How Much Do You Really Need To Save Before You Have A Child?

I’m about to enter the second half of my twenties. And amidst the career, travel and nights out, I often find myself remembering that by my age, my mother and grandmother had two kids each. I, on the other hand, wonder how I’m going to be able to afford a house, let alone raise a small human being. 

This isn’t an uncommon feeling amongst millennials and Gen Z. A study by Monash University found that 24% of the young people surveyed are pessimistic about having children. The Australian Institute of Family Studies found that it’s not from a lack of wanting children that our birth rate is declining (although being child-free by choice is becoming more common), it’s the fact that having a secure, stable and “adequate” income stream are pre-conditions for people to feel comfortable having children.

And when you factor in the pay gap, increasing costs of living, climate change, and the housing crisis, many people don’t have a nest egg for themselves, never mind children. Taking all of this into account, if you’re wanting to bring the next generation into the world, how much do you need to have stashed away? 

A 2018 study by the Australian Institute of Family Studies showed that it costs low-paid families $340 a week to raise two children, equating to roughly $170 per child or $8,840 every year. If they’re dependent on you until 18 years old, you’re looking at $159,120 over the course of their childhood. And according to Finder, this is on the lower end of the scale. 

Jennifer Richardson is the Director of 123 Financial Group and creator of Got Money Honey, a women’s financial literacy program that helps women take control of their financial future. 

“Having a family is a huge expense,” says the mother of three. Richardson believes that in 2022, hopeful parents should have at least six months of living costs saved up to “take the pressure off the increased costs and decreased income.”

Richardson recommends reorganising your budgets as soon as you decide that you want children.  “Knowledge is power so doing a deep-dive into your expenses allows you to know where you can make changes.” If you are expecting kids in your future and need to rejig your family expenses, money apps can help to organise budgets.

One expense that Richardson herself didn’t expect was the everyday little things that add up. “As soon as you put a box of nappies and a couple of tins of formula or baby food in the shopping trolley, it doesn’t take long before there isn’t much else left of the budget.”

The purchase of shoes, clothes and furniture as children grow is another expense to take into account. 

“Are you the person that needs to have new 'labelled' clothes or are you happy with hand-me-downs? Are you going to purchase all of the furniture and equipment needed for a new baby, brand new?” Asks Richardson. 

“Every single person has a different lifestyle that determines how much needs to be put aside before they have a baby. There is no set dollar figure for this, just as there is no set amount that we spend each month as individuals," she says.

“These all impact the 'how much to put aside' question.”

For Angelique Voulgaris, a 32-year-old first-time expectant mother from Sydney, she was shocked to learn just how expensive it is — even before her and her partner Andy’s child is born. 

“We have just made a little plan for our first year and mapped out what that would look like. Between us, we have about 50K-60K saved. I think that helps ease anxiety about hospital bills and any unforeseen complications.”

“We were shocked to learn how expensive it is though,” Voulgaris tells Refinery29 Australia. 

“The pre-natal expenses are already a lot and we both earn decent wages. One of my scans was about $750. If we went through the private system, I could have been out of pocket by up to 16K. So, we decided to go through the public system as the expenses don't just end once the baby is born, they only increase — we don’t have a spare 16K to burn.”

When it comes to deciding on incomes, Voulgaris notes that her partner earns “a lot more” so they can get by on one salary when the time comes. These are the observations from a couple who are both on decent wages, so what about people earning far less?

I asked Richardson if there’s any help that lower income earners can receive in order to afford a child. “The government has paid maternity leave for up to 18 weeks, but only at the minimum wage. There is also Family Tax Benefit Part A and Part B which is means-tested so not everyone is entitled to this.”

Babies have always been an expense, but even in a rich country like Australia, it seems that having a child is worth budgeting for if the timeline allows.

“Make sure you have an emergency fund to cover for those unexpected expenses that may come. Look for savings in your day-to-day costs and utilities," says Richardson.