Kids or career? The costs to consider when having another child

There is considerable debate surrounding returning to work after having children. Claire Esmond from Pave Wealth Services looks at the true cost of raising a child and explains the financial burden of adding to the nest.

It’s the million dollar question, or the $812,000 question to be precise. That’s what it costs to raise two children from birth until they leave home, giving some of us professional women reason to question whether we can afford – or want to – have more kids.

It costs professional women more than a slow-down in career progression when they have children. It gives us love and reward, but having a family these days has a significant impact on household finances.

While some professional women can afford it, especially those who are married or living with a partner, others will struggle to reconcile any desire for a bigger family with their vision of the lifestyle and career they may want to have.

The latest AMP.NATSEM Income and Wealth report, ‘Cost of Kids,’ found that although subsequent children are cheaper than the first, the combined cost of raising children is substantial.

The report found on average families are spending $281 a week on the first child, $232 a week on the second child and $193 a week on the third child.

Although additional children cost less per child, this by no means indicates that the costs of larger families are not significantly higher – in fact, some might find that for their level of income, it’s exorbitant. High income families with three children spend on average around $1,045 a week on their kids, the report found.

But for low and middle income families with three children, the cost hurts even more because they represent a greater proportion of the family’s income. The report showed low income families with three children are spending $476 a week and middle income families around $667 a week on raising their children.

The pressure on low income families is especially great with these families devoting 41 per cent of their income to their children, if they have three. By comparison, middle income families with three children spend on average 29 per cent of their income on the kids and high income families with three children around 21 per cent.

The cost of kids may only be part of the reason why a higher proportion of mothers with young children are returning to work after having children.

But costs aside, for professional women wanting to maintain a career it is important to keep their skills up-to-date. According to the Australian Bureau of Statistics more than 50% of women with children under five – and 75% with children aged 6-14 – are back at work.

So just what should professional women consider in deciding whether to have another child?

The choice to have another child is really a decision for the heart as well as the head.

Ultimately, people need to work out what is most important to their family – what their values and life goals are. The cost of extra kids and potential sacrifices that might need to be made are relative to these things.

Some would rather deal with the financial struggles they may face than not have more children. Other people want to live a life where they can afford to travel and put their children through private schooling.

Professional women also need to think about how they will keep their skills up to date while taking time out of the workforce to have another baby. This may involve undertaking online study from home or continuing to engage in networking and professional development seminars.

Once people are clear on their values and life goals, the next step is to take stock of their personal financial position – there is no point in comparing with neighbours or friends because everyone’s situation is unique.

It’s important to think beyond the cost of the baby and remember that in today’s economic climate the majority of children won’t leave home at 18. It’s not the early years of child-rearing that costs the most – it’s in the teen and early adult years where the expenses really hit home. This is because of the extra food and energy budget required as a child grows and also the growing cost of education, travel and recreation.

Children are the most expensive to support from 18-24 years and for more and more families these children are still living at home. The report found that for low income families the weekly cost of providing for these adult children was more than five times that of a child under four years.

Given that older children are significantly more expensive than babies and younger children, people need to think long term and consider if they have the income, or at least a plan to increase their income, to cover the likely costs down the track.

It’s never too late to start planning for tomorrow, both with your finances and your career. In fact, career planning when you are raising a family is something you just can’t afford not to do.

Professional financial planners can help with this process and set in place a plan that will keep your finances and your work goals on track.

Whatever you decide, and however many children you are lucky enough to have, it pays to remember that after your children are grown and have flown the nest, your career is ultimately one of your biggest assets. Look after it now and it will look after you later.

As the famous poem Desiderata suggests, “…Keep interested in your own career, however humble; it is a real possession in the changing fortunes of time.”

This blog was first published on Women’s Agenda and is published on Open Forum with the permission of the author. Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.