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Cost of children not so high after all

New research has found the cost of raising a child may be $1,300 a year, not $10,000 as previously estimated.

The maths … If children were a "cost", parents would end up less wealthy than comparable couples without children. A study found this was not the case.

Children cost $1300 a year

Sky News
12 March 2009

Children cost $1300 a year

New research has found the cost of raising a child may be a lot less than we think.

When comparing total net wealth, a Curtin University study estimates parents are only slightly worse off than their childless counterparts.

It suggests bringing up a child costs as little as $1,300 a year - not $10,000 as previously estimated.

It also shows the cost of raising two children until they're 21 is more like 55 thousand dollars - much less than the past calculation of around half a million dollars.

Cost of kids not so high after all

The Sydney Morning Herald
12 March 2009

Cost of kids not so high after all
By Adele Horin

The cost of raising children is not nearly as high as parents have been led to believe, a study reveals. Far from a child costing $10,000 a year, as previous research indicated, the price is more like $1300.

Michael Dockery, an associate professor in the school of economics and finance at the Curtin University of Technology, says children may even enhance their parents' wealth.

"People now believe they'll be millions of dollars out of pocket if they have children," he said. "It's nonsense."

If children were a "cost", parents would end up less wealthy than comparable couples without children. But his study, based on 3168 couples, found this was not the case. When the net wealth of the parents and the child-free was compared - housing, shares, superannuation and savings - the parents were only marginally worse off, suggesting a child "cost" only $1300 a year.

When wealth accumulation between 2002-06 was considered, couples with children were a little better off.

Dr Dockery said couples with children were more likely to be home-owners and to have a bigger house.

Previous Australian studies have shown that a typical family will spend $537,000 on raising two children from birth to 21. Dr Dockery claims the cost is more like $55,000.

Dr Dockery disputes the logic of seeing children as a cost. The price people were prepared to pay for fertility treatments showed children were regarded as a "very large net benefit".

He also takes issue with studies that used the amount of money parents spend on children to determine their cost. "There seems little justification for considering expenditure on children to be a measure of their cost, any more than going to a restaurant can be considered a cost to the patrons." Restaurant-goers saw their night out as a benefit, not a burden.

As well, when couples chose to have children they understood they would have to switch their expenditure from dining out to nappies and child care.

"They value having the children more than the lifestyle," he said. "To argue they are worse off makes no sense."

Dr Dockery cautioned against using his research to calculate child support because the situation for sole parents was different. But he said the family payments system had helped make children "cost-neutral" and the emphasis on benefits for "working families" needed to be changed to help all people.

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