The cost of raising kids


No one can deny that raising children is an expensive business. In fact, for the majority of couples, the spending starts even before the baby is born as nurseries are kitted out with cots, change tables, and décor, and cupboards are filled with nappies, bottles and clothes. And of course this is all just the beginning.  

A report released last year from AMP and the National Centre for Social and Economic Modelling revealed that the cost of raising children in Australia has significantly increased in the past five years. The average middle income family are now spending up to $458 a week to raise a child, a figure which reflects a 50% increase to that being spend in 2007.

NATSEM researcher, Ben Phillips, is quoted as saying that the cost of raising two children to the age of 21 is about $800,000, and with the continued increase of food, transport, childcare, and healthcare it’s not hard to see why.

So is this rise in costs forcing people to reevaluate whether or not they can afford to add to their families?

Well, It certainly appears so. 

*Charlotte Brooks, a Mum to one from Sydney, says that whilst they had factored in that raising a child would change their financial position as a couple, they didn’t fully appreciate or realise just how much disposable income they had, until it was no longer available. 

“I’m not quite sure where our money used to go,” says Brooks, “but I can now account for every incoming and outgoing dollar!”

“We are much more conscious of money now than before and tend to do things that are much cheaper. For example, we dine out in more casual venues than we would of before, and save the fine dining for the really special occasions when we can justify popping an extra $80 babysitting fee on top of a fancy dinner”

Whilst Brooks appreciates that she is currently in a fortunate enough position to be able to afford to travel overseas and give her daughter a nice lifestyle, she also acknowledges that this would very much change if she were to have a second child.


“Money has definitely factored highly in our decision not to have any more children,” says Brooks. “At the present time we are able to provide a comfortable lifestyle and a quality education for our Daughter, providing she is the only one that we are responsible for. Having another child would definitely mean that this would not be the case.”

But it’s not just in Australia that the increasing cost of raising children is causing couples to assess if their financial situations are conducive to the lifestyle that they would like for their children.

A recent article in the UK’s Daily Mail newspaper revealed that the rising costs of having a family there has resulted in one in ten parents choosing to have a smaller family, one in five delaying having an additional child, and an increasingly large number of women who are choosing to delay having children for the foreseeable future.

And it doesn’t just stop there either. 

*Sarah Jones is an Australian expat living in Singapore, who highlights that cost is definitely the driving factor in why her and her husband have decided not to add to their family.

“Honestly, in hindsight, we were completely unprepared for the financial responsibility and relentless cost of raising a child,” says Jones. “There hasn’t been one aspect of our finances left untouched by having a child.”

Jones explains that for the first two years of her son’s life the financial toll meant that there were many sacrifices made. There were no holidays or dinners out, the couple rarely brought anything for themselves, and the weekly grocery bill was monitored to the cent. 

Whilst things have since got easier financially, the fact remains that there is no doubt in Jones’ mind that another child would definitely stretch them.

“We definitely feel that having another child would be a massive financial sacrifice, bring unwanted stress to our relationship, (because no couple enjoys fighting about money) and prevent us from doing the things that we currently do,” she says. “The reality is that we want to buy a house, send our son to a good school and, build a retirement fund, and with the added cost of another a child, we’d struggle to do these things.”

Despite all of this however, it still remains that money is not necessarily an important factor for everyone when it comes to having children. In fact, very often it is the case that the desire to have a family far outweighs the worry or concern about financial security.

*Kirsty Young fits into this category admitting that her and her husband couldn’t really afford to have a family, but vowed that they would make it work and survive regardless.

“We have had to go without all luxuries,” says Young. “We don’t go out for dinner, the movies, or holidays away, but we wouldn't change a thing. We do everything we can to make the kids feel like they are not missing out on anything, and we figure that as long as we are all happy and healthy, we can deal with not being as financially stable as others around us.”

But with all this in mind, what does the financial expert think?

Dominique Bergel-Grant, Founder and Director of Leapfrog Women & Money, says, “In many cases people do underestimate the costs in starting a family, and the loss of often one income for between 3-6 years for the average 2 child family can put a dent on your future financial security.”

Bergel-Grant offers the following advice and tips for those planning a family;

  • Be prepared and don’t hide from the financial reality.
  • Set a strict budget and save for as long as possible before the baby arrives – having a high savings buffer will take away some of the pressure.
  • Where you have the option of family support to help you go back to work earlier, set up the agreements now so you can plan for exactly when you will start to bring in an income again.
  • Plan not only for the upfront expenses, at least $3,500 for prams and other initial items after the baby arrives, but also how you will fund future needs, such as a bigger family car.
  • If you are struggling make sure you have received all government entitlements you are eligible for.
  • Look at renting rather than buying baby items such as a baby capsule.  To buy one will cost around $300, whereas you can rent one instead for six months for a third the cost.  Also look at where your local toy library is – another great way to save money.
  • Remember children get more expensive as they get older, so don't just think about the here and now.
  • Remember you are not judged as a parent by how expensive your pram is.
  • Be prepared to sacrifice your financial security, financial future, and goals such as owning your own home to put your child first. If you can understand these consequences and the emotional impacts they will have then at the end of the day it becomes your choice.