So what does it take to raise a child?  They used to say it took a village to raise a child.   Today it can be more challenging than ever with the influence of television, internet, and music coming at our children from every angle possible.   I know this as my kids are twelve, ten, and eight years old respectively.   But, according to the Department Of Agriculture (www.usda.org), it will cost a middle class family $369,000 to raise a child from birth to seventeen years old which represents slightly over $20,000 per year to your annual budget.

In the report, a middle class family is considered to be incomes between $56,670 and $98,120.   Child rearing was the largest expense in raising a newborn, followed by child care/education, and then food.   Whether you are a single parent family or a married couple, expense for the child increasing significantly as the age of the child increases.  The most amazing part of this report is that college education expenses are not including in the $369,000 number.

You can read the entire report at (http://www.cnpp.usda.gov/Publications/CRC/crc2009.pdf), but the real question is how you should think about this as it pertains to your personal finances.    For those that are married and are thinking about having children, I think the first home purchase is the key decision where families can go wrong in their personal financial plan.   If you are buying a first home you should consider whether or not you can handle the current mortgage payment with an additional $20,000 per year of expenses per child that you are thinking about having.   Far too often, I see newly married couples where there are two incomes and they purchase a large home for a first home.  Then, when they have their first child, one income may disappear along with the increase of this $20,000 expense.  This is what causes the major strain in the overall financial plan.

With all of this leaving out the cost of college education out of the picture, having a solid plan in place before you have your first child will be the cornerstone of future success.   For $369,000 I guess a village is now a little city to raise a child!

oXYGen Financial, Inc. co-CEO Ted Jenkin  is one of the foremost knowledgeable professionals in giving financial advice to the X and Y Generation.

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Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder oXYGen Financial, Inc.

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