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How much does it cost to raise a child?


Laine Gordon

By Laine Gordon

4 min read

Today's family trends tell an underlying truth about the financial factors this generations are taking into account before having their first child. Families are getting smaller and women are having children later in life. It's no coincidence then that money, credit card and mortgage debts, have a major impact on these life events and is a major concern when couples are considering having children.

There is not much you can predict and prepare for when having a baby but you can alleviate some stress by knowing exactly how much it will affect your finances and budget ahead of time for the changes.

How much does a child cost to raise?

In 2003 it cost close to $450,000 for an average-income household to raise two children from birth to age 20, according to a report from the National Centre for Social and Economic Modelling  (NATSEM) .

The report on the costs of children in Australia today focused on data from households earning a combined total income of $68,848 per annum. The data indicated it cost an average of about $224,000 per child or $11,200 a year.

Since 2003 we’ve seen a lot of economic changes, so how much does it cost today?

About $12,231 a year or $244,630 for 20 years, according to calculations based on the Child Support Agency “Costs of children 2008” data for the same household income used in the NATSEM report.

That means over five years there had been a 9.2 per cent increase, totalling an additional $20,630 to raise one child til they’re 20.

But before you start blaming the kids and thinking the phrase “I want” has caused the change it’s worth turning to the economy. Inflation seems to play a bigger part in the increase than the children do.

Between March 2003 and March 2008 the Consumer Price Index has gone from 141.3 to 162.2. Although an increase of 20.9 points may not seem like much it can significantly impact on the cost of living.

A report from the Australian Bureau of Statistics shows some of the highest price increases this year are for clothing, housing and household contents, health, and transport which all contribute to family costs.

Since the last quarter’s report children’s clothing alone has risen 3.8 per cent, making it that little bit more expensive for the wear and tear life children’s clothes often have.

The other categories show a similar trend, suggesting even a little increase in the CPI can make all the difference.

However, before you get the wrong idea there is good news for people thinking about having children.

Food costs have dropped 10 basis points from the last quarter’s figures and this change will make a positive difference in the overall costs that contribute to raising a child.

More significant than that is that the ABS report shows the net price of child care has fallen 28.7 per cent following last year’s inclusion of child care rebates and benefits on top of the usual CPI data.

So while $244,630 might seem like a lot of money to fork out, now that you know what’s involved you may be able to save on costs.

One of the most important ways to save is by keeping track of where the money is going and figuring out how to cut costs without anyone missing out. Consolidating your child’s expenditure into one credit card can also help you to save, and

find out if you are eligible for the Child Care Tax Rebate and other benefits.

Plus, with an easier financial situation you’ll have even more time to spend with your loved ones.

Try RateCity's handy loan calculators to help you budget for the arrival of your little one.

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