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Cost of Children | Child Education | Education Costs

Cost of Children

Can you put a value on your child?

No one can put a price on children -- ask any parent and they will tell you they couldn’t possibly measure the love and joy with a dollar sign and nor would they want to. But what they might say is that raising children does take some careful financial planning. So, having an idea of the likely expenditure of a family could be of immense help.

Even economists have great difficulty in determining the cost of children. One such method used, by Professor Ann Harding and Richard Percival, is that of analysing data from The National Centre for Social and Economic Modelling (NATSEM) at the University of Canberra. With this data they take into account families of varying income, size and standard of living to calculate how much a family is spending on their children.

There are some very interesting findings.

The actual cost of raising children
Would you think raising 2 children is cheaper than 4? Or what age group costs the family the most, babies, 8 year olds or 18 year olds? And how about really looking at all the costs, are there some you might not have thought of?

So whether you already have a family -- or are thinking of starting one -- getting a clear idea of what is ahead of you is worthwhile. No, it’s not meant to put you off -- but it will show you that some simple planning can let you get on with the joys of parenting rather than being bogged down with money issues.

Percival and Harding’s research suggests that the cost of a single child is between 11-17% of the family income and this rises up to 33% for 2 children and to a staggering 48% for 3 children.

Transferring this into dollar figures means that each child you have does cost less however the sum total can mean planning for an average expense of $110 a week for the first child (in a middle income family).

Impact of children on the household budget
Economist Rebecca Valenzuela of Monash University says the average couple needs an extra 26% in the household budget to maintain their standard of living for their first baby. While she said the additional costs of having a second or third child are less pronounced, they do not necessarily fall as the child grows into a teenager.

The cost of children varies between researchers but one aspect that is fairly consistent is the evidence alluding to the fact that teenagers cost a considerable amount more than their younger siblings.

What about the cost of education?
According to Percival and Harding, a middle income family can expect to spend around $86 a week for the new edition to their family, $99 a week for their primary school child and a whopping $178 for their teenager (who is quite literally eating them out of house and home).

The worrying factor with this type of calculation is that school fees, uniforms, childcare and medical expenses are often not included.

The estimated distribution of costs taken from Lovering and Lee, Cost of Children Update (1989) survey at the Australian Institute of Family Studies, states you could be spending $190 a week for your average 10 year old, with $31 spent on food, $40 spent on transport, $41 towards recreation, $50 going towards household goods and utilities and $18 spent on clothes, leaving $10 for you to spend on the other. These are really bare essential figures so any additional expenses such as holidays, new furnishings and private education (or even a music lesson) appear to be luxuries.

Take this information into account for the duration of your child living at home and you could be looking at an easy quarter of a million dollars for one child - and this excludes education costs!

Calculating the exact cost of children is really a very complex issue but having a ballpark figure might make planning for your child’s future something you can do with confidence and peace of mind, knowing you are prepared for just about anything.

Carly Schwerdt
B.Vis Comm (Hon), B.Ed (Specialisation)

Other links within this site that might be helpful:

• Child education
• Education costs
• Education and careers
• What jobs pay
• Education savings

References
Australian Institute of Family Studies –Commonwealth of Australia: February 2000, 'A Guide To Calculating The Costs Of Children' Family Matters
http://www.aifs.org.au/institute/pubs/costs.html

Harding, A. and Percival, R. (1999), The private costs of children in
1993-1994, Family Matters no.54 Spring/Summer

Saunders, P. (1999), Budget standards and the costs of children, Family Matters no.53 Winter

Valenzuela, R. (1999), Costs of children in Australian households, Family Matters no.53 Winter

The material in this section is intended to provide general information on particular subjects and should not be considered a substitute for professional advice. For more detailed information, you should talk to an independent expert in the relevant area concerned.