The real cost of raising kids and how to reduce it

How much does it really cost to have and raise kids in Australia?

This question comes up regularly. I grew up as one of 5 kids, then when Mum passed away in my teen years, Dad remarried and I became one of 9 kids. I have two kids myself (now aged 9 and 10), a few of my siblings have 4 kids each and the cost of children has varied greatly between all of us. This post will cover common expenses (including medical or special needs), average expenses and how to reduce them. It is LONG but you can jump ahead to whichever section applies to you using the headings or images to quickly see what is relevant.

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Over $1,000,000???

Various studies in the past few years have shown the cost is anywhere from $286,000 to over $1,000,000. It depends on what you include (e.g. extra housing costs such as another room can be $200,000 more, though some studies focus only on clothing, schooling, childcare etc.)

In 2012, a study by the University of Canberra determined the average was $812,000 but under $500,000 for lower incomes and over $1,000,000 for higher incomes. Suncorp found the cost to be $286,000.

When you look at all the variables such as age, parents working vs not working (including the cost of superannuation and career loss for the at home parent), the financial cost can get even higher. However, having a child is generally not solely a financial decision. For me, it’s totally worth it and not something I factored into my decision to have children.

Before you start, check to see if you are eligible for things such as family tax benefit, rent assistance, the childcare rebate or benefit etc. These can help a lot towards the cost of raising children.

Housing

We all have to live somewhere. Single people have options such as boarding with others, Couchsurfing, backpacking, hostels, work options with accommodation such as being au pair etc. All of which can drastically reduce your housing expenses. Some of this is possible with kids, however, most families opt for a home instead.

Budget Housing

Depending on your location and income, budget housing can be things such as housing commission homes, social housing or co-ops (this is an example about housing co-ops). Alternatively, living rurally often means more affordable housing, though you need to factor in other expenses being higher such as food and petrol. Another option for single mums is Share Abode which we wrote about here.

Cheaper rent and mortgages

The first step is to rent or buy within your means. While Australia is quite expensive, if you look around there are options. Recently, I was watching real estate in an area we wanted to move to for my daughters to attend high school. Surprisingly, the prices kept dropping and have continued to so it might be worth checking out your area again or areas close by.

Aside from that, I have also used Airbnb to help pay the rent/mortgage. You can find my top tips here plus this post covers how to make it easier.

Food

While my kids are younger, I had teenage brothers and currently have male exchange students. Teenagers, especially teenage boys, can eat you out of house and home! Here are some ways to reduce those costs.

Firstly, check out how to get free and super cheap groceries here. Marley Spoon offers $35 off your first meal box, HelloFresh offers $50 off theirs and the great thing about both of these is the kids can cook them! If your teens can use their phones, they can cook!

Check out options such as home scanners and Bron Rewards to get points and cash for your shopping, plus Cash Rewards will get you cash back on your groceries and other online shopping.

Cheap meal ideas

Protein helps you feel full for longer and meat isn’t the only way to get it. Meals based on vegetables, beans, legumes etc all help. Dhal, curries, risottos, pasta bakes and similar are cheap as well as filling. Avoid sugary foods as the sugar simply fills for a bit then you get a slump making kids hungrier (and probably hangry at the same time). Instead, opt for healthier options.

Buy fruit and veg in bulk at markets, check out the butchers at the closing time along with supermarkets for reduced items. You can check out cheap recipes in my eBook 26 Ingredients for only $4.95. Or have a look at some of my meal plans and their recipes here, here and here.

If they must have takeaway you can get $10 off Uber Eats with the code eats-kyliet591ue, $10 off Foodora here or always be sure to search for a discount code online before ordering from anywhere.

Transport

Living right in the CBD in Melbourne means we walk pretty much everywhere. In Canberra, a car was essential and more recently I have missed having a car. It is up to you if you want a car or not. Often with older kids there are more commitments and you end up a bit of a taxi driver for a while so a car is essential.

Options with no car e.g. rideshare

While I haven’t owned a car for a while, I have used one. Car Next Door has been my favourite and most used option. There are other car share options which we compared here. For rideshare, Uber was my preferred option, however, it is the most expensive in my city now. You can get a free ride (up to $15) with the code kyliet591ue or get $20 off Ola, a cheaper option with the code AGNZEEU.

In general, though, we walk or use public transport. Find out more about living without a car here.

Saving money with your car

If you want to keep your car, there are things you can do to reduce the cost such as locking in the price of fuel when you see it cheap through the fuel watch app. Ensuring your tyres are inflated properly, you are using the correct fuel, your car is well maintained and you don’t drive around with unnecessary weight in the car (e.g. things you don’t need clogging up the boot).

On top of the day to day running of the car, service it and clean it regularly. Both of these things help with your resale value which is important. Find out more about reducing the cost of transport here.

Education

Whether you go public or private, there are costs involved with educating your children. School uniforms, shoes, bags, lunchboxes, excursions, books, fundraisers, teacher gifts, school fees and voluntary contributions. For a full guide on ways to reduce these expenses, check out ‘how to afford school expenses’. Also, be sure you are teaching your kids about finances to help set them up for their future. Check out this post from Financial Spectrum for more info and tips from other bloggers.

Entertainment

When my kids were little it was easy as there were so many free options from the library to the park that were simple and they loved. As they’ve gotten older, their interests have gotten more expensive. We’ve kept some free entertainment (Melbourne has loads), plus football was free for them with their club, but dance and other hobbies cost money. We also love to travel as a family but you can travel for free or super cheap and even make money by travelling as a family, both of which we do.

Look for freebies

Your first step for entertainment should be looking for free things (check out our huge list of Aussie freebies and this post with Aussie birthday freebies). Encourage your kids interests and I am all for extracurricular activities, but as for family fun or things to do on weekends, look for free options. Check out festivals and events in your area, do the touristy things, play at the river/beach/lake or in the bush if you have some near you. Movies and other expensive entertainment aren’t the only options.

If you do want to do movies and similar, look for ways to get free tickets such as through online surveys, using apps or market research. Always look for discount codes online or join loyalty programs too (we have a big list here of ways to get discounts or there are 12 ways to get coupons and discounts here).

Reducing the cost

Can you volunteer with their sports to get free registration? Does your school offer programs or discounts for families to certain sports? Shop around clubs and compare prices. For example, with Auskick for my kids, our club had a multicultural status with the AFL which made it free for all kids. Other clubs had fees.

When it comes to other activities, check out sites such as Groupon for discounts.

Childcare

In two-income homes, it is not uncommon for it to feel like one parent is working purely to pay for childcare. While it is expensive, in my opinion, it is important for both partners to maintain career options. It’s not only the income you need to factor in but also superannuation with the compound interest effect it has the sooner you contribute. Career progression, staying relevant, your experience and qualifications all need to be included.

With childcare, shop around and look at all your options. I’ve used after school care, done childcare swaps with other mums, had an au pair and at another time a housekeeper. At each stage of our lives I have researched to find the most affordable option for our needs. When I was partnered, due to our incomes an au pair or live out housekeeper picking up the kids (and doing cleaning etc a few hours a day until we got home from work) was more economical than after-school care so consider all your options.

Make sure you are registered for the child care benefit and child care rebate if you are eligible for it too.

Health

This is where I have spent a lot as my kids needed speech therapy and other extra assistance, the autism assessment was $5,000 last year and of course, there are the regular things like medicine which are part of childhood. Going public where possible, using your health insurance if you have it and claiming everything you can when you use it plus budgeting for medical expenses all help. Find ways to save on your health including medical, dental, glasses, ambulance cover and more here.

Birthdays and celebrations

My kids have higher expectations than I ever did for birthday parties. Growing up we had a party every second year with friends and every year with family. Most were at home and fairly simple. At my daughters school, ice-skating parties are the most popular.

Hosting parties for your own kids, presents for other kids parties, Christmas and other celebrations all add up. The things which helped me were to have a clear budget, set the kids expectations so they know from the get-go what the deal is in your house for their birthday parties, the budget for friends presents etc then always look for ways to come under budget.

For birthday party ideas check out my sisters business Mini Peas for ideas (new ones going up regularly), plus you can purchase printables for the parties from her Etsy store.

Birthday Parties and Presents

My kids have often had home parties or we’ve done things at a venue our own way instead of with a specific party and kids have raved about it because it was different. A Monster High party a few years ago saw my sister and I dress up as dolls, we had makeup and nail stations, a fashion parade (with our dress ups) and simple games. She had kids begging to invite them the following year.

Last year we did a spy party in the park. I researched riddles for the area we were in which they had to solve, we did spy training, then they ate and played on the park. Kids came dress in black as spies and loved it. Another party we did was on level 55 of the building we were in and it had games like musical chairs, statues, pass the parcel etc. Everything was rainbow including the jelly which the kids were talking about the other day at school and the party was almost 2 years ago!

For presents, we buy them when on sale. Smiggle and similar stationery is popular in our area so we head to DFO and Kmart to stock up in clearances. So far, all presents have been a hit. At all other schools the budget was around $20 with most kids, this school the parents have been spending $60 to $80! With the number of parties my kids get invited to, we could go on a holiday for that money. Buying in sales means we can do similarly priced gifts for a much lower cost.

Christmas and other celebrations

Considering most celebrations we know about ahead of time, they can be budgeting in. Christmas is at the same time every year, as are the sales so plan ahead. If it’s hard to stretch the budget, check out this post to show you how to easily get $2,000 in time for Christmas (starting in October).

Babies and toddlers

My girls are 9 and 10, so the baby stage was some time ago. I remember I saved money by purchasing things second hand, using hand me downs (except the car seat, that should be bought new). I used cloth nappies most of the time and sometimes disposables. Being unable to breastfeed for medical reasons I had to buy formula and my daughters had issues so it was reflux formula which never went on sale.

Overall, the baby stage was the cheapest stage. They grow so quickly so get a good support network, swap items with each other and buy things on sale. Make your own baby food, check clearance racks for clothes or shop at second-hand stores and you won’t need to spend much.

Older Kids

Most articles focus on saving money when kids are babies or in primary school, which much of this article has as well. Some of the tips can be applied for all ages, but with teenagers and even adult kids (for example children studying) there can be significant expenses. Plus, if you are eligible for Family Tax Benefit, this is when it decreases!

Technology Expenses

Touring high schools for my daughters recently we were informed they need laptops and phones. No longer is technology an option, it is expected. My daughters have iPads at their school and it is part of the curriculum from when kids are in preschool here.

Phones, computers, gaming devices, cameras and other equipment needed for various hobbies or school projects add up quickly. Shop around, ask the school if they get a deal with any particular store and always look at the insurance and protection options. Get cases, screen covers and other things to protect them from damage to help them last longer.

You can also look at refurbished or second hand options. While your kids probably want the latest and greatest, dropping $2,000+ for a phone and laptop might not be in your budget.

Clothing and accessories

I’ll include make up, clothing, shoes and everything related here. Teens want what they want and it is up to you what you do. Some families have a set budget per year and it is up to the teens how they spend it. Others go shopping at certain times of the year or in sales. Whether you buy the brands they want or not is your choice.

My kids have very different personalities and like different things so I cater to that. They know we have a budget for different things and we work their wants into the budget. They’re also quite savvy shoppers themselves as I have taught them from a young age.

Sign up to loyalty programs and VIP clubs to get welcome offers, look for discounts online and include your children in the choices.

Cars

My parents gave us $1,000 (provided we saved $1,000+ ourselves) and a loan if necessary for a car. I bought a bomb and it died, I bought another one and it died too. Finally, I borrowed a decent amount from my parents and got a good one. Cars have cost me a fortune over the years.

Encourage your child to get their licence, invest in some driving lessons (it is incredible how many rules change and how much needs to be corrected for the driving test). Teach your kids to budget and save for a car. Or if you want to, you can choose to buy your kids one.

One note, I took better care of my cars than my friends did who were given one by their parents. Those who were given one all had car accidents or trashed the cars because they hadn’t worked for them. Personally, I plan on encouraging my daughters to save for a car, if they want one.

Higher education

It’s your choice if you pay for university or other higher education. We have more affordable options than the USA and various scholarships plus interest free loans to help with education. Personally, I won’t be paying for my kids university. I’ll help for the first year or to get them started, but it is up to them.

Making More Money

Your income only stretches so far, but you or your kids can make money on the side. I’ve always encouraged my kids to budget and save for things they want plus look for other ways to make money. Kids can be quite resourceful and it’s not just lemonade stands anymore. Let them buy things to resell (or you can), they could start their own business for under $100 or find ways to make money on social media.

As an adult you have more options. Check out 43 ways for single mums to make money (really, they can be used by anyone) to give you some ideas.

What do you do to save money when raising kids?

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