The cost of a child

Santa brought my 6 year old niece an iPad 2. It's no wonder the costs of raising a child are now estimated to be over $500,000.

Santa brought my 6 year old niece an iPad 2. Seriously. If she's young enough to believe in Santa, she's too young for an i-anything, but all the other kids have one.

Her brother begins high school this year. The fees alone could bring tears to your eyes but it's then there's the extra $8,000 required to take the compulsory Mandarin language lessons. Why? Because their field trip is to China! To think we went to the water treatment plant for our year 8 field trip…

The cost of raising children is skyrocketing. Granted my nephew will be at a well reputed private school, but even a "modest" childhood (birth to 18) is now estimated to realistically cost $400 000 to $600 000. 

Official government estimates are indexed to income. Based on the current average weekly wage of $1,322.60* and one parent, working full time, the annual costs for a child from 1 to 12 years old are estimated to be $10,379 . This increases to $15,064, for 13 to 18 year olds. Back of the envelope numbers put the official cost of raising a child at $215,148, which being polite seems to be a number that is a tad underwhelming.
  
Social Researcher Mark McCrindle believes the government figures to be woefully out of date. Working to realistic consumption trends he has estimated the cost of raising one child comes to $557,013. And the average family, of 2.7 children, at $1,000,028.93. One child being proportionally more expensive.

So once you throw in toys, entertainment and the fact that the little treasures won't leave home at 18 (the average age to leave home is now 24, and it's getting older all the time)  there's over a million reasons to consider when thinking of the patter of tiny feet.

Some not so-fun facts

  • A 5 year old is worth roughly a kilo of gold! If you and your partner are on an average income, your child will cost you at least $50,000 before his 5th birthday (excluding childcare).
  • In one year, an 8 year old will cost you about the same as the average mortgage.
  • A 13 year old, over 12 months will cost more than a new brand new Falcon XR6 with all the extras.
  • You could trade in your 17 year old for a brand new Territory!

So let's break it down in order of pain.

Housing

Upgrading that hip little studio apartment with the "harbour glimpses" to 4.5 bedrooms of suburban bliss is extortionately expensive. According to Paul Henman of the University of Queensland, Sydneysiders have it easy compared to the urban dwellers of Brisbane, Canberra and Melbourne.

Then, there's the second upgrade otherwise known as the Moody Move, the sanity saving move or the extension that gives your children space to be irritable, irrational and artistically ironic, without you having to watch.

Loss of income and childcare costs

Swapping the boss for a full nappy may seem like a fair trade but losing that second income can be downright unfair. The loss isn't just the base salary of the primary carer; it's what that loss costs long term. Reducing mortgage repayments, reducing or losing super contributions, foregoing investment opportunities, using credit and sacrificing savings all cost a lot more than just a salary.

There is an alternative. To the average young family, childcare is a four letter word. With both parents working in professional jobs, the cost of keeping two young children in care five days a week will likely be upwards of $600. When factoring in commuting and working costs, it's no wonder housewifery or husbandry looks inviting.

Food, clothing, and other essentials

While a child or teen can be clothed on a modest budget, the unrelenting whining and dissension will severely increase your wine outlay. The older a child gets the greater their need for expensive clothes, electronic entertainment and let's not forget the ravenous, endless and quite inexplicable demand for food that is unique to teenaged boys.

Education

This is it, the one we fear, the one we anguish about, that we debate and discuss and argue about. Public or private? If private, low end or high end? The difference in annual fees between a suburban Catholic High School and a high end private school can be measured in units of "Luxury Cruise" it's so great. High end private school fees start at around the $20,000 mark, but the little extras like sports, extracurricular activities, events and socials, compulsory contributions and class excursions to the Orient can more than double the fees on paper.

And that's just for high school.

Want to give your babies the best start in life? In a bid to get them out of the nest before they're 40, more couples are opting to pay upfront for their child's university education too. Sparing your child a $60,000 university debt might be the best way to get them started on the right financial foot (and getting them out of your house) but it's easy to see how our precious little gems are literally worth their weight in gold.
 
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* ABS data, August 2011.
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