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Most couples know that when they start a family, they are in for some big changes, not the least of which are financial.
While the cost of raising a child can get lost in the sheer delight and excitement of pregnancy and birth, it’s also important to remain practical. Because the real expenses, like medical, clothing and education costs, might surprise you. And it’s important to be prepared.
The most recent comprehensive study done on the cost of raising children was published in 2016.
It estimated that for kids born now, parents will spend about $300,000 raising them to the age of 17.
So, now that you’ve wrapped your head around that, let’s talk education costs.
There’s no such thing as a free education in Australia, and all the studies show that it is only becoming more expensive. It’s perhaps the biggest cost to raising a child whether you decide to send your child through the public (Government funded) system, or choose private / independent schooling.
Research published in Money Magazine shows that fees jumped by 64% in the decade to 2017, outstripping inflation by two and a half times!
This, at a time when wages are largely stagnant.
According to the Australian Scholarship Group (ASG), which conducted the survey, Catholic School fees cost around $240,000 while other private schools can cost nearly $490,000.
Of course, school fees tend to be more expensive in major cities like Sydney or Melbourne.
By comparison, if you send your children through the public system it can be around $50-$60,000.
And, let’s clarify – these numbers are per child.
So, although it seems ridiculous to comprehend the idea of school as you’re holding that newborn in your arms, realistically, that’s about the time you need to be considering your options and also thinking about savings strategies.
“You’ve got to start planning as early as possible,” says Julie Nipperess.
“On top of a school education, which runs from Kindergarten through to year 12, you’ve also got daycare fees to consider before the children start school and then perhaps university.”
The cost of going to university or college can also vary. If your child is eligible for HECS-HELP (a government loan available to tertiary students) they can choose to defer payment of university fees.
Even so, this simply defers the debt, so it’s wise to consider whether this is the best option. And then, of course, there are books and other materials, perhaps even accommodation costs if your child leaves home to study.
“While the whole idea of school fees can seem overwhelming when it’s laid out like this in sheer numbers, it’s important to remember that there are strategies you can put into place to ensure that you’re on track when the time comes. And saving for your child’s education doesn’t mean you have to sacrifice everything,” Julie says.
“It’s worthwhile to start budgeting for, and planning, your savings as early as possible, so you can make a solid start, and then increase your savings contribution as time goes by. There are also ways to manage your funds so that they continue to steadily grow and will be there when you need them.”
Using the Step Up Financial Process we help you launch the plan that will grow your wealth, protect your wealth and keep you in control.
This is general advice and should not be treated as personal advice. Julie Nipperess is an authorised representative of Step Up Financial Group Pty Ltd ASFL No: 512509.