The Cost of Raising a Child, State by State.

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September 23, 2021

The Cost of Raising a Child, State by State.

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If you have been thinking of starting a family but, as most of us do, want to be financially ready for the costs, a recent survey has revealed the cost of raising small children that may help. Or, it can provide some serious sticker shock. Released in September, LendingTree's study compiled data from the U.S. Bureau of Labor Statistics, MIT's Living Wage Calculator, the Kaiser Family Foundation, the Internal Revenue Service, the Tax Foundation, and Care.com. In it, they discovered just how much it costs for a two-income family to raise a child from infancy until the age of 5.

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Costs of raising a young child

When it comes to raising a child, there are more financial factors to consider besides the clothing and gear a child needs. Insurance premiums change when you add a child. Transportation may increase as you get your child to and from daycare, doctor's appointments, and parent-and-me programs. And your rent or mortgage may increase if you need to move into a larger space to make way for baby.

As a two-income family, this means requiring daycare for both parents to work, although each state provides tax credits or exemptions for children that can ease this burden on your finances.

In a state-by-state review, the most expensive place to raise a young child in Washington, D.C., where the average cost of daycare is $24,081 - more than double the national average. Second in the nation? Hawaii, where rents are higher than most states.

The study also revealed it wouldn't get less expensive to raise a child, with the national average of raising an infant to 5-year-old increase by more than 25% between 2014 and 2019.

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The 10 most expensive states for raising a young child

State	Rent	Food	Infant day care	Apparel	Transportation	Insurance premiums	Vale of dependent exemption or tax credit	Total annual cost
Washington, D.C.	$2,352	$1,413	$24,081	$89	$2,294	$3,260	$0	$28,785
Hawaii	$4,428	$1,687	$14,100	$99	$2,199	$3,405	-$90	$25,828
Maryland	$2,880	$1,413	$15,403	$89	$2,294	$3,229	-$152	$25,156
Connecticut	$2,892	$1,642	$15,600	$152	$1,944	$1,881	$0	$24,111
Colorado	$1,272	$1,687	$15,600	$99	$2,199	$3,124	$0	$23,981
California	$1,200	$1,687	$16,452	$99	$2,199	$3,520	-$383	$23,586
Minnesota	$1,104	$1,444	$16,120	$89	$2,294	$3,130	-$53	$23,029
Virginia	$1,596	$1,413	$14,560	$89	$2,294	$3,130	-#53	$23,029
Washington	$1,260	$1,687	$14,844	$99	$2,199	$2,590	$0	$22,679
Massachusetts	$936	$1,642	$16,452	$152	$1,944	$1,601	-$50	$22,677

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The 10 cheapest states for raising a young child

State	Rent	Food	Infant day care	Apparel	Transportation	Insurance premiums	Vale of dependent exemption or tax credit	Total annual cost
Mississippi	$1,140	$1,413	$5,760	$89	$2,294	$2,975	-$75	$13,596
Alabama	$1,332	$1,413	$7,280	$89	$2,294	$2,231	-$25	$14,614
Kentucky	$1,704	$1,413	$7,440	$89	$2,294	$2,217	$0	$15,157
Arkansas	$1,404	$1,413	$6,443	$89	$2,294	$3,589	-$29	$15,203
West Virginia	$2,076	$1,413	$8,029	$89	$2,294	$1,988	-$130	$16,165
Georgia	$576	$1,413	$8,729	$89	$2,294	$1,988	-$173	$16,165
Michigan	$1,296	$1,444	$10,287	$89	$2,310	$985	-$208	$16,203
North Carolina	$684	$1,413	$9,294	$89	$2,294	$2,710	$0	$16,444
Montana	$1,632	$1,417	$8,861	$99	$2,199	$1,834	-$177	$16,473
Idaho	$2,064	$1,687	$8,636	$99	$2,199	$1,834	$0	$16,519

The total cost of raising a child

Of course, after the age of 5, a child continues to bring additional costs. Families in Hawaii, for example, can expect to spend a total of $281,597 on raising a child until the age of 18. The cheapest state, Michigan, still costs $157,919.

The 10 states where it will cost the most to raise a child to adulthood

State	Estimated cost
Hawaii	$281,597
Maryland	$252,569
Alaska	$236,370
Connecticut	$231,198
Colorado	$228,858
Virginia	$225,233
Kansas	$218,022
South Carolina	$215,488
Washington	$215,250
New Hampshire	$213,342

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How to prepare for the costs

Couples wanting to plan for the costs and be more financially secure are not wrong. Children are a blessing, but they are also expensive. If you are considering starting a family, be sure to get your financial ducks in a row first.

Insurance. It's expensive to have a baby physically, so having good healthcare is key to keeping costs down. Not only will there be delivery and hospital room costs but expect to visit the doctor monthly and then eventually weekly, which could lead to several co-pays. After your child is born, that's one more family member who often needs to see the doctor.

It's also a good time to consider life insurance if you do not already have it to support your child if anything happens to you or your partner.

Save. Create a savings account specifically for your growing family to help ease the additional costs that come when you leave the hospital. Saving for diapers and clothing is one thing. Instead, prepare more for the high cost of daycare. If you feel this will be a struggle, use the pregnancy months to research and find suitable yet more affordable options.

You'll also want to create a savings account for your child's education, such as a 529 plan.

Clean up your debt. Use this time before your child to clean up your credit report and eliminate high debts. Create a budget to tackle debts to get them to nominal numbers so you won't have both your debts and the costs of a child to contend with during those early years. Plus, if your credit score is higher, it can help you get low interest rates on future loans you may need, including a mortgage if you are renting and ready to buy your first family home.

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The bottom line

While no parent can ever truly be ready to have a baby - many of us have tried - you can soften the financial blow by preparing in advance. Raising children is expensive, but as every one of us will tell you, extremely worth it.

Read the fulll LendingTree study.

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Lissa Poirot is Joy Wallet’s Head of Content and an award-winning journalist and editor with a focus on finance, travel and health. Her work has appeared online and in print, and she has often been cited as a source on both. She currently resides in Pennsylvania.

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