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The cost of financially managing a family

The challenge of managing a family can be compared with running a small business. Depending on your family dynamic, some might even argue it’s more like running a corporation.

A few years ago, Australian social researcher Mark McCrindle put the cost of raising a child at more than $1 million ”“ such a cost inflated by private education, hobbies, electronics and toys. He also took into account the fact that the average young adult now lives at home until they are 24.

However, the latest Australian Government statistics estimate it costs $384,543 to raise the average 18-year-old. Most parents would argue this figure doesn’t take into account toys, bikes, computer games, movie tickets and holidays.

Either way, it’s worth taking a look at some of the more expensive years to see if you’re running your family on a manageable budget.

Before birth

Next time you tell your kids they’re your most precious asset, remember your investment started before birth. Doctors’ bills and hospital cover all add up. GPs, specialists, hospital locations and more ”“ they all have an impact on the final cost. Many health funds estimate the cost ranges from $2500 to $8500.

Baby steps

An international parenting resource recently estimated one-off and ongoing costs for a child’s first 12 months can add up to $16,000. Big spenders splash out on the latest cots, prams, car seats and change tables. The challenge for new parents is to resist the trendiest choices and save more than $10,000 in the first year.

Starting school is expensive, and rising

As soon as a child starts school, the annual costs spike. This is also set to rise for future parents. Government schooling for a child born in 2012 is expected to total $65,829 for 14 years of schooling. Families opting for private education will pay up to $428,723. Parents need to budget about $4000 for the first year of public school or set aside $30,000 to go private.

10 years old

At 10 years old, the annual cost of raising your beloved offspring is still more than $10,000. According to a University of Queensland (UQ) study, the weekly cost of a 10-year-old for two working parents in Sydney is $204.20, Melbourne $310.20, Canberra $260.20, Brisbane $306.70, Perth $302.80 and Adelaide $256.

Children get more expensive with time

One thing all the figures seem to agree on is children get more costly with age. While you might be able to manage a three-year-old on $5000 a year, a 14-year-old will cost $8000. Consider UQ’s average cost of raising two children (ages 6 and 14) with both parents working fulltime. The cost is between $18,000 and $21,000 a year. Meanwhile, parents are also trying to save for their kids’ education. By simply opening a RaboDirect savings account for a two-year-old and committing $40 a week, you will have more than $25,000 by the time they reach high school.

However you choose to manage your family budget, it pays to think ahead and be aware of any upcoming costs. The price of joy and laughter is sure to outweigh the dollar values, but it’s certainly food for thought.

How have you found the ever-increasing costs of raising children?