At a Glance

Though the parenting world is wrought with advice (often both unwanted and unwarranted), there are plenty of things about raising children that nobody tells you. You’ll hear a million times over to embrace the chaos and that it all goes by so fast, but not every advantage of having kids is widely advertised and with the uprising of the DINKs lifestyle on social media it seems like the financial advantages of not having kids are thrown in your face more. It turns out though, having children can actually save you money.

But wait, isn’t having kids expensive? In one now-viral graphic shared by the United States Department of Agriculture, the average cost of raising a child in the U.S. from birth to age 18 was $233,610 in 2017. The numbers vary by region and even state to state, and adjusted for inflation, in 2022, the Brookings Institute calculated that this total dollar amount rose to a stunning $310,605.

Yes, kids are expensive, no doubt. However, there are also times when their existence can be to your financial benefit.


7.01 million

families that had three or more children under 18 living in the household in 2021.

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1. Child tax credit

If you’re already a parent, you probably know this common tax loophole for regular people — the child tax credit. It can be a significant financial boost for families, especially for those with multiple children. In 2023, this credit is worth up to $2,000 per qualifying dependent under age 17. A portion of this credit is nonrefundable, meaning it can reduce your tax liability to zero by subtracting $400 of the credit, but you won’t get that money back in a tax refund. However, the remaining $1,600 of the total credit is refundable, which means you can receive that amount back if you don’t owe any more taxes.

Another perk of this particular credit is that the earning threshold is high. The full credit can be claimed for married or joint-filing couples earning up to $400,000 and single filers earning up to $200,000, with the benefit phasing out for higher earners. As long as your child is born before midnight on January 1st, you can claim them as a dependent on your tax return the following April.

2. Child and dependent care credit

Childcare expenses can be a significant financial burden for parents. Annual childcare expenses for families in the U.S. range from less than $59,200 to more than $107,400, depending on income level and the amount of children per family. But another tax credit that benefits parents directly is the child and dependent care credit.

Qualifying families who have paid someone else (like a daycare or nanny) to care for dependents age 13 and under are eligible to claim a percentage of qualified expenses. The Internal Revenue Service (IRS) stipulates that “The total expenses that you may use to calculate the credit may not be more than $3,000 (for one qualifying individual) or $6,000 (for two or more qualifying individuals),” and all persons and organizations providing care must be properly identified when filing your taxes.

3. Dependent Care FSA

Signing up for a Dependent Care Flexible Spending Account (FSA) through your employer can help alleviate even more of the financial strain of childcare. With a Dependent Care FSA, parents can set aside up to $5,000 of your income each year to cover eligible expenses like daycare, before and after-school care, babysitting, and even summer camp for children up to 13 years old. The best part? It’s tax-free, which means your taxable income will be reduced, decreasing your overall tax burden.

The concept of a Dependent Care FSA works similarly to a Health Savings Account (HSA) but doesn’t get adjusted for inflation. In fact, the limits for contributions have not changed since 1986, but it can definitely help offset childcare expenses overall.

4. 529 plans

Surprisingly, college costs are not included in most estimates of the dollar amount it takes to raise a child. Paying for college can be costly, and costs are only increasing with time. Instead of taking on debt when your kids enter college, you can save money by planning ahead.

Did you know that the whole family can actually help save your kids money in the future? 529 education savings plans are a valuable tool that allows anyone — grandparents and non-family members included — to set aside money for a child’s future college education. This money is invested and can grow over time, and when used for qualified education expenses like tuition, fees, and room and board, the interest earned on them is not subject to federal income taxes. So, instead of spending money on taxes with other types of savings plans, a 529 is a way to save those funds.

Starting a 529 plan sooner rather than later can provide significant savings for your child’s future education expenses. You can even encourage friends and family to contribute to the 529 plan by depositing money as a gift for your child. Additionally, beginning in 2024, if your child doesn’t use the 529 funds for education, that money can be rolled into a Roth Individual Retirement Account (IRA) tax and penalty-free, offering another way to secure your child’s financial future.

Already dealing with debt from your child’s college education? Consider a debt consolidation loan to help pay it down faster. Credello’s debt consolidation tool can show you the best options for consolidating any type of debt.

5. Adoption tax credit

Adoption can be an expensive process — anywhere from $20,000 to $45,000., according to data from the U.S. Department of Health and Human Services — but there are tax credits available to help offset the costs. For the 2023 tax year, the maximum adoption tax credit is $15,950 per child. This particular tax credit is dollar-for-dollar, directly reducing your overall tax liability. Eligible expenses for the adoption tax credit include court and agency fees, foster care expenses leading up to your adoption, and the potential travel expenses related to adopting a child from another country. All of these costs add up, but the adoption tax credit can significantly ease the financial burden of adoption and make it more accessible for families.

6. Insurance benefits

When you have children, healthcare costs are one of the most significant expenses. From the cost of giving birth to emergency room visits for childhood injuries, well checks, and even potential long-term health needs, having health insurance can give you peace of mind and also save your family some money in the process. Here are some of the insurance-related benefits you can take advantage of when you have kids:

  • Prenatal Coverage: Marketplace health plans, as well as employer-sponsored health coverage, are required to cover many prenatal and well-woman visits without co-pays, including crucial screenings and preventive measures for moms-to-be.
  • Enrolling the Baby: Insurance companies often offer a special enrollment period for new parents, allowing you to enroll your child within 30 days of birth. This coverage is retroactive, meaning your baby’s healthcare costs are covered from their date of birth.
  • Freebies: Insurance plans must cover breastfeeding supplies like breast pumps —though there are often limits to this — and they also cover the cost of birth control, whether it’s pre-pregnancy or after childbirth.

7. Parental Leave

While the United States lacks a national paid leave policy, there are some protections in place for new parents to help offset the costs associated with giving birth and starting the process of raising kids. The Family and Medical Leave Act (FMLA) grants eligible employees up to 12 weeks of unpaid leave so that new moms can give birth and take some time off without losing their jobs. While this doesn’t necessarily add any dollars to your bank account, having a stable job to return to after giving birth is definitely a benefit for new moms.

To qualify for FMLA leave, employees must have worked for an employer with more than 50 workers for at least 12 months and logged 1,250 hours in the previous year. Thankfully, some companies go beyond the FMLA’s minimum requirements by offering paid parental leave, decreasing requirements to qualify for unpaid leave, or adding more time to the requisite 12 weeks. This additional benefit can help ease the financial strain on new parents during their time away from work. Additionally, certain states offer paid family leave programs that can provide further financial support to new parents.

8. Eldercare

Once you wrap your mind around the fact that you will one day age to the point where you might no longer be able to care for yourself, having children can shift your perspective about elder care. However, having children who are capable and willing to take care of you as you age can ease the burden of the associated costs of elder care. There are plenty of ways to have your children pitch in and help when you’re older — you could move back in together, they could aid in helping you navigate day-to-day activities and more. Your mileage may vary, but in the end, the savings could be worth it.

Bottom line

While the financial savings of parenthood aren’t as significant as the associated costs — and are often left out of general parenting advice conversations altogether — there are monetary benefits to having children, especially in the U.S. From tax credits to insurance coverage and parental leave, these financial perks can help parents save money and provide a secure future for their families. In short, children can be a source of joy and a piece of your overall financial wellness puzzle.