The cost of raising kids 2021

Wondering how much to save for a child? Finder research reveals parents spend $18,255 per year on average.

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Raising a child can be tough work – and it's not cheap either. From taking time off work to giving birth to baby supplies for your little one, the cost of raising kids can add up quickly. Being a first-time parent is undoubtedly full or surprises, but having a savings plan is the best way to prepare yourself financially.

For more in-depth data on family finances, check out Finder's Parenting Report.

How much does it cost to raise a child?

According to a Finder survey of 1,033 parents with children under the age of 12, parents can be expected to fork out $18,255 per year on basic expenses like food and education, alongside discretionary items like technology and holidays.

For the average family with 1.8 children, that's $32,859 per year – more than the average mortgage.

Childcare is the biggest money drainer, with parents spending $4,349 per year having their kids cared for. This is followed by food ($3,635), clothing ($1,794) and private school fees ($1,584).

The true cost of services

While the analysis paints a picture of the average family, it's important to note that how much parents spend on their children hinges on personal circumstances such as income. It's likely there are additional expenses families face that are not included in the list below. Likewise, many families won't spend anything in some categories.

For instance, while the average family spends $1,584 on private school fees per year, when we exclude those who don't send their kids to private school, the average is actually $7,059. Similarly, those who use childcare services actually spend an average of $10,546 per year. The table below shows the "true" cost of some expenses, among only those who use those services.

Healthcare costs

Schools and childcare centres can be a haven for germs and bacteria. Finder's research found parents spend $1,391 per year on medical costs.

The data shows gen y parents are spending the most on healthcare and medicine per year ($1,526), while gen Z parents are spending the least ($1,124).

To make sure your children receive the same health insurance cover as you, add them to your family policy. While the type of cover you need depends on your personal circumstances and the age of your children, sufficient extras cover is a must as it covers your family for services children commonly need, like dental and optical.

Kate Browne

Kate Browne, editor at large

"A simple change when you are expecting a baby is to switch to a family health insurance plan as soon as possible. Even if your little one doesn't need the cover straight away, you'll be glad you did when they start needing the dentist, the optometrist or even need to get super expensive braces.

"You'll also want to find a good GP in your area that you trust. Babies and toddlers catch a lot of bugs and colds and you will be at the doctor a lot more than you may have been before you had kids. If you can't find one that bulk bills, this is another creeping cost you may not have thought about when a new little person joins your family."

School fees

While the average parent of kids under 12 spends $1,584 on private school fees per year, this includes all parents. Of only those who send their kids to private school, the annual cost is actually $7,059.

The survey included only parents of children under the age of 12, and parents can expect to spend more and more on private education as their child gets older. By the time they reach year 12, annual school fees hit $63,284 per year, according to Australian Scholarships Group. Between preschool and year 12, parents can expect to have spent a staggering $487,093 on private education – that's more than the median house price in Adelaide, Perth or Darwin.

Despite the name, even public schools come at a cost. Government schools range in price from $2,818 to $7,301 between preschool and year 12, while Catholic schools range from $5,525 to $32,391.

Kate Browne

Kate Browne, editor at large

"Daycare, preschool charge eye-wateringly high rates in most of our capital cities and if you are planning to return to work you'll want to factor in these costs too. Even after government assistance it's not unusual to be out of pocket by tens of thousands of dollars per child each year.

"When your child starts school there is the question of private versus public, plus those extracurricular activities such as sport or music where you will be out of pocket again for lessons and equipment."

Other education costs

On top of tuition, there are other education costs that can put a dent in parents' wallets. Finder's research found parents spend an average of $237 per year on back-to-school costs like notebooks, calculators, backpacks and school uniforms.

Private tutors can also add to education costs, with hourly rates ranging from $15 to $80 depending on qualifications and location. Finder's survey found the average parent spends $1,230 on tutoring per year. Among only those who hire tutors for their kids, this average jumps to $4,261 per year.

Pocket money

Raising a child means spending money on food, education and healthcare – but also paying your kids their weekly wage. According to the survey, the average child under the age of 12 receives $9.80 in pocket money per week – equivalent to $509 per year. That's more than the average parent spends on technology or back-to-school supplies in a year.

The research found boys ($10.30) receive 11% more in pocket money than girls ($9.30).

Driving costs

Even children can have busy social calendars. On average, parents spend 3.5 hours per week driving their kids to school and other activities like play dates and sports. Using average hourly wages for Uber drivers, Finder calculated this amounts to $116 per week in lost time – or $6,051 per year. Collectively, Aussie parents are providing $20 billion worth of free rides to their kids – substantially larger than Australia's rideshare industry.

That's not to mention the additional petrol costs that come along with the extra hours on the road. Based on the current petrol price of $1.50 per litre, parents could be shelling out more than $29 per week driving their kids around – equivalent to $1,519 per year.

Kate Boddington, PR manager

"I would clock up 9 hours a week driving my kids to school and their various activities. We do share pick-ups and drop-offs for some extracurriculars, but while the kids are young (6, 8 and 10), I really want to be the one to make sure they arrive safely.

"I try to make the most of this time in the car together by discussing what's happening in their lives and sharing what we are grateful for that day.

"We drive a 6-cylinder car and I often think about upgrading to a more economical vehicle to save us money on petrol."

Childbirth

Finder's research found parents are spending $18,255 per year on their kids – but that excludes the cost of childbirth, which can exceed $10,000 in some cases. From scans and medications to accommodation costs, childbirth can cost parents thousands of dollars. Finder's research found parents are left an average of $1,814 out of pocket after birth.

Those in New South Wales spend the most on birth ($2,426), while South Australians are left $746 out of pocket on average.

Out-of-pocket costs depend on location and whether you choose to go through the public or private system.

The survey found 28% of Aussie parents went private for their most recent birth, while 69% stuck to the public system and 3% used both systems.

Interestingly, most parents are pleased with the choice they made. Only 11% of those who went public would switch to private if they were to give birth again. Similarly, just 10% of those who went private would switch to public if they were to do it again.

Kate Boddington, PR manager

"I chose to go private with all three of my pregnancies as I wanted that continuity of care. The same obstetrician delivered all three babies and he knows my complete history. Obviously it was the more expensive route but that was a price I was prepared to pay."

Sarah Megginson

Sarah Megginson, senior editor, home loans

"I had private health insurance, but even with insurance, you're still out of pocket by thousands of dollars. Having gone through this with my first child, I was more prepared to deal with the expenses for the second and third pregnancies. Each one I was out of pocket around $5,000, plus the additional cost of the premium."

The pros of private care were a longer hospital stay (great for me as I felt supported by the nursing staff) and continuity of care with the same doctor throughout the whole pregnancy. In the public system, I would have had different doctors, but the level of care and expertise would have been similar. It really is a very personal choice – but if you plan on going private, budget for at least $5k out of pocket."

How to prepare for the cost of kids

Kate Browne

Kate Browne, editor at large

"If you can try and get prepared before you start a family, factor in how well you can live on one wage if you are a couple. Think about the high costs of daycare and also what you value in terms of education. Also look at where you're living and whether you can afford to stay in that area, as well as factors like the number of bedrooms and bathrooms in your current home.

"Having a baby is a wild and unexpected ride full of highs and lows, but with a little clever planning your budget doesn't need to be the same."

Sarah Megginson

Sarah Megginson, senior editor, home loans

"I actually didn't spend too much time preparing for the cost of having kids – my bigger concern was working out how to have time off work, drop my income for a period of time and still afford to pay for my life. We saved up so I could afford to take 6 months off work with each child, and then eased back into work part-time.

"My advice is to have a goal of how much time you'd like off. Be really specific and work out how much your life costs you each week, and how much money you need to "replace" your income during parental leave. Note this is not the same as how much you earn. It could be quite a bit less - just enough to cover your bills and have some 'fun money' left over.

"My other tip is to budget as much time off work as you can afford. The first 6 months are a wild ride, full of emotions, highs and lows. If you can save up enough to take 6-12 months off, you can always go back to work early if you want and use childcare. But having the pressure to return to work 3 or 4 months after your baby is born can be very stressful."


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