The cost to raise a child to the age of 18 is $297,674, according to LendingTree [1]. However, some parents of young children are setting aside money to support them much longer than that.
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Leza and Anthony Dieli were interviewed by The Wall Street Journal as one young couple who plan to help their daughter, aged 7, well into her adult years [2]. According to the report, young parents who expect that their children will need plenty of support through their college years and beyond are setting aside money.
Kyla Holcombe and her husband have set aside a few thousand dollars in brokerage accounts for each of their three children. Her thinking is: “How can I help them when I’m still around, when it’s earlier in their life and they need it more?”
“I think you either need to be comfortable with your kids struggling or you need to set aside some money now,” said Robert Persichitte, a financial adviser based in Denver, to the Journal.
So what’s behind this trend, and is it a good idea for all new parents to set aside extra savings in their budget to help their children launch successfully? Here’s what we recommend.
The rising cost of living
As part of their exploration into these new savings patterns for young families, the Journal reported that while Americans are earning 18% more than they did in 1980 (adjusted for inflation), the costs of living have soared well beyond that figure. Housing is up more than 400% in that time, and the cost of medical care is a staggering 700% higher. Even worse, tuition and child care expenses have shot up more than 10-fold since the 80s. The bare-bones annual cost of raising a small child has also climbed sharply in just the last few years, with LendingTree estimating it is now $29,419, 35.7% higher than it was in 2023.
For these reasons and more, parents of young children are trying to get ahead of the costs their children will face as young adults.
The Dielis are saving around $1,000 a month for their daughter to use as an adult, which is separate from their savings for her college. They admit to keeping their living costs low to save aggressively.
Their forethought echoes the current rise of older parents who are helping their adult children with expenses. Half of parents with adult children provide regular financial assistance to their grown offspring, according to a survey by Savings.com [3]. The average support per adult child is $1,474 monthly.
“Parents are more permissive now and more likely to provide, but I also think the need is greater,” said Patrick Huey, owner of Victory Independent Planning, in his interview with the Journal. “I think parents see that and say ‘I have the ability to help out.’”
According to the Savings.com study, parents still in the workforce contribute over two times more money to their adult children each month than their retirement accounts. As parents who are in or nearing retirement today find themselves helping their adult children financially, what the Dielis are doing may be the new reality of parenting in the future.
Read more: How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement
Saving for your children’s future
With the cost of raising a child in the here-and-now so expensive, it may be difficult for many families to simply save for retirement or put money into a 529 plan, let alone save extra for living expenses after their children graduate from college. A family of three (one man, one woman and a child between the ages of 4 and 5) would spend nearly $1,000 a month on food at home with a moderate-cost food plan, according to the U.S. Department of Agriculture.
Make sure you’re taking advantage of the child tax credit and any other tax breaks the government offers parents.
The new Trump Accounts ushered in under the sweeping changes of the One Big Beautiful Bill also allow parents the opportunity to save for their children. Under a scenario of average returns on the U.S. stock market, by age 28, the child could have a total balance of $1,091,900 if the parents made the maximum contributions to the account. Even accounts that are funded with only the initial $1,000 deposit from the government would grow to $18,100 by age 28 if no contributions are made.
Finally, Dependent Care FSAs are a pre-tax benefit account that you can use to pay for services like preschool, summer day camp, before- or after-school programs, and daycare for children or adults with special needs. Parents should be sure to look into their eligibility to help cut down on costs.
For parents looking to find extra wiggle room in their budget for savings, experts recommend cutting the food budget as much as possible through meal planning and consulting flyers. You may also want to opt for fewer or cheaper family vacations, opt for secondhand baby supplies, toys and clothing, and find ways to cut down your entertainment budget to funnel more money towards savings.
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[1]. LendingTree. "It Costs an Additional $297,674 to Raise a Child Over 18 Years, Up 25.3%" [2]. The Wall Street Journal. "She’s 7 Years Old. Her Parents Are Saving to Support Her When She’s 30." [3]. Savings.com. "Percentage of parents financially supporting adult children reaches a three-year high"
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