There’s no fixed or absolute cost of a child. In fact, the more you earn the more you tend to spend on things like private education, brand name clothes, expensive holidays, etc.
However, you can usually expect the first child to be the most expensive, because you won’t be saving on things like hand-me-downs, shared bedrooms and furniture. But this can also work the other way, as having a large number of children means upgrading to a larger house and buying bigger cars.
And the older the children get the more they cost! The average three-year-old will set you back $5,000 whereas a 14-year-old costs closer to $8,000 p.a. Meanwhile the average cost of raising two children (ages 6 and 14) with both parents working fulltime ranges from $18,000 to $21,000 p.a. And you need to save for the kids’ education.
A federal government study in 2009 estimated that it costs an average of $384,543 to raise a child to 18. However, according to social researcher Mark McCrindle, adding the cost of pregnancy, private tutoring, sports and dance classes, and electronics for kids, and considering the average child now stays at home until 24, the real cost to the Australian parent of raising a child is $1,028,093.
Surprisingly, Sydney is one of the cheapest cities in which to raise a child, whereas Melbourne and Canberra are the most expensive. According to a study by the University of Queensland, the weekly cost of raising a 10-year-old for two working parents in Sydney is $204.20, Melbourne $310.20, Canberra $260.20, Brisbane $306.70, Perth $302.80 and Adelaide $256.
Check out our baby budget planner for more help with all this.
The Baby Bonus
The Baby Bonus is basically a payment by the Commonwealth Government to anyone who has a baby or gains legal responsibility (e.g. through adoption) for a child aged under five. It’s paid per eligible child in 13 fortnightly instalments. The first instalment is $879.77 followed by 12 fortnightly instalments of around $380. The higher first instalment is to help you with the upfront baby costs.
The Child Care Rebate
As long as your child care centre meets certain standards and requirements set by Australian Government, and you’re using it so you can work, train or study, the government will pick up 50% of the fee up to $7500 per child, per year.
Paid Parental Leave scheme
The Paid Parental Leave scheme is designed to help parents spend more time at home with a new baby, and help employers keep skilled and valuable staff. From the start of 2011 eligible parents can claim 18 weeks’ leave at the minimum weekly wage of $570.
To be eligible you must:
- be primary carer
- an Australian resident
- have met the Paid Parental Leave scheme work test
- have had an individual adjusted taxable income of $150,000 or less in the previous financial year
- be on leave or not working after the birth.
Education
Have you worked out a budget for the kids’ education? And it’s not just secondary school – there’s the possibility of university. There are various savings and investment options available but the choice will usually be determined by how much time you have before they commence.
If you open a savings account when they turn two and put $40 a week into it, you’ll have about $20,000 plus compound interest by the time they start Year 7. And don’t open the account in the child’s name; it’s more tax effective to open it in the name of the parent with the lowest income. You can also put money in a managed fund or a trust. You can start with as little as $1000 (one year putting away $20 a week) and the return is generally better than the interest on a deposit account.
Leave a comment about your savings plan for your child’s education.
