Grey hair, worry lines, high?blood pressure ??these are?some of the?physical?costs associated with the joys of parenthood.?Then there are the financial costs, which are just as?draining.
The last time any research was done into the cost of raising children in Australia, back in 2012, for an average family the cost of raising two children was $812,000.?Since then, thanks to low inflation, that figure has kept steady; it now?comes in?at an extra $2,000 per child, at $816,000.?But it?s?still?a huge sum, nearly twice the average mortgage in Sydney.?No?wonder the Australian?birthrate?is on the decline! And with children staying at home longer, the costs of raising a family are dragging on and on.??
Each stage of?your?child?s life?is?unique?and comes with its own?financial burdens, but?if you are realistic about your financial?situation, there are ways to save money and ease the?economic?strain of parenthood:??
Setting up home for?a?new baby can be very?expensive.?From the ages of 0 to 3, the main cost of raising a child is the stuff you suddenly find you cannot live without:?change table,?stroller, high chair, cradle etc. While it is natural to want the best for your baby, you can save a fortune by opting for pre-loved baby equipment. There?s always a glut of second-hand baby essentials out there and most parents, once their children are older, are happy to?declutter and?give away their old baby things. Or, if it must be new, keep it simple. A baby doesn?t know the difference between a basic IKEA highchair and a luxury one. And both are only?going to end up covered in food??or?worse!??
With children between the ages of 3 and 5, the biggest expense?associated with parenthood?is childcare. Unfortunately,?there?s no way of?cutting corners when it comes to quality supervision for your children, but there is government assistance.?The average cost?of childcare is $8.50 an hour, but you can claim $4.30 of that as the Child Care Benefit, up to?50 hours ($215 per week).?Before returning to work, it is essential to?sit down and crunch the numbers on the true cost of returning to work. Travel?expenses, work clothes, bought?lunches, child care ? all these things can add up, meaning,?sometimes, being a stay-at-home parent with part-time work can be more financially (and emotionally) rewarding than rushing back to?a?full-time?job.??
Those same work-family lifestyle choices are just as imperative once your children reach school age. The cost of your child?s education is very much down to you: whether you send them?to?the local state school, a church school or the very best private school. You need?to work out what you can?best afford;?what you are willing to sacrifice, both in terms of material possessions, but also?in?time spent away from your children working.?If you opt for private education for your children, remember to take into consideration the extra costs that come with private?schools:?overseas trips, pricey uniforms and?costly?extracurricular activities.?
But wherever your children go to school, it?s time for you to start?teaching?them the true?meaning of money. Once their circle of friends expands, they will start to experience the peer pressure?associated with the?latest fashions and technology. They need to understand how much effort goes into earning the money?needed to?purchase a $30?Nike?drink bottle, instead of the dollar-shop variety. By giving them an insight into how the family budget works, they are less likely to put undue pressure upon?it?by demanding the latest gadgets.
Unfortunately, even once your children are old enough to support themselves, it doesn?t mean they will. Few children are economically self-sufficient by the age of 20, whether they are out?working or in higher education.?But if you start your financial planning early, a lot of the fiscal pain can be removed from?your child?s progression into adulthood.??
The cost of a 3 year degree?is set to hit $50,000 by 2025 ? that?s a considerable sum. But by creating a savings plan for your child when they are still young, you can ensure that your child doesn?t finish?their?studies with a huge debt hanging over them.??
There are lots of different types?of saving accounts and ways to save?? but many tie up your money for long periods of time, and?at the moment?term interest rates are at record lows.?
Alternatively, by talking to your trusted?mortgage?broker, you could arrange new finance on your home and use a mortgage offset account?to save for your child?s future instead.?Your regular savings?will help reduce your mortgage ??earning a far better return than currently offered by many?savings accounts?? and your money will always be on hand, should you need to make a sudden withdrawal.??
Becoming a parent is the most important step in?a?person?s life. And with?a little advance financial planning, family planning?should be one of the most rewarding, too ? give or take the odd tantrum along the way.??
Louisa Sanghera is a Finance Broker for Residential Mortgages, Vehicle and Asset Finance, Commercial Lending and Budgeting and Cashflow Coaching with Zippy Financial.
She has?gained more than 30 years in the Banking and Finance Industry, and since founding Zippy Financial, has become a multi award nominated expert in the field of finance featuring regularly in industry press and speaking at finance and investment seminars across the country.