Financial Impacts of Being a Foster Parent

Licensed foster parents help young people during a scary and chaotic time in their lives. Many foster families find it extremely rewarding to care for foster children. Foster home care provides a safe harbor for foster children until they can safely return home to their birth parents.

Close to 400,000 foster kids are in America's child welfare system. Many have experienced child abuse or neglect. Others have lost primary caregivers due to death, incarceration, or abandonment.

In cases like these, foster children cannot return to their birth families. They may stay in the foster system until they find adoptive families or age out of foster care. The home environment, even for a short-term stay, dramatically improves outcomes for children who have suffered trauma. When kids have even one dependable adult to show love and personal care, they are more likely to have healthy, happy, self-sufficient lives.

Good parenting relationships make a lasting impact on your foster child and future generations. Raising, nurturing, and supporting a biological child has financial implications. So does raising a foster or adopted child. When you foster a child, you are making one of the most important investments of your life.

Practically speaking, it's important to understand what it costs to foster children. This guide details the financial implications of fostering. Understand basic impacts on children and families. Then, contact a child-placing agency in your state for additional information.

Foster Parent Necessities

Every child needs necessities like food, transportation, education, and health care. Let's break it down, then take a deeper dive into specific fostering financial responsibilities and assistance.

Food

You may have heard the expression about growing teens eating parents "out of house and home." Younger kids may not need as many calories as an adolescents, but all growing kids need regular, nutritious foods. Healthy food provides children the nutrition and energy they need for active lifestyles and academic achievement.

Various calculators help prospective foster and adoptive parents determine cost of living factors for families across the United States. The Economic Policy Institute created an interactive map. Users can click on any geographic area in the country and see estimated costs, including food expenses. In addition to home meals, the USDA reminds parents to budget for treats, restaurants, and other foods away from home.

Many resources give tips and tricks to eat healthy on a budget. Experts advise parents to stick to the outside aisles where the grocery store stocks fresh, whole foods. Clipping coupons and buying on sale also go a long way to reducing weekly grocery bills. Weekly savings may not seem significant; however, savings over a longer period of time become clear.

Food Assistance Programs

The USDA's Food and Nutrition Service (FNS) runs SNAP, the country's Supplemental Nutrition Assistance Plan. Among the requirements to foster is maintaining financial stability. You may not be eligible to foster if you rely on food stamps or another food assistance program.

Your state may have exceptions if you have special emergency care circumstances, like fostering a family member. Your child-placing agency can help you navigate short or long-term care resources for your unique situation.

Transportation

Foster parents must be able to get their foster children to school, medical appointments, and other important events. Foster parents need a dependable way to transport their kids, including for unexpected emergencies like going to the ER.

The foster approval process requires families to have a reliable vehicle in many places. Alternative transportation plans may be acceptable depending on your location and unique situation. Your agency's Home Study professional will review your access to transportation before placing a foster child in your home.

School and Extracurricular Activities

Supporting your foster child's education is among the top priorities of every foster parent. Parents in Virginia, California, and everywhere else must ensure their foster kids attend school and hang out with friends. Some states subsidize education costs under certain circumstances.

Many kids enjoy extracurricular activities in their schools or communities. Foster parents must support the interests of their children and help them expand their involvement. Foster parents often support sports programs and other civic youth organizations, like Boy Scouts or Girl Scouts. Depending on your child's interests, many free or low-cost programs are available.

Active, physical playtime is also important for growing kids. Foster parents often plan low-cost trips and outings with their kids, visiting state parks, museums, professional sports games, and day trips. These activities help kids explore their world, gain confidence, and have well-rounded development. Experienced foster parents can recommend lots of ways to have budget-friendly fun with your foster kids.

Car Payments

Car expenses are among a family's most significant costs. A high car payment can burden even the most thrifty family. A close look at monthly car expenses is vital to ensuring your readiness as a foster parent.

Owning or leasing a car means purchase and gas payments. If you do not have a car, you will need to demonstrate a reliable transportation plan. If you own a reliable car, it makes sense to plan for an increase in gas and maintenance expenses over time.

Transportation Reimbursements

Some foster parents are eligible for transportation reimbursement through their state. Emergency transportation to a medical care center is often an eligible expense. Your child-placing agency will be able to review all regulations and requirements for your particular state.

Education

Foster parents must support the ongoing education of their children, including supporting school expenses. The upheaval of their home life, including moves within the foster system, forces many foster kids to change or miss school. As a result, many foster kids are catching up on schoolwork. High school is a critical time when workload increases and teens prepare to transition into adulthood.

Financial literacy is another essential life skill that foster parents teach their foster youth.

Public School

Most foster kids attend public school. Exceptions may be for special education or unique circumstances. These vary by state according to state requirements and resources.

Common costs for kids to attend public schools include:

• Textbooks and materials
• School supplies
• Bagged or at-school lunch
• Clothing and uniforms
• Personal hygiene necessities
• Healthcare costs of infectious illness
• Computer or other technology requirements
• Books and special materials
• Activity and event fees
• Concessions
• Field trips and fundraising
• Musical Instruments and art supplies

Allowance

Allowance is not the same kind of essential as food and school. However, earning an allowance empowers kids to contribute to the household through chores. It also gives foster kids some control and life experience, deciding what to save or buy. Parents also find allowance teaches kids basic finance and accounting principles.

Even experienced parents can have difficulty deciding how much allowance to give based on age and skills. Scholastic for Kids is among the resources that assemble handy allowance guides for parents, including parents with young kids.

Allowance is not necessary, but it lets foster parents teach and guide foster kids in their care. Within the four walls of their foster homes may be the only source of financial literacy many foster kids have.

Healthcare

Coverage for Foster Kids

Medical visits and healthcare insurance are significant financial considerations for families. Foster children in the custody of their state are eligible for Medicaid benefits til they turn 18 years old. Kids in foster care can get healthcare coverage until the age of 26 years through the Affordable Care Act (ACA). This applies to those who reach the age of 18 while still in foster care. 

Requirements for Foster Parents

Physical and mental health requirements exist for adults to become licensed foster parents. Foster parents need good health, energy, and time to care for children, as states require.

Foster care helps and supports parents who can give caring homes to foster kids in need. If you are managing a chronic physical condition or treatable mental health issue, exceptions are possible. Your child-placing agency will discuss special circumstances and guide you through any necessary action steps.

Proving the health of a foster parent has a financial implication in more than one way. Foster parents must provide medical histories and undergo a medical physical before getting their license. Medicaid offers reimbursements for foster parent health requirements. Additional fees may apply based on your healthcare provider or where you receive treatment.

Medications

Medicaid reimburses foster parents for prescription and over-the-counter costs of medicines for foster kids. Often, foster parents may receive full reimbursements. Either way, most find they can easily afford any out-of-pocket costs for medications for foster kids.

Monthly Foster Stipends

Adults considering foster care often ask if they will receive payment for fostering kids in their homes.

The answer is not black and white. The foster system does not pay people to take in foster children as a means of making a living.

However, many states offer monthly stipends, such as food and clothing, to offset the costs of caring for a foster child. Many allocate costs based on specific fostering factors, such as the child's age. There may also be funds or financial assistance if your foster child has special health or behavioral needs. Your child-placing agency can walk you through the stipend program or "maintenance payments" in your state.

Foster care stipends and benefits often include:

• Standard maintenance expenses
• Clothing
• Medicaid
• Enhanced maintenance expenses
• Contingency (for unforeseen expenses)
• Respite care

Standard Maintenance - Food and Clothing

Most foster parent work, though, still rely on a maintenance stipend to offset costs for their foster child's basic needs. These include specific expenses, such as food, clothing, and school supplies. Stipends may also cover elements of home mortgage or rent expenses. Depending on the state, stipends may also contribute to insurance or incidental expenses.

Basic monthly stipends account for your foster child's age. For example, the food and clothing needs of a five-year-old child in foster care differ from those of a 15-year-old.

Enhanced Maintenance Payments

Foster parents willing and prepared to care for children with special needs have access to additional support from their state. These payments cover medical equipment, special transportation needs, and education. They may also apply to medications not covered by Medicaid. Non-specific expenses that ease a foster parent and child's transition together could also fall under enhanced maintenance.

It's worth repeating that stipends, payments, and allowances aim to offset childcare expenses. They do not cover all costs of raising a child.

Daycare

When foster parents have full-time employment, daycare for young foster kids can be a significant expense. Over the past several years, daycare costs in the U.S. have dramatically increased. Some states allow maintenance payments to supplement these costs for foster children. Your child-placing agency can review details and eligibility based on state mandates and your unique work situation. 

Your agency partner can also point you to resources to explore public support, such as through programs like Head Start. They can also provide guidance if you need evening care as well as day care.

Foster Care Tax Credits

Foster parents are able to claim tax deductions based on the number of children they foster within the tax year. Tax credit caps and details are subject to change with the tax code. The maximum 2021 tax credit for foster parents was $4,000 for one foster child. Foster parents could get up to an $8,000 maximum credit for two or more children.

These Child and Dependent Care tax credits are in addition to the federal child tax credit. Besides these, multiple other government assistance stipends and other programs offer tax credits for foster parents. Your agency partner or accountant can explain taxes for foster parents or co-parents.

Payments and Benefits by State

The number and complexity of benefits differ by state and foster situations. The Child Welfare Information Gateway offers information on payments and benefits for foster care and adoption. Factors such as the state, the child's age, abilities, and caregiving details form the basis of this information.

Your child-placing agency will provide more detailed information based on your and your foster child's situation. In the meantime, this resource will give you a start in building a comprehensive picture of fostering costs.

Exceptions and Unfortunate Circumstances

It can be challenging for foster parents to meet the needs of a child who has experienced extreme trauma. It takes patient, loving people to open their homes to foster children and spend time in training to support them. 

Some states offer contingency money as compensation if a foster child damages a home by accident or on purpose. The program aims to reassure foster parents and safeguard against significant financial loss from property damage.

Foster families receive maintenance payments when a foster child is absent for less than 14 days. Many reasons may cause a foster child and parent to be away from each other for a short time. This includes a foster parent who needs temporary care for their child, also known as Respite Care. In rare cases, it is also for foster children who run away. 

Foster care programs give financial support to foster children after any trial period once there is a care agreement.

Unexpected Out-of-Pocket Fostering Costs

All parents can count on having unexpected out-of-pocket costs. These unforeseen costs range from treatment for minor bumps and bruises to replacing crayons or school supplies. Recreation fun also creates unexpected costs, like a spontaneous amusement park or festival trip.

Schools can easily add expenses for playground accidents or urgent supply needs. Most parents can recall a time they rushed out to buy a recorder for music class or poster board for a science project. 

Out-of-pocket costs are a fact of fostering life. The goal is that monthly maintenance payments relieve the burden of child-rearing costs for foster parents. 

Financial and Background Requirements

All licensed foster parents must prove financial stability and submit to a criminal background check. All adults and adult children living in the foster home must pass a background check. To become a foster parent, you must prove you have:

• Submitted all required paperwork to the child-placing agency 
• Sufficient and stable income
• No criminal traffic convictions, either misdemeanor or felony
• No history as a sex offender
• No assault or other domestic issue convictions or guilty pleas

Fostering requirements vary by state, but many that ensure child safety are standard throughout the United States.

Documentation and Associated Fees

Many required foster documents are available free of charge or for a minor acquisition fee by listing authorities. To become a foster parent, you must obtain your:

• Birth certificate
• Social Security cards or number
• Medical records
• Vaccination and immunization record
• Proof of citizenship
• Proof of pet registration and up-to-date vaccinations
• Marriage certificate or divorce papers (if applicable)
• Home mortgage or lease information
• Banking and income assets
• Other financial assets (such as property)

Post-Inspection Home Changes

Among the most important and detailed steps to becoming a foster parent is the Home Study process. A Home Study professional will ensure your home is safe for a foster child. Aspiring foster parents will have the opportunity to make the required modifications if the Home Study identifies safety hazards.

Safety hazards range from missing stairwell baby gates to unlocked medicine cabinets. Some fixes will be quick and easy. Home inspectors may identify more time-consuming or expensive safety issues, such as a fence to block pool access. Heating systems, smoke alarms, and carbon monoxide detectors must also be in working order.

Homes have unique features that will also be subject to inspection. Examples are wood stoves that may require fireproof barriers or other unique tripping or falling hazards.

Your inspector or advocate will inform you if monthly maintenance payments will reimburse certain home modifications.

Common Safety Hazards

Preparing for the home inspection portion of your Home Study will keep your approval process moving along. Check ahead for these common safety hazards that could have a financial impact. Foster homes must have:

• Childproof cabinet hardware
• Childproof furniture and corner hardware
• Childproof electrical outlet covers
• Working door and window locks
• Door and window screens
• No untreated lead paint
• No asbestos
• Smoke-free home
• Properly locked and out-of-reach firearms (or no firearms)
• Friendly pets who are up-to-date on vaccinations
• No sharp objects within reach
• Working heating and cooling systems
• Fenced lawn space or outdoor space safe for kids

Post-Inspection Financial Concerns

Children of different ages have different requirements. For example, a small child will need a car seat or booster seat. You can wait to purchase anytime before your child arrives, but you must prove your ability and plan to fulfill this requirement.

Keep track of the expenses you plan to offset through the state's monthly maintenance payments. They often spread thin at the beginning as you set up your home to welcome your first foster child.

Foster parents need to be prepared for interviews with everyone in their household, including young people. Social workers conduct these interviews to determine if the family is a good fit for each child and their unique needs.

On the surface, this will not have a financial impact. Family members in therapy or receiving medical treatment may need to show proof of therapy or a medical diagnosis. This could come with a fee. Foster parents might need to take time off work for interviews or to gather paperwork during business hours.

Costs for Court Hearings or Attorneys

Children in foster care are in the custody of the state in which they live. Therefore, the state will cover most legal fees related to their case. A local Department of Social Services pays court costs for foster child abuse and neglect cases involving child protection services.

Circumstances rarely arise that require foster parents to incur some of the costs. Examples of how this can happen include a disputed kinship claim by your foster child's family.

You can learn more about navigating the foster legal system.

Costs to Raise a Biological Child

Most people who become parents factor pros and cons into their decision. Having a child costs money, but most decide it's worth the joy of having a family and raising a good and independent human. From a purely financial perspective, by all accounts, raising a foster child costs less than raising a biological child.

The USDA estimated that raising a child in America costs around $250,000 from birth to 18 years. Tax credits and benefits help all parents, but foster care systems provide additional support and assistance for childcare costs.

Foster Parents Have Support

Financial considerations of raising a child can seem daunting. Learning about financial implications helps aspiring foster parents plan ahead. When foster parents know how the foster system works, managing their family's spending decisions is easier. 

Every agency partner wants parents to enter the foster community with arms and eyes wide open. When choosing a child-placing agency partner, ask about their involvement in financial planning for fostering. They will help you understand maintenance payments, reimbursements, and other allowances for foster parents in your state. Some go the extra mile to provide education and support as foster parents navigate financial questions.

Financial impact is one of many foster parenting considerations. Social workers recommend that you involve everyone in the household in the decision to foster. Frequently asked questions (FAQs) from other foster families can help you decide if foster parenting is right for you. More FAQs are available from foster parents on your state fostering information page.

Become a Foster Parent Today

The fostering journey brings intangible rewards and tangible costs.

Caring for children takes an immense personal and financial investment. Financial matters are important considerations. However, most foster parents find the cost pales in comparison to changing the life of a child in need. The choice is yours to make.

As you consider this detailed financial guidance, remember the true value of fostering extends beyond any monetary measure. Your dedication to nurturing a foster child is the foundation for a brighter future.

Take the next step in this rewarding foster parent journey today. If your heart is open to this admirable path, contact your local child-placing agency.