Though they might often be seen as a cute addition to the family, children are also an extremely heavy financial burden for Australian parents, leaving families in need of sound financial advice to overcome the hardship, a new report has claimed.
Released by AMP and the National Centre for Social and Economic Modelling (NATSEM), the report shows that an average Australian family is likely to spend around $448,000 to raise two children from birth to age 20.
This figure equates to around $310 a week, or 23 per cent of their average gross household income of $1,324 a week, and includes most of the costs involved in parenting including housing, transport, recreation, food, clothing and education.
The report, entitled “All they need is love – and around $450,000,” emphasises that meeting these costs requires families to focus on financial management, including saving, budgeting and investing in financial planning advice.
“A great start to solving the question of these costs is for them to adopt some good saving and budgeting habits, backed up with advice from a good financial planner,” AMP Australian Financial Services managing director Craig Dunn says.
“Parents with good financial habits who have good financial advice will be in a better position to manage these pressures,” Mr Dunn said.
On average, households spend around 30 per cent of the costs of a child on transport and recreation, another 43 per cent on food, clothing and other expenses, 13 per cent on housing and 14 per cent on education and child care.
NATSEM director Professor Ann Harding said the costs of raising children vary greatly with family income and the age of the child, with costs increasing as a child aged.
“The lowest direct costs of $55 a week were estimated for children aged between zero and four years living in low income families. The highest costs of $466 a week were estimated for 18 to 24 year old students still living with their parents in high income families.”
The report is the third AMP/NATSEM Income and Wealth Report to be launched this year, with previous reports focusing on trends in taxable income by postcode and the income and assets of older Australians preparing to retire.
