Children Don't Come Cheap, Study Finds
The Age
Monday November 8, 1993
New studies show that a child can cost $250,000 to raise. And that's not counting the Mambo T-shirts. ANDREA DIXON reports.
BRINGING up children is expensive, perhaps more expensive than even parents realise. Indeed, the cost of feeding, clothing, educating and entertaining children helps keep many families virtually broke.
Figures just released by the Australian Institute of Family Studies, a Federal Government body, show that for a family with a gross income of $511 a week, an 11-year-old represents a $215-a-week drain.
In fact, between birth and leaving the family home at age 21 (though not all leave at that age) a child costs about $250,000, based on today's figures. Three cost about $500,000. In other words, the institute found that there are slight economies of scale in having more than one child, but you'll still pay dearly.
The survey includes the direct cost of clothing, food, dental costs, education, housing, transport and other miscellaneous costs.
The institute emphasises that its figures are for a single-income family earning close to the average wage. Some children, and not necessarily those from wealthy families, clearly cost more.
Its figures hardly encompass kitting the kids out in the most fashionable garb, like Nike runners and Mambo surf and leisure wear.
According to the Mambo managing director, Dare Jennings, the label has a broad market ranging from young children to 40-year-olds.
To deck one child out in designer gear could cost more than $300 _ probably more than the weekly grocery bill for a family of six. The survey found that in its first year after birth a baby costs $181 a week. This falls to $148 a week for a toddler aged between two and four. The figure increases to $160 a week for a five to seven-year-old and then leaps to $194 a week for children aged eight to 10 years. For youngsters between 11 and 13 the figure is $215 a week.
Just as the teenage child starts to get truly expensive (ask any parent), the institute stops making its observations.
The deputy director of the institute, Dr Peter McDonald, says the data based on the Australian Bureau of Statistics' survey of household expenditure is not appropriate for teenagers.
``There is no question that the expenses increase substantially for ones older than 13, particularly for education. Leisure costs also jump, but that is offset by the 30 per cent of all 15-year-olds and over who are making their own money," Dr McDonald says.
The good news, he says, is that about 50 per cent of full-time university students below the age of 25 are working. But the bad news is that the money is spent on discretionary items such as entertainment and clothes.
``Unless the students are from low-income families, they don't contribute to the household economy by paying board or other costs," he says.
One good thing about the latest figures is that they are up only $5 a week on 1992 for most age groups.
Dr McDonald says families with a second child reduce expenditure because they just don't have enough money to spend the same on two children. ``Roughly, two children cost one-and-a-half times our figure for one child. Three children cost twice as much as one child," Dr McDonald says.
Not surprisingly, the figures show families with children spend almost all of their money. ``Families don't save much money except for paying off the mortgage or a car. They are not buying shares in BHP or investing in other areas," he says.
And it appears the cost of bringing up children is not just a worry for parents; potential parents are starting to think about it, too.
Mrs Sherri Reginato, a senior advertising executive, has had a special ``stop-work children account" underway for two years. ``The account is to cover the loss of income while providing me with spending money," Mrs Reginato says. ``By most people's standards my savings would constitute a nice income for one year, but I will make it last over two years as a supplement to my husband's salary."
However, Mrs Reginato says, that on the basis of the AIFS statistics, she believes she will have enough to provide for a child for three years as well as have spending money for herself for the period.
It appears the cost of keeping children, as researched by the AIFS, has little relevance to the Federal Government's Child Support Agency, which dictates the amount a non-custodial parent pays the caring parent in child support.
The payments are determined according to a formula claimed to be based on the cost of children and the capacity of the parent to pay, with the average payment for one child amount ing to $46 a week.
The payment is capped at $240 a week for one child, that is, for a non-custodial parent with taxable income of $70,000 a year or more.
The minimum wage for which child support payments can be provided is $10,000 a year or about $200 a week where the payment is just $7.44 a week.
The Australian Institute of Family Studies also has a survey based on a basket of goods and services drawn in 1984. The study provides only part of the cost of a child, while the expenditure survey measures the total amount spent. The basket includes food, clothing, fuel, household provisions, schooling other than fees and uniforms, gifts, pocket money and entertainment. Excluded are housing, education and medical costs.
On this basis, families earning less than the average weekly wage of $517.50 gross can expect a two-year-old to cost $29 a week or $1511 a year, which jumps to $37 a week or $1939 a year for a five-year-old.
The same family will face outgoings of $45 a week or $2377 a year for an eight-year-old while an 11-year-old will cost $49 a week or $2522 a year.
Middle-income families earning more than $517.50 a week gross spend substantially more on buying this basket of goods and services for their children, this survey shows.
© 1993 The Age