My latest tax deduction (also known as a child for you amateur finance readers) uses diapers at an alarming rate and I’m wondering if it is going to greatly impact the family budget.
I thought it would be a good time to see what information is available for family spending on children. I find it helpful to use national averages to set goals in my own budget, to see how my spending compares and help me identify areas that need to be worked on. To my excitement, I located a report from the Department of Agriculture.
According to the report, families spend on average from birth to 17, $11,880 per year on one child and $13,830 for two. Just a reminder, the basic tax benefits per child are only $1,550 each year. As a percent of the whole annual expense, the following pie chart represents costs for a single child.
However, it is much more useful to think about it in terms of monthly expense.
Housing – $306.90 per month
Child Care and Education – $168.30 per month
Food – 158.40 per month
Transportation – 138.60 per month
Health care – $79.20 per month
Misc – $79.20 per month
Clothing – $59.40 per month
Diapers are included in the $59.40 per month for clothing and thanks to hand-me-downs, we are right on target and with a little coupon help, maybe we can do better? I’m also pleased to see that we are below the national averages on all expenses. Although the study did find that expenses increase as a child ages.
However, the most interesting fact I find from this study is that a second child adds only about $2,000 per year to the family budget. After your first tax deduction, the second tax deduction comes at quite a discounted price and I do love tax deductions and discounts!