What does a third child mean for your spending?

We just had our third child!

And while the step from two to three has so far not been financially difficult (lots of hand-me-downs), for some families it can be a real challenge. Where I see the greatest struggles are in one income families, when one of the parents has to take time off work to raise their children or even harder the single parents out there. It can be really jarring for you to go from two regular income streams down to just one or single parents dropping back to part-time work. Your expenses and lifestyle are still the same, but the costs increase with your new child.

New baby? New budget!

Having a budget is an incredibly useful tool, but most importantly you need to track your spending. Understanding where you’re spending money allows you to save for the big expenses, like holidays, and ensure you’re always moving forwards. You can then identify areas you could improve on! Challenging yourself to get the most out of your money can be the best thing you ever do in your life.

Clearly, the more you earn, the more you can afford to spend on your kids. The table below shows how much the average family from each income bracket spends on each of their kids each week.

Source: National Centre For Social And Economic Modelling (NATSEM)¹

When you’re looking at your budget and costs, a third child will certainly increase them, but perhaps not by as much as you might think (at least at first). You have to consider whether you’re paying for childcare or using family and friends, whether your children have special needs, and the types of activities you do with your child, like swimming lessons or playing sport. You need to think about the amount you spend on new baby equipment, like prams and cots, and later on whether you send your children to public or private schooling.

Generally, your first child will have been the most expensive, as you will be buying a pram and cot for the first time, and hopefully can reuse them with your second child. In turn, the second will cost more than your third, because by the third you have a mountain of hand-me-downs ready to use. So while it does cost more to have more children, each costs less than the last.

Despite this, the price of parenthood is that your children will only cost more as they get older and according to a Suncorp Bank report in 2016 found the average cost of raising children to age 17 was over $297,600².  The question is, will your incomes rise to the challenge?

This is where we come in. 7Wealth has years of experience working with families to set up your budget, stop you living pay to pay, build your capital, and most importantly facilitate the conversation between couples to map out their future together. Having a third child was part of the plan for my wife and I (although I still want a fourth!), but many families struggle to handle the costs of their children. We are here to help.

If you would like to make a time to meet us, give us a call or contact us online.

^{2 http://www.suncorpgroup.com.au/sites/default/files/pdf/news/Media%20release_Costs%20of%20Kids_FINAL_27032016.pdf}

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