Typical Child Rearing Expenses @ 3yr Old

Each year I am learning a bit more about the costs for raising a child. It is clear my initial thoughts on the expenses of raising a child were naively simple when we had our first child. I wanted to capture a snapshot of our current child rearing expenses as I think this could be useful for future financial planning for families.

Major Financial Cost Drivers for Our Family with a 3yr old:

  • Preschool - Our child's preschool currently costs $210/mo. I've heard that is very inexpensive compared to many other preschools, but haven't done the research myself.
  • Food -- Our food bill is higher, but hard to distinguish, part of it is likely lifestyle changes for us and a small part due to our child. After all she has her favorite foods - yogurts, kids snacks, etc that we regularly buy just for her. I'd estimate our food costs are up about 10%, rather small compared with all the other expenses.
  • Health Insurance -- We held off on buying dental insurance initially, but my wife did take our 3yr old for an initial visit to the dentist this year for a total cost of $59. My wife felt it was important to get her exposed to a dentist and found a special offer that kept the cost low. We have had health insurance from day 1 from my employer for an extra $110/mo.
  • Presents -- Not only do we have gifts for holidays (Christmas, birthday, etc), but we also have social engagements and birthday gifts for all her friends too. There is at least 1-2 birthday parties a month so I anticipate $25-$50/mo for gifts alone.
  • Annual Birthday Party -- $250-$300/yr. With our time at such a premium the only way we can throw a decent birthday parts is to buy one. We had her 1st & 2nd birthday at our house which was less expensive, but with more obligations and pressing needs for time, we are now just buying a birthday package at a local place -- bowling alley, kids fun place, etc.
  • Clothes - $150-$200/yr. Kids out grow clothes fast. The keys that have helped us keep clothing costs manageable are hand-me-downs; shopping consignment sales/2nd hand store; and clearance sales at clothing stores.
  • Child care - ~$300/yr. drop in daycare and babysitters. This would be considerable more, but we have significantly cut down on our evenings out and instead have stayed in most of the time. Still my wife and I need quality time on occasion and without family close by we tend to rely on babysitters. A good suggestion I've heard from friends is to do swap sitting with other families, but we just haven't been organized enough to have much success with this yet.
  • Extracurricular Activities - $55/mo. Currently my daughter is taking a weekly dance class and a local dance company. We've also previously signed up for swim lessons and plan to join a soccer team in the future. We generally try to have 1 extra-circular activity going at a time to manage/throttle the expenses.
  • College Savings - We are currently socking away about $150/mo in a 529 plan for our 3yr child. I have seen many estimates out there, but the general consensus seems to be to target saving $250-$400/mo for college so we may have a bit of catching up to do.

I'll also note as I've done previously that probably the single largest expense is our time commitment to raising our child. The time required is exponentially the largest expense for us, but absolutely worth ever penny.

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