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Raising a baby costs $52,000 – just in the first 12 months

Considering car seats, cribs and all those animal crackers, parenthood comes with a lot of expenses.

With rising costs from child care to college, many first-time parents aren't financially prepared from the start — no matter how much money they make — according to a recent report by NerdWallet.

New York City is one of the most expensive cities to raise a child.
Ghislain & Marie David de Lossy | Getty Images
New York City is one of the most expensive cities to raise a child.

The personal finance site analyzed the expenses of a baby's first year in two sample households — one with a $40,000 annual income and one with a $200,000 income — to illustrate how families with different resources might cope with all of the expenses associated with a bundle of joy (including food, housing, transportation, diapers and health care).

In both cases, expectant parents, including those currently pregnant and those planning to have a child in the next three years, dramatically underestimated the costs right out of the gate: More than half of would-be parents believed the first year will cost $5,000 or less.

In fact, the first year of parenting is substantially more — just over $21,000 in a $40,000-income household and nearly $52,000 for families making $200,000 or more, according to NerdWallet.

The majority of soon-to-be parents mistakenly thought diapers and wipes would be the largest expense, although at $743 it was far below the cost of full-time child care, which averaged $8,059 for the first year.

Nationally, the cost of full-time care in child-care centers is 85 percent of the monthly U.S. median cost of rent, according to a separate report by think tank New America. To cover the cost for one child, a family earning the median household income of $53,000 would need to fork over 18 percent of its income.

But the expenses don't stop there. The cost of raising a child to age 18 will set parents back a whopping $233,610 (not including college), according to the latest figures from the Department of Agriculture.

Most parents aren't saving nearly enough, either because they don't have the funds or they are misjudging the expenses, according to NerdWallet's insurance editor, Amy Danise. "Babies aren't a business decision, so there may not be a lot of research that goes into having one," Danise said.

To get a better grip on what's in store for those entering parenthood, other parents are often the best source of tips and advice, she said.

Regardless of their household income, more than half of parents said there are financial steps they regret not taking, NerdWallet found.

The biggest one? One-third wished they'd started or contributed more to a college savings plan.