2 hours ago
2
A newborn may be little larger than a shoebox, but the cost of caring for that child to adulthood is akin to a home mortgage.
From boxes of nappies to the challenges of feeding a teenager with seemingly hollow legs, the cost of raising children is a daily, weekly, yearly reality for parents.
While the love and affection of a child is almost impossible for a parent to quantify, two different Australian measures of child-rearing go a long way to putting a price tag on all the broken toys, out-grown clothes and school excursions.
And they come to similar conclusions; each child is like a small home loan – parents can expect two children to be the equivalent of repayments on a $300,000 mortgage.
While both measures have limitations – especially around the choices people make about their children, from schooling (private or public) to extracurricular events (none to a jam-packed week with horse-riding, piano and language lessons), health decisions (braces or no braces) to the type of cereal they munch at breakfast – they do shed insight on the sheer financial commitment that comes with parenthood.
The cost of parenthood
The Centre for Social Policy Research, based at the Australian National University, measures how much a child costs relative to the standard of living enjoyed by a childless couple with a disposable income of $100,000.
If that childless couple has a baby, then they need an extra $13,000 a year to maintain the standard of living that $100,000 buys. For two children they need an extra $23,000, while a third child would require $33,000.
These are estimates for the first 17 years of a child’s life. It does not include children who cannot afford to leave home when they hit adulthood or the ongoing bank of mum and dad tapped by children in their 20s or 30s.
As most experienced parents know, the cost of a child varies as they age.
A single child aged under five, or one aged 13 to 17, costs between $14,000 and $15,000 a year to maintain the living standard of that hypothetical couple.
Three children under five require $30,000. Three kids between 13 and 17 need $33,000.
However, children aged between six and 12 are a “bargain”. Between $10,000 for one and $21,000 for three, the expenses for these primary school years fall.
Various factors determine these downward steps in cost. Childcare costs ease for most. The food costs of children between six and 12 are relatively modest compared with the growling stomachs of teens that need to be sated.
One of the report’s authors, Ben Phillips, says most costs associated with raising a child have climbed in line with inflation over the years, rather than a historic explosion in expenses.
“There’s not been a real increase in the proportion of costs of raising children. But people’s choices may have changed,” he says.
The biggest cost variable is actually the family home. Phillips says it’s unarguable that housing costs have risen, but most couples thinking of a child factor that into their considerations before taking the parental plunge.
Phillips notes that children also cost parents something even more valuable – time.
That, however, may deliver a financial saving.
“When you’re a couple without kids, you might be going out for dinner more, going to nightclubs, taking overseas trips. Once you have a young family, you lose the time to do those sorts of things, so you save some money,” he says.
“Your world becomes a bit smaller.”
Weekly bill breakdown
A separate way to measure the cost of children is to track how much is spent on kids, from haircuts to buying breakfast cereal.
The University of NSW’s Social Policy Research Centre drills down into such everyday costs, collecting prices from Target, Kmart, JB Hi-Fi and the like, then comparing average expenses across couples without a child, those with one and those with two.
Its most recent report, covering expenses up to 2024, estimates the total weekly budget of a single-income couple without children at $1778. If you strip out discretionary costs, including a bought lunch once a week and low-cost private health insurance, it falls to between $1117 for renters and $1437 for those in the process of buying a home.
But once you add a child, the cost rises.
For a couple with one income and one child, weekly costs jump $208 a week to almost $1986. The cost facing a double-income family with one bub are higher, at $2035 a week, while for an unemployed couple, the cost is lower at $1650.
Add a second child, and guess what? Costs grow again. The research centre puts the weekly spend at $2260 for a single-earner family, $2331 for a dual-income family and $1902 for the unemployed family.
The centre breaks down its estimates into categories.
The grocery bill, for instance, increases by about 22 per cent, or $41 a week, with the addition of a single child. The second child pushes it up another $58.
The children in this analysis are assumed to be an eight-year-old girl and an 11-year-old boy. It’s fair to assume if one of the children was a 16-year-old boy, the grocery bill might be slightly larger.
Transport costs rise about 18 per cent, health costs increase between 50 and 100 per cent, while clothing expenses go up by a similar amount.
Of course, the single biggest change is education. A dual-income family is assumed not to have education costs. Add on children, and that reaches $48 a week, while a second child takes the weekly bill to $104.
The lifetime cost of raising a child
Both methods provide roughly similar results over the long term.
UNSW’s numbers suggest that over 17 years, one child for a single-income family will cost between $166,000 and $184,000. That’s before inflation is accounted for. Dual-income families will spend more on their single child, between $183,000 and $201,000.
With two children, the costs climb. A single-income family faces shelling out between $299,000 and $426,000. A dual-income family gets stung by between $335,000 and $462,000.
ANU’s analysis shows a couple should expect to spend about $221,000 on a child (to the age of 17), about $400,000 for two, and more than $560,000 for three.
Under both measures, a dual-income family faces the equivalent of the repayments on a $300,000 mortgage if they have two kids.
The situation is different for single-parent families or where parents are unemployed. They are almost always starting with less income than couples, even if one of those people is bringing in an income.
Single-parent families spend less per child than a couple with children and suffer higher levels of financial stress.
Unsurprisingly, financial stress among couples without children is much lower than for those with.
But do these estimates go far enough?
There are issues with both measures.
The UNSW system assumes children are healthy and require little more than a clean and scale from the dentist every six months. Pity the parents with a couple of children who require braces.
Something as simple as milk or baby formula can deliver a big financial hit.
A mother who can breastfeed is effectively feeding a baby for free. But an 800-gram container of baby formula, which makes about five litres of fluid, costs at least $20.
In just that one case, be it a family’s choice, a dietary requirement or a health issue for the mother, the costs of a child can swing wildly.
Both studies also struggle with parental choices. Education is the best example. While economically the decision to send a child to a private school may be described as discretionary, many parents would argue it’s a necessity.
Add in such extras as tutoring fees, extracurricular activities (like a pair of netball shoes) or an upgrade to a laptop required for school and that suggests official measures of costs are shy of what is experienced by parents. In some cases, this can be mitigated by parents choosing to go without.
Most Australian homebuyers would kill for a $300,000 mortgage.
But when they disrupt your sleep, leave clothes lying around and raid the fridge every afternoon before complaining about tonight’s dinner, it’s little wonder some people baulk at committing to having a child.
