You often hear about how expensive it is to raise children, but have you ever given much thought to those costs? From furnishing and decorating your newborn’s room, to stocking up on nappies and formulas, it often seems like there is an endless amount of things to buy when you first have a child. While they bring tremendous happiness to our lives, the cost of raising a child undeniably takes its toll on your wallet.
Of course, how much you’ll need to budget for your children’s welfare depends on a few different things, including your own standard of living and your income.
However, a 2018 study by the Australian Institute of Family Studies looked at the weekly cost of raising a six-year-old and 10-year-old. It found unemployed families spent around $140 per week, per child, while low income families were out of pocket $170 per week, per child. Expenses included the minimum necessary for healthy living — so think food, clothing, school and household expenses.
This research follows a 2013 study by the University of Canberra. The NATSEM report found middle-income families spent $812,000 on raising two children until they left home. For high-income families, that figure was $1.1 million.
Sadly, these studies underestimate the true costs of raising a child for many Australian families today. The rising living costs in recent years also needs consideration.
Yet, feeding and clothing our children, as well providing them with a roof over their heads, are no longer the primary costs today’s parents need to consider. While these studies highlight traditional costs associated with raising a child, there are various other expenses playing a big role in today’s society.
Keeping your child connected
One of the major expenses is your child’s social life and their need to be connected. This is partly a consequence of social pressure; as parents, we want the best for our children. Moreover, we would never want them to feel out of place or vulnerable. These days, denying our children a phone or a games console can damage their social life.
Today, friendships are formed and solidified by technology. Children need their mobile to stay in contact with their friends, communicating via social media. What’s more, game consoles provide children with the ability to socialise without leaving their bedroom. They speak to one another on their headsets, bonding via a virtual reality.
But all these things cost money. In fact, some reports suggest parents are paying upwards of $110 per month per child for communications, connectivity and technology.
While it seems like a world away from the days of meeting your friends at the park, this is how many children socialise. Technology is critical in establishing and maintaining our children’s friendship groups. It’s understandable then that parents feel pressure to buy their children the latest games and phones.
Getting your child from here to there
Another cost that ranks high when it comes to raising your kids is transport. Transport becomes a major cost contributor during the primary school ages. Running the kids to after-school piano lessons, karate, and Saturday sports such as soccer, netball, tennis and football can account for a sizeable portion of the weekly fuel budget. Not to mention all the necessary gear.
In late-2021, Suncorp Bank revealed the costs of raising a child in Australia in its Cost of Kids report. It found that parents are now spending $232 per month per child on transport. While the Australian Automobile Association’s Transport Affordability Index revealed the average Aussie family spends $354 per week on transportation (which includes car loan repayments, tolls, fuel, public transport, insurance, roadside assistance and servicing).
All-in-all, you could be looking at between $100,225 and $600,000 in costs getting your children from here to there from the time they are born until they move out of home. As any parent will tell you – particularly as your children get older – your role can often more closely resemble a chauffeur, chaperoning your child around to their various social events.
Cost of birthdays
If you thought baby showers were draining your wallet, just wait until those babies grow up a bit. According to the 2018 Real Insurance’s Family Values survey, the average Australian spends around $270 on their child’s birthday party and $185 on their child’s present.
Kids’ birthday parties have a tendency to make their presence felt on your child’s social calendar. At certain times of the year you might even feel like you’re taking the kids to a birthday a week. How much to spend on a child’s birthday is a common dilemma for parents. You need to find the balance between not breaking your budget and not looking cheap to your child’s friends.
While the $100-plus might seem reasonable for your own child, no one expects you to invest the same amount in your child’s friends. In fact, most parents agree that between $20 to $30 per child is more than reasonable for a child’s birthday gift.
While that amount seems manageable ‘now and then’, over the year it adds up, especially when you consider that the average Aussie kid is invited to around eight birthday parties a year.
Let me entertain you
By the time your kid reaches their tween and teen years, the costs of food, education, socialising, technology and clothes really start to take off.
The Cost of Kids report suggests parents are spending up to $815 per month per child on things like clothing, extracurricular activities, entertainment, leisure and social activities and food.
While a kid’s social life sounds fun, the costs associated with it can be eye-watering for some parents. The potential costs of having children can be useful for families wanting to put more appropriate safety nets in place. Those safety nets include having a budget as well as longer-term financial plans and even estate plans. It means that when expenses come up, you’re better prepared and not caught short.
This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not a financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.
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