Raising a family has always come with additional costs, but in 2025, it’s become a whole lot more expensive.
Take the Millers, for example. This couple in Boulder, Colorado earns a combined annual income of $220,000, which had provided them with a comfortable lifestyle — until they had kids. They have a mortgage, two cars and student loan debt to pay off. But now, with a toddler and a five-year-old, the Millers are feeling financially stretched.
On top of that, it seems every time they go to the grocery store, prices keep getting higher. Everything else seems to be going up, too, from home insurance rates to the cost of child care. Raising a family in America just seems to be more expensive than it used to be.
The data, meanwhile, suggests that the Miller’s suspicions are indeed true: the cost of raising a family in 2025 is getting higher.
A 2025 study from SmartAsset — which used the latest data from the MIT Living Wage Calculator — shows just how much Americans are struggling in today’s economy.
“An individual in any given U.S. state needs about $5,844 more earnings than last year to have a comfortable, sustainable budget, while working families of four need an additional $9,360,” according to the study.
Living “comfortably” means making enough money for necessities — along with things like long-term savings, education funds, entertainment, hobbies and vacations. In Colorado, the income required for a four-person family to live comfortably in 2025 is $273,728. By comparison, a single adult would need $105,955.
At the same time, the national median annual income is $58,500 for those between the ages of 25 to 34, and $69,264 for those 35 to 44, according to data compiled by Forbes Advisor. However, this varies by state, gender, age and educational level.
In Colorado, the average median annual income for a family of four is $146,972, according to Census Bureau data from April 1 to May 14, 2025. With this in mind, the Millers are doing well, in comparison to the average American family.
Yet, it’s not quite enough to live comfortably, as they don’t meet SmartAsset’s recommended $273,728 annual earnings for Colorado families.
Here’s why the Millers are struggling.
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In Boulder, the Millers pay $4,600 a month on their mortgage. While it’s a lot of money, it’s still slightly less than the average monthly mortgage payment in their county.
The average median home price in Boulder County as of Q1 2025 was $828,810, with an average monthly mortgage payment of $4,880 (assuming a 20% down payment), according to data from the National Association of Realtors. That’s up slightly from $4,730 during the same period in 2024.
The 30% rule states that homeowners should delegate no more than 30% of their monthly household income to housing, which includes mortgage payments, insurance and utilities. If a homeowner is spending more than 30%, they could end up being “house poor.”
Since the Millers bring in about $18,300 a month and their mortgage payment is $4,600, they’re spending about 25% of their monthly income on their mortgage. That leaves about 5% — or roughly $900 — for home insurance and utilities, which means the Millers are following the 30% rule quite well.
However, they’re increasingly pressed in other areas.
A recent study found that the annual costs of raising a child in 2025 is $29,419 — that’s up a whopping 35.7% since the study was last conducted in 2023. Those costs include everything from child care to food, clothing and transportation.
However, this varies by state; Hawaii has the highest annual costs of raising a child, followed by Massachusetts and Washington — while Mississippi, South Carolina and Alabama have the lowest annual costs.
“Families spend an average of 22.6% of their income on the basic annual expenses associated with raising a small child,” according to the study. “That’s up from 19% in our 2023 study.”
In Colorado, the average annual cost for an infant or toddler in family child care is $13,666 per year. Costs are even higher in center-based child care: $20,978 per year for an infant and $17,479 per year for a toddler, according to data from Child Care Aware of America.
And that doesn’t even take into account saving for a child’s future education.
The price of groceries is going up, and the impact of President Trump’s tariffs could bump those prices even higher. Other factors are at play, too: avian flu, for example, drove egg prices through the roof earlier this year.
Over the past year, grocery prices have increased 2.2%, according to May 2025 data from the U.S. Bureau of Labor Statistics.
But a report from Yale’s Budget Lab, a nonpartisan economic research group, found that U.S. tariffs on imports from trading partners like China, Canada and Mexico will raise prices on everything from clothing to machinery to natural gas. And groceries are no exception, with produce jumping 5.4% in the short run and food products increasing 4.3%.
Overall, Americans are reproducing less these days, and one of the reasons is related to the high costs of raising a family.
To maintain a stable population, each woman in America would need to have 2.1 kids on average. In 2024, the U.S. reached an all-time low, with fewer than 1.6 children being born per woman.
A 2024 Pew Research Center poll found that 51% of young adults between the ages of 18 to 34 say they’d like to have kids one day, while three in 10 aren’t sure and another 18% say they don’t want children.
Meanwhile, 23% of Millennials and those in Gen Z who don’t have children say they don’t plan on becoming parents, mainly because of financial reasons, according to a 2024 survey from MassMutual.
“A preference for financial freedom and the inability to afford children are equally cited by 43% of younger generations,” according to the study.
It seems not every young couple wants to find themselves in a position like the Millers — making well above the national median annual income, yet still struggling to pay the bills.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
