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Raising children can be costly

Parents who have been busy buying uniforms, shoes and books to get ready for another school year will realise the cost of raising and educating children can be challenging. With the recently announced changes to Family Tax Benefits from 1 July this year, it is important to plan ahead when it comes to the family budget.

PIC_mum with kids_shutterstock_46242610BMO Financial Solutions Principal and father of three, Mal Smith explains the new adjustment to the Government payment that assists with the cost of raising children.

“If you’re a couple and your youngest child is 13 years or older you’ll no longer be paid Family Tax Benefit Part B. Nothing will change for single parents, grandparents and great grandparents who care for a child 13 to 18 years of age. They’ll continue to be eligible for Family Tax Benefit Part B.

“This change will see thousands of households up to $4,300 worse off each year.” Mr Smith said.

The latest report from AMP and NATSEM* estimated that the cost of raising two children from birth to the age of 21 years costs the average family over $800,000 or around $450 a week per child. This is almost double what it was reported to cost back in 2002.


Mal Smith discusses further how to manage the cost of having children.

“If we want our children to have the best possible start in life we need to feed them, care for them and give them every available opportunity.

  1. Develop a family budget. This is fundamental and yet so many families just spend and spend without a plan. Write down all your income and expenses. Split expenses into what is essential (like electricity) and discretionary (like going to the movies). There are some good apps and free worksheets on the internet you can use, or see a financial planner to help you through the process.
  2. Decipher between need and want. Your children will survive (and can still be very healthy and happy) without every single new electronic device. Thinking carefully about whether items are a need or want will also help set the right example for your children.
  3. Get protection. If you are only just making ends meet and one of your family members gets seriously ill, having the right insurance will mean you have the opportunity to receive benefits to help you through tough times. Children are relatively inexpensive to insure, so it’s worth checking it out with an experienced financial planner.

Implementing these three concepts will help ensure you get your children from nought to 21 without facing a financial fall out.” Mr Smith says.


*AMP.NATSEM Income and Wealth Report: The cost of raising children in Australia May 2013. http://www.natsem.canberra.edu.au/storage/AMP_NATSEM_33.pdf Principal Wealth Management Pty Ltd trading as BMO Financial Solutions ABN 53 109 336 601 is a Corporate Authorised Representative of McPherson & Associates Pty Ltd Australian Financial Services Licence (AFSL) 229883. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your particular investment objectives, financial situation and individual needs. McPherson & Associates Pty Ltd and its Authorised Representatives do not accept any liability for any errors or omissions of information supplied in article.

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