Raising a family
Australia is enjoying a mini baby boom. But despite our increasing fertility rate, many people don’t fully appreciate the financial cost of raising children.
As a new parent, you need to consider how you will:
- meet new expenses while possibly living off reduced wages
- save for your child’s education
- buy a bigger home or renovate your existing home to meet your growing family’s needs
- ensure your family is well looked after should illness affect the main breadwinner’s earning abilities.
How much does it cost to raise a child?
The average cost of raising two children in Australia is estimated as between $400,000 and $500,000. And higher income earners with disposable cash can spend $600,000 on raising one child alone from birth until age 18.Education is one of the biggest expenses, with the cost of essentials such as clothing, computers and school trips.
What are the implications of parenthood for women?
As women are usually the primary caregivers, they spend more time out of the workplace than their partners. Women therefore tend to earn less over their working lives and therefore are not able to contribute as much to their superannuation as their partners.If you plan on spending time out of the workforce consider the following.
- Make voluntary repayments to your superannuation over and above what you are already contributing to make up for time out of the workforce.
- Begin investing for your children’s education well in advance.
- Consider the benefits of investing via a discretionary family trust as income can be distributed at the discretion of the trustees.
- Factor in the cost of university or other forms of further education as your financial obligations to your children don’t necessarily end when they leave school.
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As at 30th March 2011, AXA Asia Pacific Holdings Limited and all of its Australian and New Zealand subsidiaries ceased to be members of the Global AXA Group and became members of the AMP Group.
