Tanya Steinhofer No Comments

Do you struggle with finances? Are you contemplating going back to work or seeking a pay raise to help pay the bills? Do you miss those pre-kids’ days with expendable income? I know a number of families in this situation.

If you’re like the average Bay Area family that has two kids, you’ll need a million extra dollars (post taxes) to get them through college.

A report by the US Department of Agriculture (USDA) recently made headlines. The report is an annual report produced by the USDA on the costs of raising children. While the headlines focused on the national averages, these can be a bit misleading for people who live in the Bay Area and who are high earners. Furthermore, the study doesn’t include the cost of sending kids to college, or the value of parents’ time, which can often exceed the direct costs. This article attempts to shed some light on more relevant figures for the Bay Area.

Expenses through Age 17

The first component of the cost of raising a child is the cost of the living expenses through age 17, as covered in the USDA report.  While the national average for a middle-income family totals $241,000, the total for a higher earner family in the urban West is closer to $425,000. The categories of expenses that are the biggest drivers of this difference are housing and child care/education, as you might expect. Housing was more than double for high earners in the urban West, largely due to the higher cost of housing. Child care and education was also a bit more than double the national average, likely due to higher costs, but also a higher propensity to pay for child care so the parents can work.


The USDA study is based on two-parent households with two children. However, costs differ depending on the number of children and number of parents. In two-parent households with only one child, expenses tend to be 25% higher. With three children, parents tend to spend 22% less per child, likely due to economies of scale. In single-parent households with two children, there is a tendency to spend 3% less on the older child. However, the costs for a single-parent, one-child household are 29% higher than in a two-child single-parent family.

The Cost of College

The second major component of raising a child that was not covered by the USDA report is the cost of college.  The national average total cost for a public 4-year college in-state student was estimated to be $22,000 for the 2012-2013 school year. This cost includes tuition, room & board, books & supplies, transportation and other. This compares to $43,000 for a student at a private 4-year college.  Then there are schools like Stanford, which estimate the cost to attend at $60,000. It is worth noting that schools with large endowments offer substantial financial aid to their students, so the net cost to attend might be substantially lower.

Adding It All Up

Adding it all together for families in the Bay Area, the cost to raise a child in a two-child, two-parent family ranges between $500,000 and $600,000 per child, depending on whether you send them to public or private college. Fortunately, there are many benefits to having children in our lives, but the magnitude of the expense means it is worth taking seriously things like planning for our kids’ education and how we plan to pay for other major expenses like housing and child care.