3 Unexpected Costs of Raising a Kid

Parenthood is an amazing experience, but as every parent knows, it’s also expensive. In a survey by Freedom Debt Relief, 20% of parents said the cost of childcare was about the same or more than the cost of their rent or mortgage. The Brookings Institute estimates that it costs about $310,000 to raise a child (over $1,400 per month).

Raising a child comes with unexpected costs that even the best parenting books can’t prepare you for. So, to help new parents get ready to deal with these expenses, we asked our employees to tell us about their most unexpected costs of raising a kid as new moms and dads.

1. Your Child’s Social Life

Maintaining a social life is expensive. After you become a parent, your social world changes as all of your focus goes towards raising your little human(s). Before you know it, they’re enrolled in school, daycare, and other extracurricular activities, where they start to develop friendships and form their own social circles.

The invites start to roll in, and you’ll soon find that the restful weekend you’ve been looking forward to is packed with birthday parties and playdates. Your little human’s budding social life and all of the expenses tied to it (gifts, tickets, snacks, etc.) can become overwhelming and a drain on your budget.

My tip: Don’t try to do it all. Your quality time with your children should be your #1 focus—especially if you’re a working parent with mainly evenings and weekends to spend with them.

If you have the bandwidth to pursue these social activities, then by all means, go to a few of them. Allocate a small budget, or fun-fund for your child’s social activities so that you’re not pulling money from necessary living expenses. Consider making thoughtful homemade items with your kids and giving them out as birthday presents. Take advantage of bargains and major sales when buying gifts. Re-gift items if you find an opportunity to. Maintaining a social life for yourself and your children is possible!

Kimberly Ocampo

Social Media Content Manager

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2. The Snack Attacks

Raising two boys on my own required various methods of cost-cutting for some time. I can’t really say I had an unexpected big expense, more like a lot of ongoing ones. While raising my kids, I had to come up with ways to shave excess costs, but still enjoy life and do the things we wanted.

For example, when we took our yearly trips to Disneyland, I would take boxed drinks and snacks to cut down on expenses while in the park. My youngest son’s stroller was like a food cart that allowed us to avoid the expensive drinks and food they offered there. And since we were able to cut back on food and drink costs, I was able to use some of my budget to get each of them a souvenir (at young ages, any trinket made them happy).

My tip: Cutting some corners and a little resourcefulness can go far to help reduce the cost of raising kids.

Shirley Honda

Visual Designer

3. Prenatal and Birth Costs

About a week before we were going to have our first child, we got a phone call from the billing department at the hospital where we had registered to have Alessandra.

They wanted us to prepay the amount that we would owe based on the health insurance that we had. The amount: $4,500. A lively conversation ensued, but I already knew roughly what the birth and the hospital stay were going to cost. When we found out we were pregnant, I had a conversation with my insurance carrier about it.

Just know that you cannot be compelled to pay in advance, although it may feel like it when the billing department calls you!

My tip: Have an early conversation with your insurance carrier to understand what the cost will be based on the hospital you choose. Most carriers will send you an Explanation of Benefits (EOB) that you can use to help map out everything from the prenatal doctor visits to the actual birth day. This information may prove useful in saving hundreds, if not thousands of dollars.

Once you have that information, make sure to save into a Health Savings Account. This tax-advantaged account can be used to pay for current or future healthcare expenses. When combined with a high-deductible health plan, it offers savings and tax advantages that a traditional health plan can’t duplicate.

Michael Micheletti

Director, Corporate Communications and PR

Balancing Your Kids’ Needs vs. Your Own

As you navigate the costs of raising a child, another challenge is balancing their future and your own. We all make sacrifices for our children. However, you still need to take care of your own financial needs. You shouldn’t put yourself in debt or neglect your retirement savings just so your kids can have absolutely everything.

With a good financial plan, you can meet your money obligations, plan for the future, and set your kids up for success. Here are a few simple steps you can follow.

Manage your spending with a budget

As you’ve read and maybe experienced already, parenthood involves a ton of new expenses. All the more reason to keep your finances in order with a budget. When you make a budget, you decide how much to spend in each category, and what to do with every dollar you earn.

If you like to do things the old-fashioned way, there’s nothing wrong with putting pen to paper for your budget. If you want technological assistance, try a budgeting app. Some budgeting apps can even connect to your banking and credit card accounts, track your spending for you, and recommend places to cut back.

Get control of your debt

Debt is extremely common, so you’re certainly not alone if you have a car loan, credit card balances, or anything else to pay off. U.S. household debt reached a staggering $18.04 trillion at the end of 2024, according to the Federal Reserve Bank of New York. Still, there are benefits to paying off debt, including peace of mind and not paying interest every month.

Put as much money as you can toward your debt to pay it off sooner. Consider making a debt repayment plan you can follow, especially if you’re dealing with multiple debts. And if you feel like your debt is too much to handle on your own or if you’d just like a helping hand, contact Freedom Debt Relief for assistance.

Start saving for long-term goals

Parents often want to help their kids get an education. If you’d like to set up college funds for your kids, start as soon as possible. The average cost of college in the U.S. is $38,270 per student per year, according to the Education Data Initiative. The earlier you start saving, the more time you have to put away as much as possible and grow that money by investing it.

Retirement is another long-term goal that parents shouldn’t forget about. Social Security benefits replace an average of about 40% of pre-retirement earnings. A healthy retirement fund is important so you can retire when you want and have enough money to live comfortably.

Figure out how much you can afford to save toward your long-term goals per month. The most effective way to save is to make it a habit. Make sure to save with tax-advantaged accounts, too. You can save for retirement through a 401(k) or an IRA, and for college with a 529 plan, for example.

Preparing for the Hidden Costs of Raising Children

Some parenting expenses are probably going to take you by surprise. But now that you know about some of the hidden costs of raising children, you can better prepare for what to expect.

The best way to be ready for hidden costs is to put yourself in a strong financial position—one that includes a budget, an emergency fund, and no high-interest debt. No matter what your current situation is, if you work hard and watch your spending, you can pay down debt, build your savings, and offer your kids a good example of how to manage money.