If you’re a parent-to-be, an experienced toddler wrangler or plan to be a parent sometime in the future, you might be curious about what to expect. One of the most important questions parents ask is how much it costs to raise a child and what they can do to prepare.
Statistics Canada shared numbers from 2011 that calculated the average cost of raising a child to 18 was $253,947. Mix in some inflation and a higher cost of living, and it can be difficult to say this number is still accurate. Still, we can all agree it’s a lot of money.
Each year of your child’s life, the cost to raise your child will vary. For example, the expense of feeding your toddler may be relatively small compared to the increase in your grocery bill when your child turns into a teenager.
So, before we get into every single budget line that comes with being a parent, let’s look at the annual cost of raising a child in year one.
What Expenses Can You Expect? (And Averages)
The day you find out you’re expecting can be one of the most emotional experiences you’ll face. But, as a personal finance nerd, I didn’t so much focus my first thoughts on the excitement of a new adventure or the fear of whether or not we’d be ready. Instead, I immediately pulled up an Excel spreadsheet and estimated how much money we’d need to save throughout the pregnancy.
Once the baby was born, I took things even further and tracked every single expense we had in the hopes that it would help another parent one day. Today is that day. Let’s dive into every single cost you can anticipate and how much, on average, you should budget for that budget item.
1. Diapering
An unavoidable expense is paying for diapers, whether you choose the reusable or disposable route. You’ll need many more diapers in the early months than in the later months of year one. But diapers aren’t the only expense you’ll incur when changing a baby.
Some additional costs include wipes, a diaper bin, and diaper cream. If you want to go fancier, you can purchase a wipes warmer or a luxury changing station. Personally, my expenses fell somewhere in between. After tracking every single diaper, we changed in year one and a full list of all of the additional purchases we made in this category, year one cost us around $825, which falls near in line with the national average of $900.
Total cost: $825
2. Feeding
Depending on how you feed your child in the newborn stage, whether it be breastfeeding or formula-feeding, you will have expenses associated with both. The difference is that formula is much more costly than breastfeeding. For example, I breastfed my child but still managed to spend $750 on all the needed materials, such as a breastfeeding pillow, in-home sessions with a lactation consultant, and a breast pump and bottles.
We also fed formula for three months at the end of year one, costing us $230. So in total, feeding our baby just milk costs us $980. Additional expenses, like a high chair, bowls, spoons, and a few sippy cups mixed in, bring the total cost of feeding our baby in year one to $1,132. As for our daughter’s food after six months old, our grocery budget increased by $25 per month.
In total, we spent $1,282 on feeding in year one. According to Investopedia, if you formula feed for the entire first year, expect to pay $900 to $3,000 USD each year, or $1,140 to $3,780 per year CAD. This number might be higher with the 2021 and 2022 formula shortage we’re experiencing.
Total cost: $1,282
3. Baby Equipment and Transportation Gear
Although it may sound like you’re preparing your baby for their first vacation, transportation gear is the equipment you’ll need to transport your baby safely from the hospital to your home for the first time and every trip you’ll make after that. This includes your stroller, infant car seat, and maybe even a baby wrap to wear around the house and neighbourhood.
A stroller can range from $300 to $3,000, and an infant car seat is relatively comparable in price. We opted for a combination of a stroller and car seat within our budget of $750 for both items. It can be tempting to purchase luxury brand-name items when you become a parent because you see others doing the same. Still, it’s essential to remember that every car seat and stroller must pass the same safety guidelines.
As for the rest of the baby equipment we bought, like a crib, rocking chair, a newborn lounger and a baby swing, our total spent on baby gear quickly skyrocketed to $3,239. But, of course, we purchased many of these items before our baby was born in preparation for her arrival.
Total cost: $3,239
4. Baby Clothes
Something I never thought would require its own category is baby clothing. But, thanks to a baby shower full of love and excitement, we were gifted enough clothing for our child’s first full year of her life. For this reason, I encourage parents-to-be to wait to purchase most items until after their baby shower to help cover some of their expenses.
Although you could buy simple onesies and pyjamas for your child for around $500 for the year, many of my relatives got carried away, and after doing some research, I’d estimate that the clothing we had for year one was around $1,000. As someone who has been through the newborn stage, it’s never worth buying expensive clothing that will be worn (or stained) only once. Instead, consider hand-me-downs from loved ones or purchase second-hand clothing stores to keep costs low.
Total cost: $1,000
5. Postpartum Care and Non-essentials
Many parents might forget to include the costs they’ll incur for themselves after the labour and delivery of their child. Most of the items we bought, I would consider non-negotiables. However, they were vital in helping my recovery for the six weeks following childbirth. From glamorous adult diapers to a few lotions and sprays to heal, we spent $300 on postpartum care.
Then there were the convenience costs that made life bearable. Going from eight hours of sleep every night to a two-hour nap here and there made ordering takeout seem like a life-saving proposition more than a few times a week. We also spent quite a bit of money on takeout coffee because it was an excellent excuse to get out of the house while waking us up simultaneously.
Finally, there was a splurge expense of a fancy nightlight we could control from our phones and a couple of lotions for our daughter’s dry skin. None of these were purchases we could’ve prepared for, but we added another $800 to our first-year baby budget.
Total cost: $1,100
6. Organizing Our Finances
A few of the most necessary expenses for me, a personal finance nerd who tracked all of her costs, were our estate plan, life insurance and an education fund for our daughter. So the day after my daughter was born, I made a list of things we’d need to get done for peace of mind.
The first thing we did was create a will. I wanted to feel confident that our daughter would be safe and have an appropriate guardian if anything happened to us. The second was life insurance to help provide for her in the same situation. It may be morbid to think about death after giving birth, but for some reason, it was top of mind at the time. The two together cost us $680.
After we could check off those two financial tasks, it was time to open a Registered Education Savings Plan (RESP) to start saving for our child’s college education. With our lower income during maternity leave, we decided to save $50 each month, totalling $600 for the year.
Total cost: $1,280
7. Childcare
Living in Canada, you can choose to take parental leave for up to a maximum of 18 months. However, you may have an additional first-year childcare expense if you decide to go back to work before this time. According to Statistics Canada, every city and province has unique costs for this expense — full-time care can cost $152 per month in Quebec to $677 per month in Ontario. However, depending on your options and the budget type, costs can be as high as $2,000 per month for full-time childcare.
For us, my maternity leave was ten months, and my husband chose to take the additional two months, leaving us without any childcare expenses other than a couple of babysitting tabs so that we could get some work done once a month. So in total, we spent $120 in year one on childcare.
Total cost: $120
How to Budget for Year One
Budgeting for a baby is something that can save parents a tonne of stress and also money. If you’re unsure where to start, there are three easy steps that any parent-to-be can tackle to manage the cost of raising a child.
1. Assess Your Current Financial Situation
Consider how much money you have coming in and going out each month. Take note of any debts, bills or monthly subscriptions you currently pay. The more you know about your money, the better.
2. Create Your First Savings Goal
Getting an estimate of how much money you’d like to save before you have a baby can be beneficial. You can do this by finding out how long of maternity or paternity leave you’ll be taking, the difference between the financial support you’ll receive from the government and your current income, and how much money you need to cover your monthly expenses.
Say, for example, you and your partner bring home $3,250 each for monthly income. On government-assistance maternity leave, your weekly pay will be capped at $638 each week but what you get depends on your salary, and you can read more about that here. Your weekly earnings may increase if you have an employer top-up program. Assuming you will earn the maximum government assistance and no employer top-up, your new income will be $2,380 each month, plus your partner’s income. Depending on your monthly expenses, this could be sufficient, but you may also find that you need to save a chunk of money to cover household, living and baby expenses.
3. Open a High-Interest Savings Account
Now that you know where you stand financially and approximately how much you’ll need to save for your first year on parental leave, it’s a great idea to open a separate high-interest savings account where you can put this extra cash in the meantime. This way, the money will be out of sight and out of mind. When it comes time to use the money, you can pay yourself only what you need each month to ensure the money lasts and you stay on budget.
How to Look Ahead to Future Years
Regardless of the cost of raising a child, being a parent can be a gratifying experience. However, the best part of setting yourself up for financial success is that you’ll spend more time focusing on the memories of raising your child and less time worrying about paying for these expenses.
It’s impossible to predict the amount of money you’ll spend as a parent. Given the many different outcomes of your parenting journey, such as breastfeeding versus formula feeding, the most important thing you can do is over-prepare for any unexpected expenses that come your way.
