The Mythical $12,000 Baby

The mythical $12,000 baby

Photo courtesy of Vinoth Chandar

On Friday, I participated in a discussion on the Huffington Post on the high costs associated with having a baby. At the heart of the conversation was an article from LearnVest claiming that the first-year costs of raising a child are $12,000. We were brought on to discuss whether that number was accurate, and if so what it meant for low- and middle-income earners who wanted to start a family but were scared off by the cost.

I think we hit some good points in our discussion, but today I wanted to explore in a little more depth some of my thoughts on this subject and how we as parents should consider this concept of the $12,000 baby.

Average numbers don’t describe you

First, let’s be clear about what that $12,000 number represents. It is an average. It represents the richest families, the poorest families, financially responsible parents and parents who spend like they’re allergic to cash. It’s very similar to looking at something like the median home price in the US. It’s interesting information, but it doesn’t determine the home you buy. Depending on where you live, the size of your family, what you’re looking for in a home, etc., you may spend more or less than that median price. In both cases, a single number representing an average across an entire country cannot possibly reflect the realities of your personal situation.

Let’s look at some of the ways that $12,000 number might not apply to you. I’m going to refer to my preferred source for this kind of information: Babycenter’s Cost of Raising a Child Calculator. When I enter my information, it tells me that my first-year costs for a baby will be $14,150. That’s even more than the $12,000 quoted in the article above, but is it really accurate for me? Let’s break it down.


$4,680 of the cost is categorized as “housing”. A big part of this assumes that you’ll spend more because you’ll have to move to a bigger place. Well, my wife and I did move to a bigger place, but our rent actually decreased in the process. This category also includes things like increased utilities and new furniture, which was part of our experience. Still, with the rent decrease we probably came out about even here. That’s a big chunk of the cost that can be crossed off.

Childcare & Education

$3,850 of the cost is categorized as “childcare & education”. For a newborn, the biggest costs here are daycare and I believe saving for college. It also includes babysitting. Daycare is indeed crazy expensive here in Massachusetts, but my wife stays home with our son and works part-time on the weekends, so we don’t pay a dime in daycare. We also don’t pay for babysitting because my parents are the best and make themselves readily available. We are saving for college and that is a cost, but it’s not close to the $3,850 per year. Again, every situation is different, but for us this category much less than what they report.


This kind of a big catch-all category that includes the cost of a new vehicle (presumably a bigger one), extra gas and maintenance costs and public transportation. The total cost they estimate here is $1,630 for that first year. This one’s a little trickier for us, as we will be buying a new car soon and it will be a minivan. But we’re only buying a new car because my current car is falling apart, which has nothing to do with having a baby. And we’re buying a minivan because we’re pregnant with our second and plan on having two more after that as well. We certainly didn’t feel any need to buy a bigger car for our first-born. Unless you have a 2-seater, what you have now is probably fine. If that’s the case, you can ignore a big chunk of this cost as well.

Insurance and estate planning

Aside from health insurance, this is actually a category that I don’t see covered by any of the categories making up this $14,150 number.  But it’s such an important part of ensuring your family’s financial security and it’s something I’m happy to spend a good amount of money on. At the top of the list here are life insurance, long-term disability insurance and wills. Each of these are things I would consider necessary for new parents and can range from as low as $50-150 to $1000+ per year, depending on age, gender, health and amount of coverage. This category definitely added a significant amount to our first-year spending.

You don’t have to follow the crowd

So for us, in some of the biggest categories, the reported costs are largely irrelevant. But we also had some spending that wasn’t accounted for in that average number. Your situation may or may not have similarities with ours that automatically make it more or less expensive for you, but regardless it’s important to remember that the $12,000 number is again, just an average and not something you have to abide by.

Let’s compare this to another big financial issue: credit card debt. Depending on your source of information, the average person in the U.S. carries between $2,720 and $5,047 of debt on their credit cards. Does that mean that as an adult in the United States you should simply expect to have that much credit card debt? Of course not! You are an individual, allowed to make whatever choices you please. There are many people walking around without any credit card debt, and even some who are making the credit card companies pay them to go on vacation.

In the exact same way, there’s no requirement for you to spend $12,000 on your baby simply because it’s what the average person spends. The list of a baby’s true needs is relatively short: a car seat, a crib, clothes, diapers, wipes, and lots and lots of love. No matter what society tells you, the rest is optional. You don’t have to strive for average. You can strive to be different and better.

Be proactive about finding your own way

With all of that said, it’s not easy to know how to be better than average. Our culture is dominated by advertisements from Babies R’ Us and Target, not by messages of frugality or living with less. You have to be a little proactive if you want to find information that will help you care for your child on less. Lucky for you, there’s a ton of it out there.

I’ve found online communities, such as Babycenter’s Family Finances group, to be great sources of information and support. There are a lot of regular parents trying to figure out the best ways to do things. A lot of incredibly helpful information comes out of all of that discussion.

And there are plenty of other parents out there writing about their personal experiences doing more with less. There’s information on how to feed a family of 6 good, wholesome food for $300 per month, how to clothe your kids for less, how to get a cell phone plan for $20 per month, and how to start investing for your future with simple, effective steps. The wealth of knowledge that the internet brings to our fingertips is almost endless.

The point is that you’re not alone, but you might need to work a little harder to find people who have moved past the consumption-driven habits of our society at large and found ways to do things different from the norm And actually adopting some of these different habits may require a change in mentality and that may take some time. But it is possible, and a little effort can save you a lot of money.


There are two possibilities that scare me most about the spread of this $12,000 number:

  1. People will hear that number and simply decide to give up on the idea of having kids. They would be missing out on one of the most joyful and rewarding experiences you can have.
  2. Parents will assume that they’re not good parents if they don’t spend that much, and will end up getting themselves into financial trouble.

I hope that this article helps people avoid both of those outcomes. We are all individuals with control over the choices we make. We don’t have to be average. We can strive to be better.

Start building a better financial future with the resource I wish I had when I was starting my family. It’s free!

62 Comments... Read them below or add one of your own
  • Your Daily Finance August 12, 2013

    Nice post Matt! i guess things really just depend on your situation. A know a few parents who would love to stay home but it just doesn’t make sense for them. Much like our situation I work from home and need those times alone to work. The trade off however is 1k per month in daycare so thats easily already puts us in the $12k per year not to mention food, diapers, etc. Its about choices and you are correct you don’t have to follow the crowd. There are other ways to solve the problems.

    • Matt @ momanddadmoney August 12, 2013

      Daycare is definitely crazy expensive. We would easily be over $12,000 where we are if we had to factor that in.

  • Holly Johnson August 12, 2013

    I didn’t keep track of what we spent…but it could have been $12,000. My health insurance deductible to have the baby was $4,000 and I only got 6 weeks of maternity leave at half pay (I took off 10 weeks total). I’m more than halfway there without the baby even leaving the hospital =/

    • Tara Zee August 12, 2013

      You make a good point Holly–with the high cost of having a kid and maternity leave, it can easily reach $12,000 even if you’re the most frugal person.

      • Holly Johnson August 12, 2013

        Yes, and those costs were entirely out of my control!

      • Matt @ momanddadmoney August 12, 2013

        Very true. Sometimes those necessary things can add up quick.

    • Matt @ momanddadmoney August 12, 2013

      Hospital bills can definitely add up, and that’s something you don’t always have control over. I actually wrote about that consideration in a post I have going up elsewhere hopefully soon, but forgot to include it here. It’s a great point for people to consider though.

  • Laurie @thefrugalfarmer August 12, 2013

    Matt, you’re right on the mark here. I LOVED what you said in the Huff Post interview about there being ways around some of the expenses that the study indicated are “necessary” or something to that effect. And you guys have proven that theory true, especially with your housing expense as an example. So often people say, as you mentioned, “Well, the report says I have to spend $12k, so I’d better be a good mom/dad and get a bigger vehicle, bigger home, spend a ton of money on clothes, etc.”. This is where media thoroughly ticks me off, and where I feel so sad for people who follow their advice like sheep to the slaughter. We were them at one time, and it created HUGE debt problems for us. Thanks for a great post here, Matt, and thanks for the link up too!

    • Matt @ momanddadmoney August 12, 2013

      Right. Above all, I think the important thing to remember is that they’re situation is different from the average. It might mean they have to spend more, but it also means they might be just fine spending much less. What’s important is not getting caught up in what others are doing and instead focusing on what’s best for your family.

  • Alexa Mason August 12, 2013

    I think the $12k number is unrealistic. Having a baby is as expensive as you want it to be and as inexpensive as you want it to be. 90% of this figure is spent on unnecessary items, or the most expensive and “best of the best.” My housing costs didn’t increase, I have no problems buying used clothing, cribs, strollers, etc. It’s as expensive as people want it to be!

    • Matt @ momanddadmoney August 12, 2013

      I think the $12k can be realistic or unrealistic depending on the situation. As I mentioned in reply to Thomas’ post, if we had to do daycare we could easily reach that number and likely surpass it. It’s just really expensive here. But it’s also true that there’s a lot included in the number that just doesn’t have to apply to many people. I just want people to take stock of their own situation rather than focus on an average.

  • Edward - Entry Level Dilemma August 12, 2013

    Granted it was 30+ years ago, but I’m certain my parents spent a fraction of that when I was born. After all, that was probably about 60% of their income at their time.
    One way to keep costs down is to get hand-me-downs instead of buying everything new. I probably had never even seen anything new until I was out of diapers!

    • Matt @ momanddadmoney August 12, 2013

      Hand-me-downs are great. We’ve been fortunate enough to get a number of them, but not everyone has friends or family to provide them. Still, clothes can be one of the easiest things to get on the cheap.

      • Edward - Entry Level Dilemma August 13, 2013

        Clothing isn’t the only thing that can be a hand-me-down. My crib, stroller, toys, etc. were all from my older cousins.

        • Matt @ momanddadmoney August 13, 2013

          Oh yeah, those are great resources to have. We’re lucky to have a neighbor that’s been more than happy to donate a lot of that kind of stuff to us. Not everyone has that though, and with some of those things (crib especially) you need to make sure it’s up to snuff safety-wise.

  • DC @ Young Adult Money August 12, 2013

    I’m not going to pretend to know everything about parenting or what costs (monetary and non-monetary) that go into having a baby, but I will say that my wife and I are waiting on having kids (or at least intend to wait) because of monetary reasons. Having student loan debt and wanting to put more money towards travel and our house at this point in life is a contributing factor, as well as the fact that we both will likely go to grad school. I don’t think the costs should deter someone from having children, since there are many ways to save on things (as you touched on), but I think more often than not people DON’T think about the costs than DO think about the costs. In other words I bet there is more who are surprised at how expensive having a baby is versus those who get scared out of having children because of costs.

    • Matt @ momanddadmoney August 12, 2013

      I think you make a great point about making sure you financially secure before going ahead with it. That’s definitely important and I would absolutely recommend that people consider the financial aspect seriously before diving in. But it’s important to consider it from a personal perspective, not a generalized one.

  • Kim@Eyesonthedollar August 12, 2013

    I think you could easily spend $12K on a baby, but you certainly don’t have to. If people really thought about that number, no one would have kids. Most of the people I see on a day to day basis put no thought whatsoever into the cost before they get pregnant. I think it’s important to think about expenses, but I wouldn’t put off having a child I was ready for because I couldn’t max out a 529 plan annually.

    • Matt @ momanddadmoney August 12, 2013

      Totally agree with you. I think it’s hard to be “100% ready”, whatever that even means. But you can have certain foundational pieces in place. And I don’t think there’s anything inherently wrong with spending that much if you have the money and it makes you happy. It’s just not a necessity for everyone.

  • Andrew August 12, 2013

    Great post! They always come out with figures on raising kids…I think it supposedly costs $250,000 to raise a child (not including college). It definitely is just an average and doesn’t apply to everyone. I saw the infographic and under spoiler alert, it says NYC moms and dads pay the most! Great! As Thomas mentioned, with daycare, I think the $12,000 is very possible though. But with other expenses, I think many parents go overboard and spend way to much for things that are not neccessary.

    • Matt @ momanddadmoney August 12, 2013

      Yeah, well everything is expensive in NYC, so good luck with that! But no matter where you live there are ways to be a little more conscientious than normal. For you guys $12,000 may actually be a little low. I don’t know, but again it’s important to focus on your own situation, not a national figure.

  • Tara Zee August 12, 2013

    I interned at the National Archives in College Park, Md one summer and I remember the woman telling me that child care for an infant was something like $800 a week. A WEEK. I’m luckily a product of a mother who had kids later in life so by the time I’m ready to have kids, my mother will be retired. As she really is looking forward to being a grandmother, she is totally thrilled to help out with child care during the week day while I continue to work. With our household income and lack of wealth, it would be a super tight budget if I were a stay-at-home mom. I give major props to households that are able to have a stay at home parent!

    • Matt @ momanddadmoney August 12, 2013

      Having my mom around to help out is HUGE. We’re so lucky and it sounds like you will be too. And both my wife and I love having her home. We’re making it work, but it’s certainly not the right choice for everyone.

  • Done by Forty August 12, 2013

    That’s a good, detailed write up and, while I know I always say this when you post on kids, I really appreciate the insight as my wife are in the long term planning phase.

    I wonder about opportunity costs associated with maternity leave. Those alone could easily eclipse the $12k figure, and that’s if you conservatively estimate that staying at home with the kids for a few months won’t have any impact on future career advancement. I’ve seen some research that this is one of the areas in which our gender biases really shows in the workplace: we view mothers and fathers differently in the workplace, and prejudge the impact the kids will have on their work performance or commitment to the company.

    • Matt @ momanddadmoney August 12, 2013

      Your point on maternity leave is a good one. That would be an interesting post for another day. Gender bias in the workplace is definitely a problem.

  • Budget & the Beach August 12, 2013

    It’s hard for me to weigh in because I don’t have kids and never wanted them, but I think when you’re a parent you just do whatever you have to do to make it work. That’s awesome you don’t have to spend any money on daycare because I know for my friends that’s a huge expense.

    • Matt @ momanddadmoney August 12, 2013

      Yeah daycare is crazy expensive. I think Massachusetts is the most expensive state too.

  • John S @ Frugal Rules August 12, 2013

    Nice post Matt! The problem I have with these numbers is that they’re averages – just like you pointed out. Yes, little ones are expensive, but they (generally speaking) are also as expensive as you make them to be. I read an article recently that discussed how expensive they can be and my problem with it was that they were going new on everything and assuming you’d be buying brand new everything for each child. Of course, you can do that, but you’d be foolish to.

    • Matt @ momanddadmoney August 12, 2013

      Right, those are the kinds of assumptions that cause problems. You don’t “have” to buy everything new. You don’t even have to buy everything. There are so many alternatives that many people never even consider and I just hope that people take some time to realize that they can do things differently and make it easier on themselves.

  • moneybulldog August 12, 2013

    I suppose that figure is hard for us personal finance bloggers to agree with because we’re all so darn frugal 🙂 I’m sure some people spend that and others might spend more, but it doesn’t have to be that way. There are loads of ways to save money and you’re right, you shouldn’t let the average figure put you off, especially with all the joys parenthood brings with it.

    • Matt @ momanddadmoney August 12, 2013

      It’s just like anything else: there are always alternatives. I do think there are some people who really do have to spend more in certain areas, but there’s still the opportunity to cut back in others.

  • Rita P August 12, 2013

    Daycare is the most expensive, Anyways I liked the article which explains the overall cost which we never thought in details when we planned for a baby

    • Matt @ momanddadmoney August 12, 2013

      I thought looking at the summary numbers and adjusting them for our situation was really helpful when we were pregnant. It just helped us get a sense of what we could expect, but it was important to understand what we would be doing differently too.

  • Emily @ evolvingPF August 12, 2013

    Great post. I think the most difficult part about these calculations and determining how your individual family compares is to add up the cost of additional housing and vehicle upgrades that wouldn’t have been in place without the child(ren). You can’t know for sure what the other choices would have been. And certainly comparing full costs between a family that uses daycare to one that doesn’t isn’t terribly useful!

    • Matt @ momanddadmoney August 12, 2013

      I actually think the choice to go from 1 to 2 is actually more expensive than the first. You can re-use a lot of furniture and clothes and stuff, but that’s the point where at least we’re realizing that maybe we do need a bigger car and a bigger place. Those costs definitely add up. But we’re also going to be replacing a car that needs to be replaced anyways, so the extra cost is getting a minivan over a sedan. Still a cost, but it’s less. But you’re right, those calculations start getting complicated.

  • Shannon Ryan August 12, 2013

    When Chris and I got married, we did not want kids. Obviously we changed our minds. 🙂 So when we moved to LA from Dallas, we did buy a home with space for us to grow as it was our intention to start a family now that we were back home. So I am willing to concede that our housing costs did increase since we may have chosen a smaller home for just the two of us. Our daycare costs were more but we didn’t upgrade or change vehicles. And of course, we revised wills, upped life insurance, etc. Our costs were higher than the average which sort of irritates me but at the same time, it’s really due to our daycare costs and I don’t regret paying a premium for great care. I do agree that problem with making decisions based on averages is that it doesn’t tell the whole picture. You have to figure out what you would spend and can afford because that is what matters.

    • Matt @ momanddadmoney August 12, 2013

      I don’t think there’s anything wrong with being above average if it fits your situation. I just want people to actually think about their situation and not rely on what this average number tells them.

  • Pauline @ MakeMoneyYourWay August 12, 2013

    If you include housing costs, those would be pretty typical, although I have many friends who stayed in the same house until the kid was 2 and they had another one on the way they would give them their own room. I also saw crazy hospital bills in the US, in France it is all free, they want to encourage the birth of new taxpayers haha.

    • Matt @ momanddadmoney August 12, 2013

      Yeah, as I said in response to Emily, I think the move from 1 to 2 can actually be more expensive. And it’s definitely true that the hospital bills can be brutal. That’s definitely something people should be prepared for.

  • E.M. August 12, 2013

    Honestly, I’m not sure if I want kids, but money is a very big factor in this decision. Just this weekend, though, I went to a baby shower for my cousin. Holy moly did she get SO many clothes, she will definitely not need to buy any for at least a year and a half. We also happen to have a generous family who loves to dote on little ones, and I know it would be the same for me. It’s just so intimidating how much goes into raising a child. Thanks for pointing out that we don’t have to be with the “average,” and there are definitely ways to cut costs in most areas.

    • Matt @ momanddadmoney August 12, 2013

      We got a TON of clothes at our baby shower too. And newborns basically just wear the same thing every day. So we didn’t have to do any clothes shopping for a while.

      I think it’s great to wait until your financially stable before having a child. That just ensures that your child is brought into a world that can support him/her. Many people aren’t as responsible.

  • Greg August 12, 2013

    I cringe mostly about the daycare part. Between my wife and I possibly staying home with a child, it would be me, and I suck at cleaning and cooking, so we pretty much will have to do full-time daycare. I will certainly be getting creative to make the best choices in cost and care when the time comes. I might have a few mini-strokes as I see some of the bills, though.

    • Matt @ momanddadmoney August 12, 2013

      Haha, you could learning cooking and cleaning pretty quickly. Not that you have to, but you’d adapt. Based on what I know of you, my guess is that financially it would be better for your family if you were working, but it may not be the choice you want to make. I have no idea. That one’s pretty personal. I am definitely glad I don’t have to see those daycare bills though.

  • Did your wife work more before she stayed home with your little one? Do you consider lost wages as a childcare cost in that manner even if you guys don’t pay daycare?

    Also – 4 planned kids! Wowser!

    • Matt @ momanddadmoney August 12, 2013

      She did work, but the salary, after taxes and everything, would have been eaten up by daycare. If she were able to build her part-time private practice up, she could certainly make enough to make it worthwhile for only one child. But we’re planning on multiple so it gets tougher. And she is still able to work part-time now, which helps level the playing field even more.

      But to your point, I do agree that lost income should be factored in to the cost of daycare. It’s an unfair comparison otherwise.

  • The Student Loan Sherpa August 12, 2013

    I love your two conclusions. Fantastic takeaways on a very difficult subject.

  • Grayson @ Debt Roundup August 12, 2013

    Well, I will spend that much money in just daycare costs. It is expensive here and that is the low number for the centers around. I wish I could say that I could be under the $12k, I know that is not going to be possible with daycare involved.

    • Matt @ momanddadmoney August 13, 2013

      Oh it’s expensive up here too. If we did day care we’d shoot right past that number. I’ve been thinking more about factoring in lost income as well, and I think that I made a mistake not factoring that in more. Probably going to be a post on that soon.

      • Grayson @ Debt Roundup August 13, 2013

        I did factor in lost income and that is why we decided to go the daycare route. It is much cheaper in the long run than losing all of my wife’s income.

        • Matt @ momanddadmoney August 13, 2013

          We definitely compared what her income would have been post-baby vs. the cost of daycare, and it would have been pretty close. She could have made more than the cost, but her part-time work makes up for that. But that’s not the only evaluation. What I was missing was the evaluation of the extra income we would have from if we didn’t have a baby and therefore didn’t need daycare, and that would definitely be higher than it is now. That’s a real cost that needs to be factored in that I was missing.

  • Jaclyn August 13, 2013

    Matt, as a woman expecting my first baby on Christmas day, this was a great article! Thanks for the info. (And, hopefully hubby and I will be UNDER that 12k mark!)

    • Matt @ momanddadmoney August 13, 2013

      I’m glad it was helpful for you Jaclyn. And congrats on the baby! We’re due with our second on 12/21. We’re hoping he’s a little early (not too early, maybe a week). Do you know boy or girl yet or are you keeping it a surprise?

      I hope for your sake you’re able to stay under $12k as well, but I think the bigger point is to look at your own situation and not measure yourself by what other people are doing. Some people will legitimately have to spend more than that, while some will be able to do with less. It’s very situation-dependent. I wish you the best of luck!

  • Ree Klein August 14, 2013

    Hi Matt, wow, this was such a great post! I don’t have children. Two key worries affected my decision: the cost of having/raising children and, more importantly, the fact that I wouldn’t have been able to stay at home because I’ve typically been the primary wage-earner. I wonder if I would have made different choices had I had access to great blogs like this even 10 years ago.

    All that aside, however, your points here are applicable across a broad range of life choices. Buying a home (as you mentioned), what you need to live a comfortable retirement, education costs (doesn’t have to be a formal education), etc. We can all choose to live the life we want and the cost variance can be HUGE! What great advice to not slot yourself into the averages presented by the media or anywhere for that matter. Be unique, investigate, make a plan and take action!

  • addvodka August 14, 2013

    Well, maybe I’m delusional but I can’t imagine kids being that expensive for us when we have them. I feel like we’re smarter than that! I don’t really care about the cost of kids because I always thought that was a stupid reason to not have them (money shouldn’t be that important in life).

    • Matt @ momanddadmoney August 15, 2013

      I definitely agree that money shouldn’t be more important than having children, but I do think it should be a consideration. I think you have a responsibility as a parent to provide for your children, and if you can’t do that then maybe you’re not ready for the responsibility. With that said, I think there are many things you can do to make it more affordable than most do. It’s all a matter of situation and mindset.

  • Marissa August 14, 2013

    They are not going to give up on the idea of having a baby if they get to read this post. Like what this post did to me, it will enlighten them.

    • Matt @ momanddadmoney August 15, 2013

      Thanks for the kind words Marissa! I certainly hope people aren’t scared away from parenthood. It can definitely be costly but it’s worth every penny.

  • Alexandra @RealSimpleFinances August 17, 2013

    Maybe I’m competitive, but I’d like to weigh my actual costs against these estimates when I have a child! I got the same estimated costs you did. Since I do not need to buy a new home and intend on staying home and (when necessary) using the free childcare my mom is offering, I think I can knock $8,530 off that total!

    Also, a friend of mine clothes her son 100% in thrift store clothing. She finds barely-used baby clothes for $1 each. With kids growing so fast, why spend more than you have to for something they’ll wear twice?

    • Matt @ momanddadmoney August 18, 2013

      I definitely think it’s possible to do a lot of it for less (your clothes example is a good one), but it’s also important to focus on your own situation. You might very well be able to spend less, but you also might very legitimately spend more. And check back on Monday for some of my reformed thoughts on whether we’re actually saving money by having my wife stay home.

  • Johnny Moneyseed August 17, 2013

    Per child we spend about $7,000/year. Child care is the biggest cost of course, but it’s worth it for us. My wife and I both make about equal pay (around $50,000/year each), so even with spending $13,000/year on child care she, or I are still making an extra $37,000 on top of the cost of daycare (a service which I feel is invaluable).

    • Matt @ momanddadmoney August 18, 2013

      Definitely sounds like daycare is well worth the cost for you guys. I’ve definitely found though that the ongoing costs for small children are really pretty small, daycare aside. It’s when they get older that I think the costs can really start to grow.

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