In this study we have estimated the direct gross costs of children in Australian one and two parent families, where the costs of children were defined as parental expenditures on children up to 17 years of age. The level of expenditure was determined by comparing the expenditures of families with the same number of adults, with and without children and at the same ‘material standard of living’. The measure of the ‘material standard of living’ was the proportion of total expenditure spent upon a basket of goods that included food consumed at home and fuel and power. No account was taken of the indirect costs of children (e.g. the forgone earnings due to mothers working part-time rather than full-time).
There were several important findings made in the study. Not unexpectedly, these included that the average costs of children in Australian families varied according to the age of the child, the income level of the parents and the number of children in the family. More specifically:
- The cost of a child was found to be lowest for children in the youngest age group (at $85 a week for zero to four year olds living in middle income couple families with an average gross income of $1330 a week) and highest for children in the oldest age group (at $364 a week for 15 to 17 year olds in the same middle income couple families);
- Higher income families spent more on their children than lower income families (e.g. the costs of a five to 12 year old child were estimated at $121 a week for couple families in the bottom income quintile, rising to $291 a week for couple families in the top income quintile);
- While the dollar costs of children rose in line with rising family incomes, they nonetheless fell when expressed as a proportion of gross family income (particularly for older children);
- The average expenditure per child was found to be greatest for families with one child and fell for larger families. The average cost of the first child in couple families was $179 for middle income couple families, while the cost of a second child was $138 for the same families, the third child cost $111, the fourth child cost $94 and the fifth child cost only $83;
- The average expenditure on children in sole parent families was found to be higher as a percentage of gross income than in couple families. It was unclear to what extent this reflected the lower incomes of sole parent families and the fact that there was one fewer adult sharing the family budget.
In assessing the results of the study, it must again be stressed that the costs of children that have been presented are averaged estimates derived from reporting of what parents spend to meet all household costs. Being averages, actual expenditures on children will often be considerably higher or lower for particular families than the estimates we present—i.e., nothing in the study suggests a prescriptive level of parental expenditure.