How to Be Financially Prepared to Foster
Becoming a foster parent means providing a child in need with a welcoming and secure home. An open heart and a loving home are just the beginning of what is required to be a foster parent. Someone who wants to open their life and home to a foster child needs to be financially prepared. While states provide some financial assistance to foster parents, it is not enough to cover all of the expenses involved with raising a child, even for a short amount of time.
Learn more about financial considerations of becoming a foster parent, how to prepare a home for foster children and find the right home insurance, what to expect from government assistance programs and financial planning tips for foster parents.
Foster Care in the United States
At least 250,000 children are placed into the foster care system every year in the U.S.
The average child spends 14.7 months in foster care.
It costs an average of $1,081 to raise a child per month and it increases as they get older.
Sources: Child Welfare Information Gateway and the U.S. Department of Agriculture
Preparing Yourself Financially As a Foster Parent
Foster parents typically receive state subsidies to cover expenses such as food, housing, clothing and transportation. However, children have many experiences and needs beyond being fed and dressed. You'll need to be financially prepared to potentially pay out of pocket for things like field trips, sports, camps, vacations, school pictures and even the higher utility bills that can come from having another person living in your home.
Financial Planning and Budgeting
Before you decide to foster a child, you'll want to consider all the potential costs involved and create a budget to make sure you're financially prepared. After you've added up all of your income and factored in your current expenses, you'll have a clear idea of how much money you have available to help with fostering a child. You can compare that to the typical average cost of items below to start budgeting to be a foster parent.
Average Cost: $177–$250 per month
Depending on the age of your foster child, food can cost anywhere from $177 a month for young children to $250 a month for teenagers.
Child care and education
Average Cost: $5,436–$24,243 per year
Child care and education costs will vary depending on where you live. Start by learning what the local child care costs are in your area so you can budget for this expense.
Average Cost: $1,152 per year
The average health insurance premium in the United States is $1,152 per year. Most foster children qualify for Medicaid, but you may need to budget for any additional health expenses that your foster child might need.
Average Cost: $500–$2000
Your foster child will require a dedicated, safe sleeping space. If you do not already have a bedroom set up for the child, you'll need to create one.
Average Cost: $565–$620 per year
If you're fostering a baby, you'll be responsible for diapers, which can get expensive rather quickly. Purchasing in bulk can typically save money on diapers.
Average Cost: $500–$1500
Most children need a computer or laptop to do their schoolwork. A laptop and other school supplies could cost between $500–$1500 depending on the type of technology purchased. To save money, you could consider buying a refurbished computer.
Average Cost: $15–$100
It comes around every year, and the costs are always surprising. Unless your foster child is only with you for the summer, you may need to budget for school photos along with other incidental expenses that come up at school, such as field trips and class parties.
Average Cost: $1,145 per person
A vacation is not a necessity, but many foster parents want to share this experience with their foster child. A typical vacation cost $1,145 per person, so you'll need to consider the extra person when budgeting.
Foster Parent Requirements
There are some basic but essential requirements to become a foster parent. States want to ensure that you can financially care for the child and provide a healthy and safe home. Foster parents are required to go through some basic training.
There is no specific income requirement to become a foster parent, but you will need to prove that you are in a good financial position to provide for a foster child. Your state may ask for your previous and current pay stubs and tax returns to prove that you can pay for basic needs such as mortgage or rent, utilities, food and clothes for a foster child. Some states may have specific foster parent income requirements, but mostly they want to assure you have enough money to meet the family's needs.
Average Cost of a Child per Year
According to the U.S. Department of Agriculture (USDA), it costs an average of $12,980 to care for a child per year for a middle-income family that makes between $59,200-$107,400 annually. The largest portion of this money goes to housing, food, child care and education.
What’s the Cost Look Like?
The more income a family earns, the more they will likely spend on child care and child-rearing costs. According to the U.S. Department of Agriculture, middle-income married couples will spend $233,610 in child-rearing expenses on a child from birth to age 17. A low-income married couple will spend closer to $174,690 to raise a child, while a low-income single parent will spend even less at $172,200. The cost to raise a child also increases as a child gets older. On average, it cost $900 more to raise teenagers between the ages of 15–17. This is because of the addition of transportation and vehicle insurance for teens as well as needing more food.
Getting Your Home Ready for Foster Children
Part of the joy of being a foster parent is providing a safe, comfortable and inviting home for your foster child. Fortunately, orientations and pre-training will provide insight into how to prepare your home. You can also follow these tips to create a home environment that will be welcoming and safe for foster children.
Home Study Requirements
Every foster parent must go through a home study conducted by a state agency to get approval to foster children. During this study, your state's child welfare organization will provide a representative to do a thorough inspection of your living environment to assure that the foster child placed with you will be living in a safe, nurturing home. While the laws and policies for approving a foster family vary significantly from state to state, you can use this general checklist to prepare for your in-home visit.
Home Preparation Checklist
Home Visit Forms and Documents Checklist
- State or federally issued ID Birth certificates of people living in the home
- Social security numbers of people living in the home
- Marriage certificate
- Proof of citizenship or legal immigration
- Proof of income
- Proof of employment
- Medical records
- Immunization records
- Pet vaccination records for pets in the home
- An autobiographical statement
Home Inspection Checklist
- Functioning smoke alarms and carbon monoxide detectors
- Gates on stairs
- Covered electrical outlets
- Secure, locked windows with screens
- A first-aid kit on hand
- Firearms out of reach and locked up
- Functioning heating and cooling
- No lead paint
- A safe yard with proper guardrails around any decks or pools
- Safe, functioning appliances
- Child-proofed corners on furniture
To support and encourage more families to open their homes to foster children, the U.S. Department of Health and Human Services department provides subsidies to foster parents through grants provided to state agencies. These stipends for foster parents provide regular payments to help pay for costs related to caring for a foster child including housing, food, clothing and transportation.
Another popular grant for foster children is the Family Unification Program. Rather than providing housing for foster families, housing choice vouchers are provided to families who lack adequate housing to receive their children back after being in foster care or are in danger of having their children placed in foster care because they lack adequate housing. The program also provides housing vouchers to youths who have aged out of foster care and are transitioning to independent living.
Home insurance might not be the first thing that comes to mind when you're considering becoming a foster parent, but some added risks could arise. As a foster parent, you could open yourself up to lawsuits from incidents that could come from your foster child while at your home. For example, the child could slip and fall by your pool or cause property damage to your home. There's also the risk of allegations of improper care.
Many insurance companies offer additional liability insurance for foster parents. You can also increase your property insurance and add additional home insurance endorsements as you add another person to your home.
Assistance and Support While Being a Foster Parent
Parenting a child is rewarding and challenging. Opening your home to a foster child is a selfless act that can significantly impact that child's life. Fortunately, there are a variety of assistance and support services available for foster parents. From tax credits to reimbursements for transportation and medical expenses, states have worked to make it manageable for those who want to foster children to do so.
Foster Care Tax Credit
There are a few tax breaks available for foster parents. Financial assistance for foster parents is not counted as income on federal tax returns, so it is not taxable. This includes payments from state or federal government agencies and child placement agencies. You may be able to tax your unreimbursed foster care expenses as a charitable donation if you itemize deductions. If the agency or organization that placed the child with you can receive charitable contributions, you can itemize those unreimbursed expenses. Additionally, you may be able to claim the child as a dependent on your tax return, which can also lower your federal tax obligation.
Foster Parent Benefits
Some additional benefits may be available to foster parents, including support for everyday expenses outside of the ordinary.
- Contingency funds: In Virginia, the Virginia Department of Social Services provides foster parents with a contingency fund to help pay for any property damage that foster children may cause. Many states likely provide this benefit. Check with state representatives.
- Free school lunches: Many foster parents can enroll foster children in the free school meals program regardless of their income.
- Respite care: Respite care is short-term supervision should an emergency result in the temporary inability of the foster parent to care for the foster child.
- Reimbursement for clinical assessments: Some states will reimburse foster parents for any clinical reports or behavioral evaluations performed on the foster child. Check with local and state representatives.
Foster Care Clothing Allowance
Average Allowance: $200–$500 a month
The benefits will differ by state, but most foster children and parents will get a monthly clothing allowance. This allowance ranges from $200–$500 a month depending on state regulations and the foster child's age.
Foster Care Medicaid
Most children in foster care are insured through Medicaid through Title IV-E of the Social Security Act or state laws requiring Medicaid coverage to be extended to children age 19 or younger whose household income is less than 133% of the federal poverty line. Medicaid benefits are distributed through local agencies to foster families and children.
Average Reimbursement: Varies
If you have to transport your foster child to required appointments, or the child is of legal driving age and has to transport themselves, you may qualify for transportation reimbursement. Most states have individual transportation reimbursement programs for children using public transportation or mileage reimbursement for necessary travel to school and other locations.
Foster Parent Reimbursement
Average Reimbursement: $20 and $25 per day or $600 and $750 a month
Every foster parent will receive a specific amount of money per child. This varies by state, the number of foster children and the ages of foster children. The average is between $20 and $25 per day, or between $600 and $750 a month.
Enhanced Maintenance Payments
Some children require additional daily care, such as those with disabilities or special needs. In these cases, foster parents can apply for enhanced maintenance payments to help cover these additional expenses. Parents will need to apply for enhanced maintenance payments through their state agency, and the agency will decide if additional payments will be given.
Expert Insight on Financially Preparing to Be a Foster Parent
- What are the most common out-of-pocket expenses for foster parents?
- People tend to think that fostering a child is a significant financial commitment. Can you elaborate on the true financial commitment and why individuals should still consider fostering?
- All of this leads to a final and essential question: Why would anyone become a foster parent?
Leading Foster Care Expert and Founder of The Foster Care Institute.
Chair of The National Foster Parent Association Council of State Affiliates and President of Oregon Foster Parent Association
Resources for Foster Parenting
Many resources are available for those considering becoming a foster parent. Whether you're unsure where to start or looking for financial assistance, the following resources can steer you in the right direction.
- HUD Foster Youth to Independence (FYI) Initiative: A housing assistance program designed for foster children who age out of the system and need somewhere to live.
- National Council for Adoption: Some foster families may decide to adopt their foster children. This NCFA page provides information on how to get started on the process of adopting from foster care. NCFA also provides resources, education and advocacy for individuals and organizations to help children grow and thrive for more than 40 years.
- National Foster Parent Association: A nonprofit dedicated to providing foster families with opportunities for advocacy, networking and education.
- Parent Training and Information Centers: This link provides a list of the more than 100 parent centers located throughout the United States. It also offers additional resources and assistance for foster parents who are fostering children with disabilities.
About Sara East
- Center for Health Care Strategies. "Medicaid and Children in Foster Care." Accessed April 12, 2021.
- Children’s Rights. "Foster Care." Accessed April 12, 2021.
- Internal Revenue Service. "Tests for a Qualifying Child." Accessed April 22, 2021.
- U.S. Department of Agriculture. "Official USDA Food Plans: Cost of Food at Home at Four Levels, U.S. Average, March 2020." Accessed April 12, 2021.
- U.S. Department of Agriculture. "The Cost of Raising a Child." Accessed April 12, 2021.
- U.S. Department of Health and Human Services and Administration for Children and Families. "Foster Care." Accessed April 22, 2021.
- U.S. Department of Housing and Urban Development. "Family Unification Program." Accessed April 22, 2021.
- 1040.com. "Tax Guide: Foster Parents." Accessed April 22, 2021.