How much does it cost to start a family? [Checklist]

Starting a family can be an exciting time, but also a stressful one. Simply, because no-one can know for certain the cost of raising a child or how those costs will change as your kids get older! Because they do – in ways you might not expect.

Around 300,000 babies are born in Australia each year, according to the Australian Institute of Health and Welfare (AIHW) – we know from our research in the Choosi Cost of Kids Report 2023 that around 56% of parents found starting a family more expensive than they’d first expected.

Having a plan in place for the family finances is essential. And the good news is, putting it in place right from the start can help ensure that you’re prepared and financially protected.

Here’s a quick snapshot of costs, and how you can start budgeting for your bundle of joy!

How much does it cost to start a family?

In short – a lot! And for many parents, the costs start before the baby is even born.

For example you might need help conceiving with fertility treatments. Out-of-pocket costs for IVF (with the help of Medicare) may range from $1900+ as a public patient in NSW to $5500+ if you go private, but there may be government rebates to help you with these costs.

Then there are costs for your prenatal care and childbirth, which can vary depending on whether you go public or private. Public involves shared care with your GP and a midwife team at the hospital where you’ll be giving birth. This costs a lot less than private as many of your tests and appointments are bulk-billed or covered by Medicare.

Understanding the financial considerations of starting a family

What does it cost you each year to raise a child? According to our research, the average is $12,823 per household, per year. Gulp!

And that’s made up of a number of different expenses, including:

• Housing: This is the biggest chunk of change you’ll outlay – whether you rent or own your home (it doesn’t help that house prices are rising, either).
• Childcare: You can get a bit of help with the Child Care Subsidy (depending on what you earn), but 38% of parents said they underestimated how pricey childcare would be.
• Food: It’s possible to feed your family for less, but given the cost of living has been rising, we know the average Aussie 3-person household now spends $179 on a weekly shop.
• Health: Keeping your kids healthy can cost you big time, with dental and orthodontic care considered the greatest out-of-pocket healthcare expenses.
• School: Even a ‘free’ public school education can cost you $89,500 over the 13 years of your child’s school career, from 2023. Going private? This can set you back $357,931 over 13 years.

Don’t forget things like toys, tech, presents, birthday parties, sports and of course, clothes and shoes – it all adds up!

Tips for budgeting and managing family expenses

Managing family expenses effectively requires a budget – that’s a no-brainer! Otherwise you’ll feel like you’re just chasing your tail every time the next bill hits your inbox.

Here are our tips for budgeting and managing the family finances:

1. Look at all of your income: whether it’s wages/salary, business income from a side hustle, investments, or government subsidies – add it up to figure out how much you have to play with each month. Using an online budgeting tool can be helpful.
2. Write down the non-negotiable expenses: you have to meet these each month, so you need to know what has to be paid first. This would be things like housing (rent/mortgage), utilities, food, healthcare, childcare or school fees, and other day-to-day expenses.
3. Create a budget or ‘spending plan’: allocate the required funds to the associated expenses. That way, you can see what might be left over and where you can add in discretionary spending for things like nights out, entertainment, etc.
4. If funds are tight, look at where you can cut back: this could be for things like food court lunches (pack your lunch instead), streaming services you barely use, gym memberships you never use, takeaway (it’s often far cheaper to cook), online purchases you don’t need, and other things like takeaway coffees.
5. Create separate accounts: if possible, do this for different expenses. That way, you can establish a bill-paying system for your mortgage or rent, utilities, school fees or childcare, letting you see at a glance how much money is allocated to each. You can also create accounts to save for family holidays or Christmas.

Adapting your budget as your family grows

When your kids are little, the biggest expenses are likely to centre around things like childcare, nappies, baby gear and so on. Taking a holiday with a baby isn’t usually a stretch from what you’d pay as a couple because your baby can be in the hotel room with you. But when your kids start to grow, so do your expenses, so you’ll need to adapt your budget accordingly.

In our research, 34% of parents said the biggest unexpected cost was how kids grow out of clothes and shoes so quickly. Other unexpected costs for 27% of parents include lessons, tutoring, school trips and other extracurriculars – and sport – so you may want to consider tweaking your budget for all of this as your children approach school age.

You’ll also want to factor in out-of-pocket healthcare costs – for 28% of parents, the biggest ones were dental and orthodontic care, followed by private health insurance (18%) and special needs appointments (11%).

Other costs which you might not be expecting (that your kids definitely will be) are things like toys ($423 per year for the average household) and tech ($765 per year for the average household).

Preparation is key

Having the right insurances in place is one thing you could consider to prepare for the unexpected. It can give you peace of mind, knowing your family is taken care of financially should the worst happen.

Find out more by comparing a range of products, and don’t forget to download our free checklist.

Download the Budgeting for Baby checklist.