Starting a family is one of the most significant financial commitments you’ll ever make, especially in today’s climate where the cost of living continues to rise, causing many Australians to tighten their budgets.
According to a July 2024 survey by Canstar Blue, which gathered insights from 2,356 Australian parents, the average monthly cost of raising a child is $1,073.
This amounts to a whopping $12,876 per year.
When we break it down by the number of children, parents with one child are spending an average of $1,005 per month.
For those with two children, the cost jumps to $1,214 per month.
Families with three children are paying around $1,303 monthly, while those with four children face a monthly bill of $1,414.
These figures represent a significant increase from 2018 data from the Australian Institute of Family Studies, which reported that the monthly cost of raising two children was $736, or $8,840 per year.
This means that Aussie families with two children are now spending an additional $478 per month compared to six years ago, highlighting the growing financial pressures brought on by the rising cost of living and increasing housing expenses.
Among the surveyed parents, 56% identified affording groceries as their biggest cost concern, followed closely by utilities and childcare costs.
Interestingly, Baby Boomers were the most worried about the cost of groceries (64%), followed by Generation X (58%) and Millennials (56%).
Here’s a snapshot of the biggest financial concerns for Aussie parents:
- 56% are most concerned about food groceries.
- 47% are most concerned about utilities costs.
- 44% are most concerned about education.
- 38% are most concerned about childcare costs.
- 38% are most concerned about entertainment (e.g., birthday parties, school holiday activities).
- 37% are most concerned about other groceries (e.g., nappies, wipes).
- 36% are most concerned about extracurricular activities (e.g., sport, music).
- 33% are most concerned about mortgage repayments.
- 31% are most concerned about rental costs.
- 25% are most concerned about baby products.
The financial impact of raising kids in Australia
The Canstar research highlighted that as the cost of raising children continues to climb, parents are increasingly concerned about maintaining a decent lifestyle and affording essential needs like childcare and education.
Notably, 15% of parents reported that their take-home pay has decreased because they’re working fewer hours, while 22% are reluctant to switch jobs due to the need for stability for their families.
When comparing the current cost of raising kids to their parent’s generation, 29% of today’s parents believe they have it tougher.
The financial pressures are so intense that 23% of parents have become hesitant about having more children.
Interestingly, the median size of an Australian family has decreased slightly, from 2.6 people in 2016 to 2.5 people in 2021—the first decrease in household size since 2000.
According to the Australian Bureau of Statistics, by 2046, the number of single-child families in Australia is expected to rise by 45%, while families with more than one child will increase by only 30%.
Extracurricular activities are also hitting parents’ wallets harder than before.
Data from the Australian Sports Commission’s AusPlay 2023 survey revealed that the median spend on sports for children aged 14 and under was $650 per child, up from $580 in 2019.
Here’s how parents say the rising cost of raising children has impacted their finances:
- 39% have noticed the cost of raising their child/children has increased over the past year.
- 23% are hesitant to have more children due to the rising cost of living.
- 27% worry they won’t be able to cover the costs of raising their child/children due to the rising cost of living.
- 25% worry their child/children are missing out because they cannot cover the increasing cost of raising them.
- 15% say their take-home pay has decreased as they’re working fewer hours.
How are Aussie parents cutting costs?
To keep up with their bills and daily living expenses, many Aussie parents are cutting costs and making sacrifices.
According to Canstar Blue’s survey, 46% of parents have reduced their spending on dining out, going to the movies, and other social activities.
Additionally, 45% have cut back on discretionary spending, such as streaming services and takeaway food.
Some parents have even made more significant sacrifices, like moving into cheaper rental accommodations, cutting back on electricity and water use, or taking on additional work hours or a second job.
Here’s a breakdown of how Aussie parents are managing the financial impact of raising their kids:
- 46% cut back on socialising (e.g., going to the movies, dining out).
- 45% cut back on discretionary spending (streaming, takeaway food).
- 32% cut back on essential spending (groceries, home repairs).
- 28% reduced the number of entertainment activities for their children.
- 26% cut back on utilities usage.
- 24% cut back on purchases for children (clothes, shoes, toys, electronics).
- 23% have taken on additional work hours or a second job.
- 12% have moved to cheaper rental accommodation.
- 9% have remortgaged or downsized to reduce their mortgage burden.
