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Becoming a parent is one of life's most joyful experiences, but it’s also an expensive one.
And where you live can determine just how expensive it will be.
Across the country, expecting moms and dads are facing a “new parent real estate penalty,” and some may actually feel forced to relocate to somewhere that’s easier on their wallet.
Mississippi, Alabama, Arkansas, Louisiana, and Iowa are five of the most affordable states for new parents, according to a recent survey by MoneyLio
Massachusetts, Alaska, New Jersey, California, and Hawaii, on the other hand, are the most expensive.
And the cost differences in these states are staggering.
In Mississippi, annual rent is about $12,300, the average mortgage costs roughly $13,500 a year, and infant care averages just under $6,900.
In Massachusetts, however, annual rent climbs to about $31,100, infant care tops $26,700, and the average mortgage soars to nearly $47,700—a difference of more than $34,000 in annual mortgage costs alone.
“It isn’t childcare that necessarily separates the states that land on the top versus the bottom. It’s housing costs,” explains Rudri Bhatt Patel, an NACCC certified financial health counselor and a member of MoneyLion’s team of financial experts.
If you’re a new parent or plan to start a family soon, it’s essential to understand how parenthood may affect your housing costs.
That way, you can create a realistic budget, decide whether a move is worthwhile, and avoid unwanted financial surprises down the road.
Where the cost of raising a child hits the hardest
In some states, childcare functions like a second mortgage.
“In Massachusetts, with infant care costing $26,709 and the annual mortgage costs adding up to $47,729, you’re essentially budgeting for one-and-a-half houses,” says Patel.
You’ll also find that states with higher childcare costs tend to have higher housing costs as well.
California, Hawaii, Massachusetts, and New Jersey, for example, are the most expensive in terms of both childcare and housing costs.
“Families in these states are more likely to have less money to afford a down payment, ongoing costs to maintain a home, and payment for insurance and taxes,” Patel explains.
And healthcare costs add additional strain.
“Since half of the country faces healthcare costs over $7,000 per year, families are forced to make trade-offs—often between housing, healthcare, and childcare,” adds Patel.
Why moving often makes sense
Many new parents realize that earning more isn’t always enough to offset high infant care or housing costs. Instead, they look at their location to reduce costs.
“In major cities, where high mortgages are driving costs, just moving 30 to 40 minutes away from the center can lessen housing payments,” says Patel.
While this might increase your commute, you’ll still have access to a job market. If you’re a remote worker, it’s a win-win.
“Moving to a suburb, smaller city, or even a different state can provide additional space and reduce the cost of housing, childcare, insurance, and more. It may also be a smart move if it provides proximity to grandparents or other relatives who can assist with childcare,” explains John Donikian, vice president at Best Interest Financial in Detroit.
Patel also points out that many expecting parents are being forced to take a close look at delivery costs, and some might decide to move before they have a baby.
“For some families, an out-of-network delivery may run more than $40,000, so working proactively to find an in-network provider elsewhere becomes paramount,” Patel adds.
Tips for new parents
Whether you’re a new parent or plan to become one soon, these tips can help you plan your next move or evaluate the long-term affordability of your current home.
Price out childcare
Do your research and determine what it might cost to enroll your child in daycare.
“Before you make a move, get three to four childcare quotes. If you’re on the hunt for a new home, this is a must,” says Patel.
Decide if you should rent or buy a home
Finding inexpensive housing is rare these days. In fact, the MoneyLion study found that only five states—Oklahoma, Arkansas, West Virginia, North Dakota, and Iowa—have median rents below $1,000.
To help you determine whether to rent or buy a home, pull your state and local area averages for both options.
“In some instances, renting for longer is the right choice,” explains Patel.
If you’re a new homebuyer, calculate all costs
Add up your mortgage costs as well as infant care and expected childcare costs until your child reaches age 5. And don’t forget delivery costs.
“Combining these costs makes it a more realistic measure of how much money you will need,” says Patel.
Don’t forget to budget for emergencies as they can and likely will pop up.
Always check your insurance coverage
When it comes to delivering your baby, your network status is key.
“In Nevada, New Jersey, California, Florida, and Alaska, out-of-network delivery costs run over $40,000. This is $11,000 more than the national median cost,” Patel explains.
Make sure to confirm that your hospital or OBGYN is in-network.
“Ideally you want to do this before you have your baby. This one action could save you thousands of dollars,” Patel adds.
Revisit your budget and financial plan annually
Childcare costs tend to change as kids get older. It’s important to revisit what works and what doesn’t.
Don’t be afraid to make a change to help your personal affordability index.
“The best home is the one that remains affordable as your family continues to grow,” adds Donikian.
