Last week in Australia there were a few articles floating around the web in regards to the cost of raising children to the age of 21. The article (which you can read here if you want) said that it costs on average $800,000 to raise two kids to the age of 21. It was split as being $240,000 per child for low income families, $400,000 per child for middle income families and $500,000 per child for high income families.
The differences in costs between the income ranges tell me that the figures in the article are probably fairly arbitrary as a child doesn’t actually need to cost anymore depending on the amount of income that you make. What it tells me is that people with larger incomes are more likely to spend excessive amounts of money when they don’t necessarily have to. I assume this is just because they have more and expect to live a more inflated lifestyle.
Educating a Child
In fact the article even says “So parents are actually choosing to spend more money.”. This quote was in regards to private schooling, which really isn’t required (at least not in Australia particularly now that we have a national curriculum). It seems that most kids come out of both the private and public systems with only limited real world knowledge (particularly when it comes to managing your finances) with students more geared towards knowing how to sit exams than to do anything to contribute to national productivity.
Costs of “Fitting in”
There is also a part of the article that goes on about the increased costs involved with making sure your kid has all the latest materialistic gadgets and brand name clothing to “fit into a particular social group”. If there is one thing that I will be teaching my son, it’s that you don’t want to be a part of that social group and that nothing good will ever come from comparing yourself to others. There will almost always be someone that is going to be better than you at almost everything, and that you should concentrate your efforts on enriching your own life rather than being miserable trying to outdo others around you (see Comparison is the thief of joy and Keeping up with the Jonses).
Anyway, my point (although I have deviated off topic a bit) was to argue that it doesn’t actually have to cost $800,000 to raise a child to 21. I’m sure it can if you don’t manage your money very well, but it doesn’t have to. I am almost certain that with the right mindset you can get away with spending a lot less than the average person does, and without your child having to miss out on the things they enjoy. Don’t get me wrong, I know kids aren’t cheap and that you have to spend money on them, I just believe it can be controlled.
I guess for me personally time will be the ultimate judge, but I would be very surprised if the figures quoted in the article turned out to be accurate.
What do you think guys? Have you had kids and know first hand of the real costs? Can you shed any light on the topic for me?