Raising a child will provide you with countless experiences that money can’t buy. But it is still an expensive business. Here’s your guide to the likely cost of raising a child in Australia.
With over 300,000 babies born in Australia every year according to the Australian Institute of Health and Welfare, more and more families are adapting to life with little ones. We run through a few of the big milestones to help you calculate the likely cost of kids.
Generally, the financial impact of having a baby begins before it is born. A fantastic first step for any parents-to-be is to think about parental leave – how much would you like to take and how much could you afford? After all, your little bundle of joy won’t just cost money to look after, you’re also likely to receive a reduced income from one or both parents depending on the arrangements you choose to make.
One simple way to start planning is to use ASIC’s parental leave calculator to establish your likely income over the course of parental leave. You can change the parameters of the ASIC calculator to assess how your earnings could be affected by taking more or less time off.
For many parents, going back to work after a maternity or paternity break can be a difficult decision, but it’s usually financially necessary for one or both parents to resume their employment.
Returning to work will likely mean that the household income is increased, but when figuring out when to take the leap, consider the likely cost of child care for your little ones. There are a number of different types of child care to consider, which as CareforKids.com.au outlines, all range significantly in cost. As well as listing approximate costs on the website, CareforKids.com.au also has a tool to help you calculate the approximate cost of your preferred type of child care.
There are government benefits available for families. To find out more and to learn about what benefit may apply to you, check the Australian Government’s Family Assistance Guide.
As discussed in a previous TAL Slice of Life article, giving your child a great education is top of the list for most parents, and whether your child attends public or private school, the ongoing cost of education is something to keep in mind.
Aside from any tuition costs, there are also uniforms, sports clubs, school trips and lunchboxes to think about.
Ultimately, the cost of education depends on a number of factors, so if you’d like to find out more about your situation ASIC’s MoneySmart site has plenty of information on calculating how much your family may need to save.
Finally, there are the everyday living expenses to consider. Research by ASIC in 2015/2016 suggests that the average couple without children spends $1,572/week to $1,833/week when the couple has children under five, and $2,085/week once the children are between 5-14 years old.
Holiday costs increase too, with the average family in Australia saving $77 per week for their next trip away, according to the same ASIC research.
Having children is the most remarkable and fulfilling experience, but it’s also a huge amount of responsibility. As well as ensuring you have properly budgeted and planned your finances into the future - which you could start to plan with the help of TAL’s six financial tips for new parents article - it may also be appropriate to re-evaluate your insurance needs once you have dependents.
Reviewing your insurance could ensure that your brand new family is looked after into the future. A suitable life insurance policy will protect your family’s finances if the worst should happen. Total Permanent Disability (TPD) and Income Protection Insurance may ensure financial stability through the tough times to help you and your family get back to normal as quickly as possible.
For more information on policies available and to get a quote, visit our website.
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