will tell you, the extreme sleep- and cash-deprivation are worth it. We promise.
