New mums and dads probably think if they can get through the first couple of years, the financial burden will get easier.
After all, there’s the baby furniture, car seats, prams and medical expenses… the list goes on at the start of a child’s life.
But a new study shows that while the first few years are a stretch on the household budget, the teenage years are even more expensive, with costs peaking when a child is 17.
The Suncorp Bank Cost of Kids Report found that teenagers cost $237 a week, or 20 percent of the average Aussie wage, or a jaw-dropping $12,000 a year to support. That’s a new car, a dream holiday or roughly 15 iPhones, items that are actually part of the problem.
“While the fundamental costs for raising children remain the same, new expenses such as mobile communication, broadband, technology used for education and increased entertainment as children become teenagers are costing parents a small fortune,” Suncorp Bank executive manager Craig Fenwick said in a media release.
The cost of raising a teenager begins to skyrocket for those parents who opt for a private education over the public system, he said.
“On average, the weekly cost of educating a child in the public system is blown out of the water from $18 to $393 if they choose to send their child to a private secondary school,” he said.
“That choice alone is worth the cost of a new car every year, for every child.”
As such, Michelle Hutchison, RateCity spokeswoman and mother of one, said it’s important to have a savings plan built into the family budget for those unexpected costs associated with raising kids.
“The obvious option is a high interest savings account, which can be used later in your child’s life to encourage financial literacy. Another popular choice is the term deposit, because the savings can’t be whittled away on other household expenses that crop up along the way,” she said.
“The less obvious savings option, your home loan, is worth considering too. Whether you have a redraw facility or an offset account, making extra repayments into your mortgage can be more profitable in the long run, and it’s tax-free!”
For an average home loan of $300,000, adding just $50 per week will save a borrower $96,500 and shave more than seven years off a 30 year term – assuming you don’t touch the money, of course. To work out how much better off you could be by saving in your home loan, use a home loan calculator such as the one at RateCity.
Or, just don’t have kids and buy a new car every year!