The cost of raising children in Australia

But we think it costs more.

A study from 2016¹ found the average among Australian families spent to raise their children to age 17 was just under $300,000:

For a nuclear family with 2 parents and 2 kids, this works out to be an extra $340 per week.

However, there's more to it.

When I first wrote this article in 2017, this number made sense. As I discussed the topic further with a few mums inside and outside my workplace, it became obvious that it was missing another factor – the opportunity cost of leaving the workplace.

With the loss of dual income, we have given up the financial freedom to retire early.

– Natalie Chan, founder of Motherpedia

The updated cost of raising children (2019)

Depending on how long you or your spouse need to leave the workforce, your household could forfeit over $300,000 in income to raise a child, bringing the average up to $600,000.

• Essential costs = $297,700
• Opportunity cost (learn more) = $308,984
• Average cost of having children = $297,700 + $308,984 = $606,684

Inside the cost of having children

Let's dig into the costs. The average total we discussed is a combination of your essential costs and the opportunity cost of leaving the workplace.

The essential costs

The breakdown

You may be asking yourself, how do these costs break down exactly? According to the Australian Institute of Family Studies, most families, food, housing and education each take up about 18–22% of their monthly childcare budgets.

Making up the rest of the spending is other household goods, recreation and transport each at around 8–10%. Clothing, health and other miscellaneous expenses will come up to complete your childcare budget.

The number of children affects the cost per child

When it's your second or third child, you will be able to reuse baby clothes and toys, while taking advantage of the lessons you learned the first time around. For a middle-income family, the weekly cost of having 1 child is $263. When the number of children in the family increases to 2, the cost drops to $220 per child per week and at 3 children the cost drops further to $184.

The cost of education can vary

When it comes to the topic of education, which schools you want to send your children to will greatly affect the costs of education.

If you want to send your children to a private school, you can expect to pay about $490,000 for education from preschool to year 12. A catholic school will be about half as much at $240,000 and a government school will be significantly less than that for a total cost around $70,000.

One mum I spoke to, Leisa Papa, founder of Little Kids Business, notes that private school education costs her family $100 a day per child.

The cost varies with age

Pretty obvious, but the cost of raising children gets more expensive as they get older.

Don't forget about pocket money

When your children begin to get a little older, they will also begin asking you for some "walking around money" to go have fun with their friends. If you have a "tween" aged child, you can expect to give them between about $10 and $17 per week, depending on where in the country you live.

What is the opportunity cost of having kids?

The cost of having children is not just made up of the money out the door that will need to be used to pay for essential living expenses. Natalie Chan, founder of Motherpedia, says she had to "take a hit with income" after her second born to become a part-time work-from-home mother. "With the loss of dual income, we have given up the financial freedom to retire early."

When thinking about the total cost of having children, it's important to keep in mind the opportunity cost of doing so. For example, According to the Australian Bureau of Statistics (ABS), the average yearly income for a female in Australia is $77,246.

If you take 4 years off (after maternity leave) before returning to work, it means means you could be missing out on over $308,984.

Income forfeited with having kids

The fact that you or your spouse may need to leave the workforce in order to raise your children is a significant opportunity cost that needs to be considered.

Aside from leaving the workforce altogether, having children may end up slowing your career progression as you will have more responsibilities at home that may not allow you to work as many late nights to push work through to the finish line.

While it's certainly possible to have a successful career as a parent, it's undeniable that you will have to make real sacrifices whether at home or in the office at many points.

We travel less, dine out less frequently and even find more joy in finding bargains from Kmart than shopping in the branded outlets.

– Natalie Chan

Non-monetary costs

Aside from these career-related costs, having children will also certainly have an impact on your social life. I spoke to Raeleen Kaesehagen, a mum who is the CEO of an online marketplace called Mudputty. Outside of career, these were the sacrifices she felt she had to make as a parent:

• Travel
• Alone time
• Fitness
• Hobbies
• Career

While that's not to say that your social life will decline in quality as you may just trade late nights in the pub for play dates while you mingle with other parents, it will certainly change. Aside from your social life, having children will likely impact your ability to stay in shape and maintain a healthy lifestyle as your kids' needs may keep you too busy to get to the fitness centre.

Travel also seems to be a consistent theme with the mums I spoke to. Leisa Papa says she has "chosen to put lavish family holidays on hold and enjoy trips in our caravan with friends" in order to pay for their kids' education.

You may also find yourself shopping around for bargains more often and dining out less to save some money.

The rewards of raising children: Look beyond the money

To sum it up, it's all worth it, and I am willing to do it all over again, anytime!"

Even with all the costs associated with having children, many people see it as the most rewarding experience of their lives. Here are some of our conversations with Australia's mum entrepreneurs:

Leisa Papa

Author of the book Daniel and the Dummy Fairy and the the founder/chief curator of Little Kids Business.

• See full interview

  I genuinely feared the lack of income and independence.

  What are some of the sacrifices you made becoming a parent?

  Although I grew up in a country town and went to a state school, the state school we were advised our children must attend, due to strict catchment guidelines, lacked the role models we wanted for our children.

  For this reason, we have chosen to put lavish family holidays on hold and enjoy trips in our caravan with friends, so that we can pay for private school education at $100 a day per child.

  Having only ever been able to afford camping holidays myself as a child I do not see this as a disadvantage, although my kids have asked to see the snow and go to Disneyland which we hope to consider in the future.

  My mother instinct clicked in.

  How did having children affect your career profession?

  While working and travelling often for corporate companies, I absolutely loved my job and I could not see myself as a stay-at-home mum.

  I genuinely feared the lack of income and independence. In 2010 I gave birth to a beautiful baby boy and all of that changed, in an instant my career did not matter and all I could focus on was caring for Daniel.

  He was six weeks premature and seemed so little and helpless and my mother instinct clicked in.

  When the pharmaceutical company I was working for was sold while I was still on maternity leave, I was happy to receive paid maternity leave plus a redundancy package and the opportunity to stay home with Daniel.

  The second child becomes easier

  Fast forward three years and Sophie was welcomed into the world...bringing her up, was much easier as I now knew what I was doing.

  A career and business is still possible... but it's challenging

  Soon the desire to work began to peek through and I was soon inspired by my children to write and publish a children's book to assist children to ditch their dummies with less stress. Daniel and the Dummy Fairy sells well however, my book sales nowhere near covers the salary I used to have. After careful consideration, I turned my Daniel and the Dummy Fairy website into a marketplace.

  Having worked with franchises such as Flight Centre and Chemist Warehouse I knew that selling together with other brands could benefit us all. I am now 18 months into my business startup and financially things are tight. Starting Little Kids Business has been expensive and a big risk for a family on a single salary.

  My husband is incredibly supportive of my desire to work and contribute to the family and while we might be sipping cordial now, we know that the champagne may flow in the future.

Natalie Chan

CEO and founder of Motherpedia

• See full interview

  Having kids means being a full-time caregiver, and along with that responsibility comes a shift in what you can and can't do.

  What are some of the costs you've experienced having children?

  Ever since we excitedly experienced the birth of our first born, most of our decisions are financial driven. Having dependants to care for have made us look far into the future and be responsible with our spending. We travel less, dine out less frequently and even find more joy in finding bargains from Kmart than shopping in the branded outlets.

  Fortunately we never have to lose sleep over unpaid bills, but I personally have to take a hit with the income after the second born to be a part-time work-from-home mother. With the loss of dual income, we have given up the financial freedom to retire early.

  She would do it again

  However, to sum it up, it's all worth it, and I am willing to do it all over again, anytime!

  There are time sacrifices

  Having kids means being a full-time caregiver, and along with that responsibility comes a shift in what you can and can't do. This also changes as the kids grow with age. At first, if you're the primary caregiver and breastfeeding, it means sacrificing sleep, work and most things for a little while. Surprisingly with a newborn and baby, it's very easy to still do coffee dates and daytime socialising. Hit toddler years the types of things you can do changes again with shopping and coffee not so pleasant with a toddler in tow.

Raeleen Kaesehagen

CEO and founder of Mudputty

• See full interview

  As a CEO and founder, here's some things that changed in my life after having kids and choosing to be the full-time caregiver.

  • Career/work
  • Fitness/hobbies
  • Travel
  • Alone time

  While thinking I could "work while the baby sleeps" you soon find that babies don't always sleep as you'd expect and they grow up to toddlers who don't take naps.

  So I adapted and look after the kids by day and work at night when they are asleep. Phone calls with kids around is very hard as too is business travel. Something as simple as a daytime business call involves organising people to look after the kids just so you can make a 10-minute call without interruption.

  I changed from rock climbing to hiking mountains, as you can hike with a baby on your back. When the baby grew to a toddler, it was harder. Then the second one, even harder again. Have some funny looks as people saw me hike with a toddler on the back and a baby on the front. This also then had to change, so like work, I either organise someone to look after the kids while I do the hobby/fitness I want or I change. I changed and do fitness with the kids around, like outdoor fitness, stand-up paddle (with the kids in jackets on the board) and running up a steep hill or stairs (while kids play at the bottom). It's all possible, just a lot harder.

  I stopped the long car trips while the kids were babies and toddlers. It just wasn't fun and as I didn't want to use devices, felt it was easier just to wait until they were older. Now, the car trips, plane trips, camping etc is back on. Just meant a temporary stay while it wasn't for them.

  With kids, then time for your partner and time for work/business you find that it is very hard to have alone time. Something that was once so easy is a mammoth effort of organising and a payoff between do I work, spend time with ... or give myself time for me. This also applies to friends and I found that fitting in the single friends who didn't really understand that taking a toddler to a cafe wasn't any fun so I'd rather pass, meant I'd spend more time with the friends with kids who understood.

Life insurance

Picture: GettyImages

¹http://www.natsem.canberra.edu.au/storage/AMP_NATSEM_33.pdf