Annual Costs to Raise a Small Child Increased By 19.3% Nationwide to $21,681 Between 2016 and 2021

Raising a child has never been cheap — and like everything else, it’s getting more expensive. The latest LendingTree study shows that the average annual essential costs to raise a small child (from food and apparel to transportation and child care) rose nearly 20% between 2016 and 2021, the latest year for which complete data was available.

Our study looked at data at the national and state levels, so parents can learn where it’s most — and least — expensive to raise a small child. After all, any insight on savings potential matters because “there is so much that goes into providing even the basics for that little person,” as Matt Schulz, LendingTree chief credit analyst, puts it. “Those things you need aren’t getting any cheaper these days.”

Here’s where they’re most expensive.

Key findings

• The average annual essential costs to raise a small child jumped 19.3% nationally between 2016 and 2021. Annual expenses minus tax exemptions or credits totaled $21,681 in 2021, versus $18,167 in 2016.
• Basic annual expenses to raise a small child in 2021 equaled $30,506 in Hawaii, more than any other state. The District of Columbia and the state of Washington followed at $30,097 and $28,116, respectively. In contrast, annual costs were lowest in Mississippi at $15,555, Alabama at $16,192 and Arkansas at $16,284. The states with the smallest expenses paid among the lowest for infant day care, at less than $8,000 a year.
• Families are projected to spend $237,482 over 18 years to raise a child. Our 18-year estimate is highest in Hawaii at $314,529 and lowest in South Carolina at $169,327.
• Families spent an average of 19.0% of their income in 2021 on the basic annual expenses to raise a small child. This percentage was highest in Hawaii at 23.9% and lowest in Georgia at 15.5%.

Average annual essential costs to raise a child jump nearly 20% nationally

Between 2016 and 2021, the nationwide average annual cost of raising a young child jumped $3,514. That translates to a 19.3% difference between 2016’s $18,167 and 2021’s $21,681.

These costs are spread across child-specific categories, like child care, and regular household expenses that having a child can affect, like food and rent.

Bare-bones costs of raising a small child in the U.S.

Sources: LendingTree analysis of U.S. Census Bureau, Massachusetts Institute of Technology (MIT) Living Wage Calculator, Care.com, U.S. Bureau of Economic Analysis, Kaiser Family Foundation and Tax Foundation data.

In every category except rent, costs increased over these five years. Note, though, that figures for rent, food, transportation and health insurance premiums represent only the difference in expenses that parents paid versus nonparents. For example, parents paid an average of $1,344 more in rent than nonparents in 2016, but that isn’t the total amount of rent they paid that year.

Many of these cost differences could be attributed to overall inflation, which stayed relatively steady from 2016 to 2020 before a momentary pandemic dip — which was followed a skyrocketing increase in 2021. In addition, the price of gas rose from an average of $2.06 a gallon in January 2016 to $3.41 a gallon in December 2021. While both figures have recently stabilized, the economy is still finding its footing after the chaos wreaked by COVID-19 — and impacting parents’ wallets along the way (especially single parents).

When it comes to raising a child affordably, Hawaii isn’t paradise

Although raising a child is expensive anywhere in America, some states are significantly costlier than others. Island paradise though it might be, Hawaii holds the title for most expensive place to raise a small child — owing, in large part, to parents paying a whopping $4,176 more a year in rent than their child-free counterparts. Aloha State parents can also expect to pay an additional $4,010 annually in health insurance premiums (this section looks exclusively at 2021 data).

The District of Columbia and Washington state round out the top three most expensive American locales for parents of small children, with residents of the nation’s capital paying an average of $25,523 a year on infant day care.

In these three most expensive states, the annual cost of raising a child is above $28,000 — more than 40% of the 2021 median nationwide household income of $69,021.

Full rankings: Costs to raise a small child in each state

Sources: LendingTree analysis of U.S. Census Bureau, Massachusetts Institute of Technology (MIT) Living Wage Calculator, Child Care Aware, U.S. Bureau of Economic Analysis, Kaiser Family Foundation and Tax Foundation data.

Meanwhile, the South leads the charge when it comes to less-expensive child-rearing — though at an annual cost of $15,555 in Mississippi, the least expensive state to do so, raising a child still couldn’t be called cheap.

In each of the three least expensive states — Mississippi, Alabama and Arkansas, in that order — parents still pay more than $1,000 more a year in rent than nonparents, and have food, transportation and health care premium cost increases comparable to more expensive regions. But child care costs in these areas are less than half of what they cost in the most expensive areas, perhaps owing to lower minimum wage requirements — but in any case leading to an overall substantial savings for parents living in the South.

Over 18 years of child-rearing, costs add up

Given the per-annum costs of raising a child, it’s no surprise that overall costs can swiftly add up. But seeing the final figure can cause sticker shock for even the most prepared parents.

Projecting the above cost categories on an 18-year trajectory, parents will pay an average of $237,482 nationwide to shepherd their child to adulthood — and that’s not even counting the cost of college. In the most expensive state, Hawaii, that figure rises to $314,529. (Every category except child care has been extrapolated to 18 continuous years of costs, while only five years of child care have been tallied to account for young kids’ transition to school.)

You’ll notice that the states are in a slightly different order on this list, since different cost categories have different levels of impact over time. For example, Alaska likely sits in second thanks to its astronomical parental rent cost — an additional $4,392 a year, which tops even Hawaii’s rent excess. Maryland, the third most expensive state to raise a child to adulthood, also has a higher rent discrepancy for parents, along with relatively high insurance premiums and transportation costs.

18-year costs of the essentials to raise a child

Sources: LendingTree analysis of U.S. Census Bureau, Massachusetts Institute of Technology (MIT) Living Wage Calculator, Child Care Aware, U.S. Bureau of Economic Analysis, Kaiser Family Foundation and Tax Foundation data.

Again, the bottom of the list is populated by many states in the South, along with a few cameos from the Midwest.

Michiganders, for example, may benefit from state tax exemptions and credits that total a savings of $208 a year. The state also enjoys the lowest yearly additional health care premium cost at $844. (In every other state, the additional cost is four digits.)

Still, South Carolina takes the lead for the least expensive place to raise a child to legal adulthood with a total projected cost of $169,327.

The physical purchases you need to make can add up, too, so it’s worth finding ways to save on them. “If you can use hand-me-down clothes, furniture and other things, it can save you a ton of money,” Schulz says. “Even secondhand clothing stores and consignment shops can work for you.”

On average, families spend almost a fifth of their annual income on child-related expenses

The high cost of raising a kid means that parents spend a significant portion of their annual income on child-related expenses. Nationwide, families spend 19.0% of their annual income on child-rearing expenses.

Again, this figure varies by state. The two states where parents spend the lowest proportion of their income on child-rearing, Georgia and South Dakota, are among the cheapest in annual cost to raise a child (fifth and fourth, respectively). Parents in those states spend a relatively low 15.5% and 16.3% of their income on their children.

The District of Columbia comes in third in this metric despite being one of the most expensive places to raise a child. Thanks to an average family income of $181,289, the percentage that goes toward child-related costs remains low (16.6%).

States where families spend the smallest portion of their income to raise a small child

Sources: LendingTree analysis of U.S. Census Bureau, Massachusetts Institute of Technology (MIT) Living Wage Calculator, Child Care Aware, U.S. Bureau of Economic Analysis, Kaiser Family Foundation and Tax Foundation data.

Unsurprisingly, Hawaii appears at the bottom of the list, with parents in the island state devoting 23.9% of their annual income to child-related expenses. Even a relatively high average family income of $127,545 can’t outpace the state’s extreme expenses.

However, the state second from the bottom, Nebraska, is the 10th most expensive to raise a child in, so it makes sense that parents are spending 23.7% of their average $106,469 in annual income on child-related costs. In West Virginia, third from the bottom, a relatively low average family income of $83,583 may lend to their 23.3% figure for this metric.

Still, it can be worthwhile to see if there are accessible ways to lower your proportional child-related spending. “It makes sense to take a hard look at your budget to see how much you can afford to spend each month and if perhaps there might be some moves you could make within that budget to free up some extra cash, if necessary,” Schulz says. A second job or side hustle could also help — though raising kids takes time and money, making this option less feasible for parents.

4 tips for balancing your finances while raising small children

Moms and dads know that raising kids is hard — not just financially, but in every sense of the word — but worth it. And there are some ways to keep your finances balanced while taking on the greatest and most rewarding challenge of all.

• Save ahead of time. Obviously, this is easier said than done. But “if you can put some money away and build up some savings in the early going, it can help you significantly as your kids get older,” Schulz says. “Even a few dollars per paycheck consistently added over 15 to 20 years can add up to some very real money. Having that cushion means that you don’t necessarily need to put that new big-girl bed on your credit card.”
• Get creative with child care. Instead of paying for a sitter, consider trading babysitting services with another family: On Tuesday nights, all the kids hang out at your house, while they hang out at theirs on Thursday. This kind of arrangement gives all the parents involved some downtime and gives your kids extra opportunities to socialize.
• Take advantage of programs designed to help. They say it takes a village — and the village is bigger than direct family members and close friends. “There are programs run by federal, state and local government agencies, as well as those by other organizations, businesses, religious groups and other entities that may be able to help you, depending on your circumstances,” Schulz says. For starters, check out the resources listed at ChildCare.gov, or search “family assistance programs near me.”
• Don’t forget about your own future. With so many exciting milestones ahead for your kiddo — and so much of your disposable income being funneled toward kid-related expenses — it can be easy to forget your financial goals and requirements. But “if possible,” Schulz says, “you should be saving some for retirement and other long-term goals along with building that college fund and emergency fund.” Setting up an automatic transfer for a certain percentage of your paycheck each period can help make this process seamless. After all, you already have enough to keep track of as a parent.

Methodology

LendingTree researchers used various data sources to calculate the average annual cost to raise a small child in a two-earner household in each state and the District of Columbia.

Our calculations incorporated expenses for rent, food, child care, apparel, transportation and health insurance premiums. Dependent tax benefits — whether exemptions or credits — were subtracted from expenses to create the average annual cost to raise a child by state.

Some notes on our expense and tax benefits categories:

• The rent, child care, apparel and health insurance premiums data is state-based, while the food and transportation data is regionally-based.
• To determine the value of tax exemptions, researchers assumed parents’ tax returns were filed jointly with a combined income of $85,028 (the national median income among families in 2021, the latest year for which data was available).

Researchers analyzed data from the following sources:

• U.S. Census Bureau 2021 American Community Survey, with five-year estimates (tabulated and microdata)
• Massachusetts Institute of Technology (MIT) Living Wage Calculator, 2021
• 2021 Child Care Affordability Analysis from Child Care Aware
• U.S. Bureau of Economic Analysis 2021 Consumer Expenditure Survey
• Kaiser Family Foundation, 2021
• Tax Foundation

Additionally, we used the Care.com Cost of Care survey (covering 2021) for national data on child care costs.