Financial Planning for families is never easy. The Department of Agriculture, the USDA, announced the ESTIMATED cost of raising a child from birth up through age 18 is $245,000.

But, according to the USDA, it costs more if you live in (or near) major cities. For example, if you live in the Northeast, congratulations, it costs even more — nearly $285,000.

The USDA report is important because this a critical resource for state governments in determining child support guidelines and foster care payments.

But news organizations, desperate for “stories,” turns this into a terrifying headline.
So, let’s break it down into some bite-size chunks. Financial planning for families does NOT need to be alarming.

First, just some basic math — spread over eighteen YEARS. $245 grand, divided by 18 years is $13,600. Or about $1100+/month.
Of course, prices change, and we can’t ignore inflation, so understand we are ball-parking these numbers.

But, the USDA reports roughly one-third of this amount is your mortgage or rent (housing).
Ummm, you ARE going to pay your mortgage, whether or not you have a child. Right?

Additionally, 16% is estimated child-care and education. Our guess is this is mostly child-care expenses.

They also note food, transportation, clothing and health care expenses all grow as the child grows.
Nothing new there. They grow from a car-seat to a bike and to their own cars, at some point.

And also from the report, one-child households spend an average of 27 percent more on their single child. Families with three or more children spend an average of 24% less. Think toys, clothes, etc., get handed down. And not every child gets their own bedroom.

Growing up in my family — with EIGHT brothers and sisters, I saw how families get a lot of mileage from clothes getting handed down. And stew for dinner. Three to a bedroom. And “figure out a ride” from someone every place you go. It all works out.

The headline all over the news was it will cost us (in 2013 numbers) nearly a quarter-million dollars to raise a child. Wow, that seems like a lot.

But here’s the often over-looked rub:

Back in 1960 (the first time the USDA released this report), a middle-income family could have expected to spend $25,230 the same way. Now, adjust that number for inflation over 55 years and it cost $198,560 in today’s dollars.

Not much of an increase over 55 years: $198k to raise a child in 1960 versus and $245k, today. 55 years later. The cost to send a child to college is the real story. And that amount is off the charts! These numbers from USDA do NOT include higher education.

Our point: do not get sucked into terrifying headlines. Whether those headlines are about the economy, the stock market …or raising your kids.

Instead, dig in and look for the real news. Financial planning for families does not need to be complicated. It does not cost much more to raise a child today as it did in 1960. And kids are a GREAT investment.