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Calculating the Baby Budget

How much does it cost to raise a child?

Every year, the U.S. Department of Agriculture calculates how much it costs an American family to have a baby, and every year, it’s big news.

In 2014, major news outlets, including CNN and ABC News, reported the total cost of caring for your son or daughter for 18 years as being $245,340, not including college. The figure was about 2 percent higher than in 2013.

But that nearly quarter-of-a-million dollar expense is a national average, which fluctuates based on a number of factors, including where you live.

Comparing national to regional costs

To figure out how much it costs to raise one child, the USDA calculated the cost of housing, food, transportation, clothing, health care, education, childcare and miscellaneous expenses, such as haircuts and cell phones.

Broken out by region, the Urban West, which includes Arizona, is a bit more expensive than the nation as a whole. The USDA figured it costs $261,300 to raise a western child, who was born in 2013 for 18 years.

Housing and transportation were the largest and unchanging line items, constituting 30 percent of the total costs. Real estate values accounted for some of the regional increase. According to 2012 data from the Center for Nutrition Policy and Promotion, the annual housing cost of a child raised in the Urban West was $6,100. The national average was $5,088.

Education and daycare costs account for 18 percent of the average family’s income and can also vary immensely, based on your ZIP code. Sending your child to daycare cost more than sending them to college in 31 states, according to www.nerdwallet.com. Parents can see how the 2014 USDA figures change across the country by using the CNN.com child cost calculator.

How do Arizona cities rank?

In 2012, Arizona welcomed 85,725 babies, 54,475 in Maricopa County alone, and within the state, the price tag of raising that baby for 18 years differed by almost $48,000 a year.

Nerdwallet.com, a consumer-personal finance website, analyzed the cost according to city, by taking the $245,340 number compiled by the USDA and adjusting it for cost of living in 288 metropolitan areas, using the cost of living index from the Council for Community and Economic Research. Using this methodology, the site reported that the most expensive city in which to raise a child in Arizona is Flagstaff at $282,232, ranked #33 out of 288.

Next are Scottsdale at $278,420 (#35), Yuma at $248,295 (#375), Tucson at $243,857 (#90) and Phoenix at $234,302 (#140). On a national scale, the most expensive U.S. city is Manhattan, NY at $540,514, and the least expensive is Norman, OK at $199,298.

What about college?

So far, we’ve only been talking about costs up to high school. Beyond that, the College Board numbers set the bar. As reported on azcentral.com, the College Bar estimates that the general college expense range is from $15,933 a year for tuition, room/board and other costs at a public, two-year commuter school to $44,750 for a private, four-year college, if your child lives on-campus. Over the course of four years or more, college could add upwards of $64,000-$179,000 to your family investment.

Many Arizona parents plan to share the expense with their children, according to survey of 200 families conducted by Fidelity Investments. Although 20 percent of respondents plan to pay their kid’s full ride, 80 percent expect the student to contribute toward his or her education. Thirty percent of the surveyed families will use 529 savings accounts for college-related expenses.

Don’t forget the surprises

Even with the best-laid plans, raising a baby is an expensive adventure and not without its fair share of surprises. According to CNN.com, families said the largest and most unanticipated costs of having a child were food allergies, video games, spending money, and sports and other activities.

One family reportedly spent between $1,500-2,000 a year on extracurricular activities alone, which means football and dance require line items in the family budget.