Cutter Family Finances: The Cost of Raising a Child in Today's Society


Kids are expensive.

Last Wednesday, I made a guest appearance on the “Morning Show” at New England Cable News (NECN) with Kristy Lee.

Kristy wanted advice for NECN’s viewers on how to tackle the rising costs of both child care and college. 

I told Kristy that her timing could not have been better. I had just returned from a three-day “economic summit” in California on Monday. The purpose of the summit was to gather wealth and financial advisors with leading economists from around the United States, to discuss the current economic conditions and their impact on Americans and the markets. We discussed such topics as market cycles and trends; global approaches to the US markets and the international markets; monetary and fiscal policy; retirement strategies for uncertain times; and active investment strategies to protect wealth. One of the hottest topics of discussion was the financial burden the middle-class American family is carrying during this economic recovery.

Kristy and I discussed a recent study that shows how most middle-class families will pay more for child care than they will for their child’s higher education. In fact, the study shows Massachusetts leading the way, finding that couples here in the Bay State spend more than 15 percent of their income on child care each year. I told Kristy about a US Census report we studied at the summit that shows that over the last five years, the average middle-class household income has fallen over 10 percent, while child care and college costs are continually rising, on average, 3 percent and 6 percent, respectively. No wonder the US birth rate is at a 30-year low.

I explained to Kristy that while the numbers on child care are staggering, it’s only part of the price to be a parent in today’s uncertain economic conditions. We talked about a recent study from the US Department of Agriculture (USDA) that shows a middle-income family will spend more than $300,000 on a child from birth to age 17. This is astounding to me since the study does not even include the rising cost of college. But when you factor in all child-rearing costs, from food, clothing, and child care down to toothbrushes, it adds up quickly. I mentioned to Kristy that since I have three girls, I also have to consider the cost of items such as fancy headbands, iPhones, phones, and “skinny” jeans, which are not cheap! (I still do not understand the concept of “skinny” jeans. I guess it is probably best I don’t, since I am the father.)

My advice to the young couples watching NECN last Wednesday was the same that I give to you, our Cutter Family Finance readers. Financial planning is more critical than ever for this demographic. First, do not wait until your new baby arrives to begin a “baby” budget. Young couples must run the numbers to see how much they will spend on everything from food and formula to diapers. I recommend using the USDA’s Cost of Raising a Child Calculator (, which calculates the annual cost per child based upon a child’s age. 

Secondly, immediately start implementing the changes that such a “baby” budget requires. As the cost of child care keeps skyrocketing, some families are being forced to make a very tough decision: one parent is giving up his or her profession to stay home with the baby (my wife, Jill, and I went through this in 2003). My advice is if you are considering going from a two-income household to a one-income household, start acting like the changes are effective today, which could mean big cuts to your expenses. Take action now.

Lastly, build a cash cushion. I recommend that young families have an emergency fund of at least six months, given how unpredictable life with kids can get. Prospective parents should start saving during pregnancy and save as much as possible. This is also the time to cut debt since there is more financial certainty.


At supper last Wednesday, Jill, the girls and I talked about the TV interview I had with Kristy and NECN that day. I shared the report with them about the significant costs associated with raising children. I told them that we need to cut back on the fancy headbands, iPhones, and skinny jeans. Almost in unison they yelled, “Not happening, Dad!!” Hmmm...I think I am overruled on this one.

Be vigilant and stay alert, because you deserve more.

Jeffrey Cutter, CPA, PFS is the managing partner from Cutter Financial Group, LLC ( which provides private wealth and investment management. He can be reached at

Investment advice is offered by Horter Investment Management, LLC, a registered investment adviser. Insurance and annuity products are sold separately through Cutter Financial. Securities transactions for Horter Investment Management clients are placed through Pershing Advisor Solutions, Trust Company of America, Jefferson National Monument Advisor, Fidelity,  Security Benefit Life and FC Stone.  1.


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