The Cost of Raising a Second Kid

  • By Charles Passy, MarketWatch
  • September 22, 2014

cost of children

It’s a fair bet that Prince William and Kate Middleton aren’t sweating the financials when it comes to having a second child. (Yes, the royal couple is expecting once again.)

But as for the rest of us? Well, that’s another story.

The government says it will cost $245,340 to raise a child born in 2013 through to age 18. The government also says the cost per kid can go down in families with more children. “The children can share a bedroom, clothing and toys can be handed down to younger children, food can be purchased in larger and more economical packages, and private schools or child care centers may offer sibling discounts,” says the Department of Agriculture in its most recent “Expenditures on Children” report.

But many parents say otherwise. So do many financial pros. And as the father of two children myself — a son in graduate school, a daughter in high school — I’ve done the math and can say without hesitation that one plus one doesn’t equal two (or less). If anything, it’s more like one plus one equals three.

What are the extra costs of having a second (or third) child? I’ll give you four of them:

When my second kid was born, a move was in order — from a rental in a townhome to the purchase of a new home — just so we could have the necessary space. That added about $1,000 to my monthly costs right there. (And that’s not factoring in the cost of the move itself.) Redfin, a real-estate brokerage, says that each additional bedroom adds about $86,000 to the cost of a home — or $7,600 extra a year in mortgage payments (with a 30-year loan). In some markets, it can be much pricier. (Having that second kid in San Jose? Redfin says the extra bedroom can equate to $20,000 extra a year in mortgage payments.)

Of course, you can double kids up in bedrooms (or even triple them, “Brady Bunch”-style). But the situation becomes all the more complex if the children are of opposite sex.

There’s a reason why the minivan is such a suburban stereotype. Namely, when you go from one kid to two, you need all that space — not just for the kids and their friends (and their car seats), but also for their gear. Ever try taking a family vacation with two kids in a compact car? Trust me, that’s a mistake I won’t repeat again. But the cost of going from that compact car to that minivan is another financial bullet to bite: In my case, I went from a Ford Escort (purchase price: about $12,000) to a Honda Odyssey (about $27,000). The differential can be higher today, particularly with prices of new cars on the rise.

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