How much does it cost to raise a child?

The most recent thorough modelling on the cost of raising kids in Australia, released by AMP and The University of Canberra, found the cost of raising two kids in Australia for a family on a middle income will set you back $812,000. For a higher income family, the cost rises to $1.09 million from the time the kids are born to when they leave home, while a lower income family can get away with spending $474,000.

Why the differences in costs of raising children?

The differences arise from assumptions that those with more money are more likely to send their children to private schools and have a higher standard of living overall. The top private schools can cost more than $30,000 each year. And that’s just for tuition.

The study found the cost of raising two kids has increased 50 per cent from when the same research was conducted in 2007. In contrast, household incomes have only grown 25 per cent in the same period.

How much do I budget a week?

The average family with two kids will spend $458 a week on their children. That may seem like a lot of money (after all, how much do kids really eat) but it takes into account factors such as housing — an extra bedroom in a dwelling can cost up to $200,000, or if you’re renting $300 a week.

Send us a question

post3

Making a will

This is not something that automatically comes to mind. But if you have a child, a will is essential to designate guardians. We recommend you engage a lawyer to draft a will in which you name an executor who would pay your debts and distribute your assets and a guardian for your child(ren).

Saving for your child’s education

Raising children and paying for their education can be expensive so it helps to have good planning and money skills. Recent studies (AMP.NATSEM Income and Wealth Report 2013) have shown that the cost of educating a child to tertiary education level can be up over $190,000.

Insurance

Once you become a parent, having insurance is absolutely critical. After all – if something were to happen to you or your partner, you have to make sure your dependents will be provided for. You need to consider how much money would be required if one of you were no longer around, no longer earning an income or no longer able to look after yourself or your children. This can be affordable and more importantly provide you with the peace of mind to enjoy your new baby.