We love them dearly, but children certainly aren’t cheap. I should know, I’ve got four of my own. And while they now like to think of themselves as adults, they keep gravitating back to the family home. 

The cost of raising children seems to be getting more expensive, whether you’ve got a baby or a 25-year-old. Childcare fees are rising, mobile phones and iPods are now essential equipment for teens, and those in their 20s aren’t in a hurry to leave home.

The price of kids
Of course you can’t be expected to put a price on your beloved children – but AMP and Canberra University have. They found the typical middle-income Australian family will spend a whopping $537,000 bringing up two kids to the age of 21. On average, 23 per cent of the family income goes towards raising two children – that’s a big chunk of the budget.

The study also shows that the more you earn, the more you invest in your kids. High-income families spend twice as much on food than low-income families and much more on education. A high-income family will fork out an average of $161,000 putting two kids through private schools and university.  

Plan ahead
If you waited until you could afford to have children, most of us would never have had them at all. You just make it work. But with a quarter of your income likely to be spent on raising children, the more you plan ahead the better off you will be.

Conception is a good place to start. Get used to living on one wage before you have a baby, just in case you decide to take a break from the workforce to raise your child. This will prepare you for parenthood on a single wage and, with the extra cash saved by only spending one income, you can build a very handy emergency or contingency fund.

Most families with young children
struggle to get on top of the mortgage and pay off the credit card each month. The last thing they want to think about is putting money aside to cover secondary or tertiary education and teenage expenses. But the earlier you start investing, the more time you give your money to grow.

Take advantage of compounding, and earn returns on your returns. Putting as little as $100 a month into a managed fund or high-interest savings account for more than five years is a great way to build a nest egg for your children. Treat it as an expense in the family budget and contribute as much as you can.

Get some help
If you are struggling to cover child-related expenses, contact Centrelink to find out if you’re eligible for any additional social security payments. The single biggest financial help to new parents is the Baby Bonus. It’s a $5000 government payment to help cover the costs of a new baby. From January 1, it will no longer be paid as a lump sum. Instead, all new mothers will receive fortnightly payments over six months. It will also become means tested, available only to families with a combined income less than $150,000.

Family Tax Benefit A aims to help families with the cost of raising children. Depending on how much you earn, you can get up to $151 a fortnight for each child under 13 years, and up to $197 a fortnight for kids aged 13 to 15 years. Benefits are reduced
once children reach 16 years.

Family Tax Benefit B is an extra payment for households with one main income, including single parents and families with one main breadwinner. To qualify, the primary income earner must make less than $150,000 a year.

Put yourself first
Just when it seems like yesterday we brought home those tiny bundles, they’re asking for the car keys. We all love our kids, and it would be fantastic to buy a car or save a home deposit for them, but you can’t shower them with gifts at the expense of your own financial future. Think about how that money would boost your superannuation balance.

Your children are going to depend on you for money for a long time as it is, so it’s important they also learn some financial independence and responsibility. The best gift you can give your kids is a good education and the rest is up to them.