Your life changes when you become a parent. You become profound in many skills which you may not have ever considered to be skills before.
Your time management skills go through the roof. You become a part time night club janitor, cleaning up obscene amounts of bodily fluids at all hours of the day. You become a psychologist as your relationship with your partner faces new challenges and priorities. And your once-neat home becomes a minefield of toys, sporting equipment and unwashed, haphazardly strewn clothing.
You’re forced to reacquaint yourself with things you thought you’d left far behind – like algebra homework, finger painting, band practice and science projects. As a parent, you soon realise that you have less spare time than ever before – and a lot less spare cash, too.
For the 'Raising a Family Checklist' see the bottom of the page.
The dollar figures from the latest NATSEM (University of Canberra) Income and Wealth Report show that a middle-class Australian family can incur a cost of $812,000 for raising two children from birth to adulthood. What’s scary about this number is how much it has gone up in the previous decade (the same figure in 2002 was $448,000).
And the news doesn’t get much better any time soon. During the same time, the costs of having a child have gone up by 50% since while our household incomes have only risen by about 25%. The reality of this research means that the cost of raising children is growing at double the rate of our average incomes. If the costs of parenthood have nearly doubled in just one decade, what will the dollar amounts look like in 10 more years, or 20?
While the cost of raising a child continues to rise, it is a very real thing to say that, for most Australians, having a child is the most economic important decision of their life.
For some couples, having two incomes isn’t a choice – it’s a monetary necessity. With both parents working, child care becomes a major expense. Some parents even call it ‘our second mortgage’.Childcare in Australia isn’t cheap. A recent report showed that costs have climbed 150% in just the past decade, with the result that parents who return to full-time employment are losing up to 60% of their gross income to childcare costs after skyrocketing childcare fees, higher income tax rates and loss of benefits are factored into the equation.
With over 600,000 Australian families paying up to $170 a day (per child) for ‘long day’ childcare , it’s no wonder that telecommuting and work-from-home options are becoming increasingly popular.
According to the Australian Scholarships Group (ASG), a child born in 2014 will cost around $63,000 to educate (from Prep to Year 12) in a public school in Metropolitan Australia. To educate the same child in a private school, the cost jumps to around $459,000.
There is a common perception in Australia that sending your child to a private school will result in a much improved educational outcome. Several studies conducted in the past few years contradict this.
The costs are a bit lower for regional Australia – $51, 656 for public schools and $323,006 for private schools. These figures include tuition and predicted expenses for transport, clothing and extracurricular activities.
Where you live in Australia also affects your child’s education costs, with Sydney and Melbourne being pricier regardless of whether your child attends a government school or a private school. Hobart and Adelaide currently boast the most affordable public education in the country (for capital cities) at around $50,000 per child.There is a common perception in Australia that sending your child to a private school will result in a much improved educational outcome. Several studies conducted in the past few years contradict this assertion, however.
The latest, conducted by the National Institute for Labour Studies, found that the main determinant for higher raw test scores in private schools was the higher socio-economic status of the students who attend those schools, and that “school quality does not depend directly on the sector of the school”.
A large number of similar studies have come to the same conclusion – for example, the OECD’s Programme for International Student Assessment found no significant difference in public, Catholic and private school results after taking socio-economic background into consideration.
What’s also interesting is that a study published in the Economics of Education Review found that Australia’s decline in academic performance in international tests over the past decade was primarily due to poorer results in private schools – not public schools.
The main costs associated with raising children are food and transport – as anyone who has tried to feed three teenagers and drive them all around to soccer/ballet/chess practice can attest. But there are a lot of other expenses that tend to creep up on us without warning when we become parents.
The more children you have, the bigger your car and house will need to be to accommodate them. If a child is sick and has to stay home from school, you have to take time off from work to look after them – which costs you money. Each child will have their own sports, hobbies and activities to fund. And while you always wear the same sized shoes and clothing, children have this inconvenient habit of growing out of theirs.
When you have a new baby it seems like there are so many new things to buy: prams, cots, bouncers, baby carriers, soft toys, clothing, formula, inoculations, nappies, baby capsules, etc. But the serious expenses of raising children don’t really kick in until they get a bit older – when education, recreation and transport costs start to take centre stage in a big way.
Of course, teenagers can sometimes offset these costs by taking on a part-time job, but there’s no getting around the fact that older children eat more, enjoy a wider range of social, educational and sporting activities and cost their parents more money than the younger ones.
And don’t think the costs of raising your offspring necessarily end when they turn 18.
According to recent research, about a quarter of Australians aged between 20 and 34 continue to live in their parents’ home for a variety of reasons: the high cost of tertiary studies, the frightening costs of buying a new home or the difficulty in finding suitable employment, to name a few.
According to recent research, about a quarter of Australians aged between 20 and 34 continue to live in their parents’ home for a variety of reasons: the high cost of tertiary studies, the frightening costs of buying a new home or the difficulty in finding suitable employment, to name a few. There are even special names for these ‘late-leavers’: S.L.O.P.s (Singles Living Off Parents) or K.I.P.P.E.R.S. (Kids In Parents’ Pockets Eroding Retirement Savings).
To help struggling older children with deposits for a first home or fees for higher education, some parents may even opt to delay retirement, sacrificing their own financial security to make life easier for their kids. In a tightening economy, it can be hard to find the right balance.
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1. https://www.amp.com.au/wps/amp/au/FileProxy?vigurl=/vgn-ext-templating/fileMetadataInterface?ids=1c047918d9ece310VgnVCM1000004320220aRCRD 2. http://www.goodschools.com.au/news/survey-reveals-the-cost-of-an-australian-school-education 3. http://www.theage.com.au/national/education/fourth-study-this-year-confirms-private-schools-no-better-than-public-20141109-11jlgn.html 4. http://www.smh.com.au/national/parents-take-hip-pocket-hit-as-childcare-costs-skyrocket-20140622-zshr7.html 5. http://www.smh.com.au/money/planning/boomers-go-bust-over-kids-20110910-1k2rs.html