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The Cost of Conception: Where does all that money go?

Oct 05, 2017 09:00AM

Research now places the price of raising a child at more than $232,000—where does all that money go?

By Kelsey Casselbury

Very few people—if any—decide to have a child under the impression that it’s an inexpensive choice. Currently, birth rates are down, and that’s partly due to the fact that millennials (the generation born between 1980 and 2000, and the majority having children right now) are waiting to start a family until they feel a bit more financially secure. That might mean paying down student loans, getting that lucrative promotion, or buying a house. As any veteran parent will say, though, “There’s never a right time to have a kid,” and that includes when you’re considering your finances.

However, the idea of waiting isn’t hard to understand when you look at the numbers associated with having a baby and raising him or her to adulthood—particularly in the great state of Maryland, one of the pricier locations in the country. In January 2017, the U.S. Department of Agriculture determined that, to raise a child that was born in in Maryland in 2015 to age 17, it will cost the parents approximately $232,500 (This takes into account the potential for future inflation).

Luckily for Marylanders, this is a bit cheaper than the ultra-pricey $264,000-plus in the Northeast; plus it is a decrease of nearly $12,000 from raising children who were born in 2013—but it’s still a tough pill to swallow if you’re not aware of the cash that kids can require. In case you’re wondering, here’s where the money goes: 29 percent to housing, 18 percent to food, and 15 percent going to transportation. It also goes to health care, clothing, child care, education, and miscellaneous items, such as personal care items and entertainment, like sports and games.

It’s easy to see how getting all your financial ducks in a row can bring a little bit of sanity to the stressful, whirlwind process of having a child. But when do you know that you’re financially ready? Can you ever be truly ready? Do you really know how much dough it will take to raise a child in the Old Line State?

From the Get-Go

The bills start adding up from the moment you discover you’ve conceived—including that $10 or so for the pregnancy test. USDA’s estimates for raising a child don’t include pregnancy costs, but, luckily, [at the time of this writing] the Affordable Care Act (ACA) deems maternity care to be essential health benefits, even if you were pregnant before your coverage started, so all qualified health plans (whether you have private insurance or get it through the state exchange) must cover those services. Thank goodness, considering that the average bill for doctors’ fees is, according to the Kaiser Family Foundation, nearly $10,000 for a standard delivery and $12,500 for a Cesarean section—and that’s without complications (like preterm birth) or expensive tests such as an amniocentesis.
At the same time, parents-to-be will constantly take out their wallets to outfit a nursery and purchase other “must-have” items. New parents spend nearly $6,000 on baby-related one-time costs, such as cribs, strollers, car seats, and other baby items needed for daily life. However, first-time parents are also more likely to spend more on luxe items, rather than going for the budget version or buying secondhand.

Finally, don’t forget about feeding and diapering that little one. In theory, breastfeeding is free; however, moms who want to pump and save milk will need helpful accessories such as a breast pump, freezer bags, and bottles. She might also choose to purchase additional items such as nursing bras or shirts, nipple cream and/or a nursing pillow. Formula feeding, on the other hand, is pricey—but sometimes necessary. The cost can vary so dramatically based on the product chosen and the amount the baby eats, but a good estimate is about $135 a month or more than $1,600 a year, according to parenting website As for where that formula or milk eventually ends up, diapers for the first-year average about $60 a month. (The average baby will use more than 2,700 diapers in the first year!)

The Younger Years

You might not be surprised to learn that Maryland ranks first in the nation in median household income at $75,847, as of 2015, says However, according to data from the same year, 79 percent of Maryland children under 12 have mothers in the workforce—so while women are making money, they’re also spending it on childcare. The Maryland Child Care Network tracks the number of care providers in each county, along with the cost—there are nearly 700 family providers and child care centers in Anne Arundel County, with the latter being significantly more expensive. In a center here, the average family spends about $312 a week for their infants to two-year-olds, and $210 per week for their two- to five-year-olds. For family providers, the cost is $211 a week for newborns- to two-year-olds and $172 for two- to five-year-olds.

That’s not an easy cost to swallow. The number one reason Marylanders say they can’t find child care—which any working parent knows isn’t an easy task—is prohibitive costs, while the second is finding the right combination of ages. The state allows only so many children per age group, so when a parent has an infant and a three-year-old, it’s not easy to find providers for both in the same location.

But it gets better when the kid turns four and can head to public preschool, right? Not quite—while public preschool does exist, what many non-parents don’t know is that its availability is very limited, particularly to those who don’t qualify as “low-income.” In Anne Arundel County, all elementary schools offer a half-day prekindergarten option, while 13 offer full-day programs. While all four-year-olds are eligible to apply for AACPS’ prekindergarten program, enrollment isn’t even close to guaranteed—Maryland’s Senate Bill 856, Bridge to Excellence, enacted in 2002, requires priority to be given to students who are economically disadvantaged.

Therefore, many parents return to the daycare centers, which serve as preschools for older children. According to ChildCare Aware of America, preschool care for a four-year-old in Maryland costs an average of $10,039 per year at an accredited center.

One piece of good news: If you’re considering having a second (or third) child and are hesitating because you don’t want to double or triple your costs, rest easy. USDA data finds that as the size of your family increases, the cost per child decreases as you don’t necessarily have to increase your housing costs, and the second child typically gets hand-me-down toys, clothes, and other items.

Kindergarten through Graduation

You might think that it gets cheaper as the child grows up—after all, daycare is pricey, and public school is free. But what if you choose private school? In Maryland, average private school tuition ranges from $9,500 for elementary schools and nearly $16,000 for high schools (this is slightly higher than the national average of $8,900 and $13,500, respectively).

Even if you do go the public school route, food, health care, and transportation increases as the child becomes a preteen and, then, scarily, a teenager (particularly for transportation for a child 15 to 17 as he starts to drive or take part in activities farther from home). A few costs that ramp up during school-age years:

Health Care: Costs to keep a child healthy through age 17 averages around $18,000, but much of that comes as the child gets older and are more likely to suffer injuries (from, say, sports practices and games), get sick, or require mental or behavioral assistance.
Electronics: Whereas once students, particularly those in elementary school, were expected to write their essays longhand and do their research with encyclopedias, now electronics are a key part of education. From laptops to tablets to always-connected Internet, parents foot the bill for their kids to stay tech-savvy for school.

Transportation: You’re spending more and more gas to get the little ones to soccer practices or piano lessons, but just consider when he or she starts to drive. Not only is there the cost of an actual vehicle—if you feel so generous—but also the price to insure a teen driver. On average, premiums rise about 80 percent when you add a teen driver, but in some cases, they can even double.

Activities: On average, parents spend $671 annually on sports-related activities, while 21 percent spend $1,000 or more per child. If they get competitive and join traveling teams, that number more than doubles to $2,266 annually, says University of Florida’s Sport Policy and Research Collaborative. These costs make it prohibitive for low-income students to engage; just 38 percent of students from homes that make $25,000 or less in income play team sports, compared to 67 percent from homes that make $100,000 or more. It’s not just sports; all activities have their costs, whether it’s piano lessons, drama, etc.

Beyond Adolescence

None of these cost projections, including USDA’s, include college—which has, in the eyes of many, become a necessity rather than a luxury. At University of Maryland, in-state tuition costs a little more than $10,000 per year, with room, meal plan, and books running another $13,000. Going the community college route is more budget-friendly, to be sure, but not anywhere close to free—Anne Arundel Community College estimated that, in the 2014–15 academic year, in-county students paid approximately $4,300 for tuition and fees, around $1,500 for books and supplies, and another $4,500 for personal expenses, such as transportation.

Clearly, Maryland isn’t an inexpensive state in which to have a child, but it’s not all bad news—a child born and raised in Maryland is likely to get a higher-quality education, compared to many other states. A state-by-state breakdown of the best high schools in the country by U.S. News and World Report had Maryland leading for the second year in a row, with nearly 30 percent of the state’s schools earning a gold or silver medal from the publication. In the county, Severna Park, Chesapeake Science Point (Hanover), and Chesapeake High (Pasadena) all earned medals for excellence. Additionally, Maryland students score higher than other states on the fourth-grade reading and eighth-grade math portions of the National Assessment of Educational Progress. So, while it might not always be easy (or cheap) to raise a child in Maryland, don’t start job-hunting in another state quite yet—the educational perks that the Old Line State offer might be worth the price tag.

Caught in the Middle

In 2016, financial website completed an analysis of the best states in which to have a baby, based on delivery costs, health care accessibility, and the baby-friendliness of each state. Maryland ranked right in the middle, at 25th overall, while Vermont and Maine ranked Nos. 1 and 2, respectively. Louisiana and Mississippi, unfortunately, came in last.

The research looked at 17 key metrics, including “hospital Caesarean-delivery charges,” “annual average infant-care costs,” and “number of pediatricians per capita.” Here’s how Maryland fared:

MD ranks No. 1 for the lowest charges for hospital Cesarean deliveries (New Mexico has the highest). It also ranks second for lowest charges for hospital conventional deliveries.

The state is eighth for overall “Delivery Budget,” which averages out hospital delivery charges, annual infant care costs, the cost of living and average health insurance premiums. Mississippi claimed the top spot here.

Maryland comes in at number 39 for “Health Care,” which looks at Infant and maternal mortality rates, rate of low birth weight and preterm births, and the number of midwives, ob-gyns, pediatricians, and fertility clinics per capita. Vermont ranked number one.

The state ranks 19th in the nation in the “Baby-Friendliness” category. This looks at parental leave policies, number of moms group per capita, the number of child care centers per capita, and the percent of nationally accredited child-care centers. Connecticut came in first.

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