Published on December 15, 2017 7:17 pm, by Jen Bakker
Raising kids is expensive. Australian research suggests is costs just under $300,000 to raise a child to age 17. Some of this is unavoidable, some depends on lifestyle decisions we make and some are discretionary. For most of us though we want to give our kids as many opportunities as we can – which can make skimping on anything to do with our kids a difficult decision to make.
Here are four things to keep in mind:
Child care expenses can be a massive hit to the household budget. For a lot of families, the cost of child care can almost make it uneconomic for both parents to go back to work. If you are looking for child care it makes sense to put yourself on waiting lists as soon as you can – it’s not unusual for people to do it as soon as they find out they’re pregnant. If you can plan and get your name on a list you might avoid paying an exorbitant amount to get the only spot available when you need it.
If you can avoid child care expenses altogether you will be a long way in front. Perhaps grandparents or relatives can help out – even if it’s not all the time.
Another really cost-effective option can be child care that is provided on your employer’s business premises. This is cost-effective because they are generally Fringe Benefits Tax (FBT) exempt. So you should be able to pay for the child care expenses from your pre-tax salary and not pay FBT. Check with your employer to see if they have child care services available.
Otherwise, it makes sense to look at the various options available – daycare centres, long daycare centres, and family daycare centres. You’ll generally find there won’t be a significant price difference between the different options available in the same area. But Family Day Care Centres might offer you more for your money and a bit more flexibility.
It also pays to make the most of government grants and concessions for child care. To be eligible for the Child Care subsidy your child must be attending an approved child care provider and meet residency and immunisation requirements.
School and Tutoring
When it comes to tutoring, if you’re paying an agency to provide a tutor, you will often find that a private tutor will be less costly. If this is something you’re having trouble finding, often the Facebook groups in your suburb are a great place to ask others in your community for their recommendations. If you’re sending your child to a private school and looking to cut this cost, your option is a less costly private school or a government school. Outside of that, reducing fees directly to do with school is difficult.
You might also consider tutoring as a group? Get together with some other parents and see if you can arrange a group tutoring session.
Also if you have older children, or friends with older children that had done well at school you might be able to arrange for them to tutor your kids.
Ultimately, you could do it yourself as well. For many of us, at least up to senior school years we should be able to tutor our kids, shouldn’t we?
This is about finding a balance between creating opportunities for your kids to develop passions and interests, managing your budget and not having kids over-scheduled. It’s easy to get the balance wrong and spend a lot of money or over schedule your kids.
If your kids have developed a particular passion or interest this is really an issue of budgeting a reasonable amount to support their passion. If your kids are yet to develop specific interests it can be a bit more challenging. Try to find ways to introduce them to different activities cost-effectively until they find something that interests them. See if there are introductory programs or trial activities available. Look for programs sponsored by the local council during school holidays etc. If the activity requires equipment see if there is a way to borrow equipment until your kids decide if they like it.
Getting kids out of the house and active is a challenge many parents are currently facing in this age of technology. This may increase the importance of structured kid’s activities outside the home and school.
A few ways to decrease spending here is to give yourself a per term or per year budget and stick to it. Shop around for the best price for the activity your child is interested in – understanding that once they start somewhere changing providers is not always an option due to relationships they will quickly build.
If you’re looking to start your child off and are not sure what to look into first, club sport such as soccer, cricket, and netball are often less costly than options like gymnastics, martial arts, and dance.
To contribute to the costs some states now offer a rebate or voucher to put towards one or two activities per year. Some state government offers this to all children of certain ages where others offer it to children who are listed on their parent’s concession card. Please see the relevant state websites to see about your child’s eligibility.
Kid’s Clothing & Shoes
Unlike most adults, kids continue to grow (and grow and grow), which results in new clothes and shoes sometimes being a must-have rather than a nice to have.
As a parent, you can choose to buy functional and often less expensive or fancy and more expensive. The reality is if you want to buy branded clothes for your children you will pay a premium price.
The third option, of course, is hand me downs. The best way to make savings in this category is to accept the offer of clothes. Often times people who are finished their family, are more than happy to hand on clothes their children no longer fit in to. If you don’t have mates or family with kids older than yours, often the Facebook neighbourhood groups will be offering clothes no longer required for free or for a discounted price. If you’re looking for a way to reduce this category, it’s well worth checking that out.
A big expense every year or 2 can be the purchasing of school uniforms. We can think of a couple of suggestions to reduce that – one is purchasing clothes a little on the big size rather than the size that fits snugly. This may give your child another year’s wear out of them. Uniform shops sometimes take back used uniforms and sell them at a discounted price.
And finally shoes, we find that shopping around is helpful. If you are looking to purchase a good pair of leather shoes or runners for your children look online first – often the same shoes will vary by $30 or more between retailers. And for things like shoes, you can get away with an older model, so check out the sporting clearance stores and online sites like Catch and Ozsale.
And for those who have a rewards membership, you may be able to purchase an eGift card where you can generally get an additional discount of up to 10%.
Lunches & Food
This category is mainly used for things like giving kids money to go out with their friends and paying for tuckshop or canteen at school.
The best way to limit, reduce or extinguish this category is to prepare or teach your kids to prepare their lunch and snacks before school and when they’re heading out with their friends.
If you wish to reduce the category – placing some limits around the number of times you will give them cash for food or the number of times per week, per month or per year they may order tuckshop/canteen will help them reduce spending in this category.
This is another discretionary category, often best managed by putting a limit on it.
A day out can be just as fun whether it’s on a budget or breaking the bank. Some great ways to head out and not spend too much are:
And for activities that have a cost attached, see if you can find discounted deals. For things like the movies, make sure you check your member rewards programs as they will sometimes offer cheap tickets. The Entertainment book price is often at least $5 cheaper than buying at the cinemas:
Kid’s Care & Babysitting
Do you spend a lot of money paying for babysitters?
Obviously an option is to cut down on your use of them, but we understand that’s not always possible. There is often the option of giving up some time to save money. You may be able to find a friend, family member or even a friendly acquaintance in a similar situation and you can do some childminding swapping. This might mean times of looking after their children and yours, and times of them reciprocating.
Or you could think bigger. 30 years ago and even now in some communities, babysitting clubs were on-trend. Groups of parents would get together and swap babysitting each other’s children. This would work on a time or points system but in theory, for every hour of babysitting you did, you would receive an hour of babysitting back. These groups were often formed by friends and could hold as many as 4 parents to 12 parents (sometimes more if somebody organised would track hours etc.). If this is something you’re interested in, there’s even an app to help you get started.
Aside from these ways to save money, another way is to use babysitters less, or see if you can source a babysitter with a lower hourly rate.
You can read out ideas on purchasing clothes, shoes, and toys for your baby, under Kid’s Clothes & Shoes, and Toys & Games. If. you have a brand new baby or are about to have a baby we suggest the following –
Toys & Games
You can really make some savings by simply searching online for the items you wish to buy. Big W, Target and K-Mart are often the cheaper options ranging from kids’ games through to lego and toys. Outside of these stores though, you will also often find online retailers sell many items for even less.
If you’re preparing for events like Christmas or multiple birthdays and buying several little people gifts, we suggest having a list, with an option or 2 per child. Then do some research online, and either head to the shops or make your purchases from the comfort of your home. Don’t forget to add in postage costs if they apply.
Some great places to look online and in-store are:
On top of the sales, if you have a Rewards Membership that gives you a discount, it’s also worth buying e-Gift cards before you head to the shops.
If you decide to pay your children an allowance and are looking for some input on what is reasonable, then starting a discussion in the Spending Shakedown Facebook group might be helpful.
It’s definitely worth thinking about the financial and non-financial values you wish to install in your children and how the provision of an allowance can help that. Some things to consider –
If you have conditions and expectations in regards to the allowance you wish to provide your children then it’s important to establish that upfront. Here is a link to more information on teaching your kids about money.
Jen is an experienced banking professional who loves wine, coffee, finding a bargain and of course her three beautiful children. Since Jen's first budget led her to buy a home at 20, Jen has passionately helped others to make better decisions with their money.