Raising children in today’s world can be costly and if you want to purchase a new home, it’s something you must factor into your budget.
According to a survey by the National Centre for Social and Economic Modelling (NATSEM), raising a child in Australia costs just over $400,000 from when they are born to the age of 21.
Source:National Centre for Social and Economic Modelling, May 2013
And it seems they get more expensive the older they get. Here’s a quick breakdown of average costs:
|0-2||$144 per week or $14,976 over 2 years|
|3-5||$26,000 over 3 years, especially if in childcare|
|6-12||$82,000 over 7 years|
|13-18||$131,300 over 6 years|
|19 – 21||
While these figures may sound alarming, they are actually great ammunition in your home search arsenal. You can use them as a rough baseline to create an accurate family budget – both for daily living and for home hunting.
Here are a few further budgeting tips to help you on your way to your new house:
When you’re buying property, working out a budget is always the first and most important step. It’s imperative you know what money is coming in and out so you know what you can afford. Consider bills, holidays, day-to-day living, education and childcare costs (the infographic above may assist here).
If you get stuck, there are lots of budget-planner tools online to make the process a little easier. Also ensure you factor in any current debt you have such as credit cards.
Once this is all done, you will know how much you have to work with for mortgage payments.
2. Work out where you can save
Once you have sorted out your budget, think about areas where you can make extra savings. Review everything from utilities to mobile phone plans to insurance. Can you get a better deal? Bundling plans and insurance is always a good cost-saver.
Look at other aspects of your life that may offer up savings. Do you really need to go out to dinner every week? Does your child have to participate in swimming, gymnastics, piano, coding club AND after-school sports? Can you cut back on one or two to help prioritise saving for that new home?
In doing this, you may be met with some resistance. But if your children are old enough, involve them in the conversation about why you doing this. Explain your end goal and all it offers them (new bedroom, new backyard, close to school etc). This is also a great opportunity to have the house ‘dream list’ conversation.
3. Review your current debts
Take a good look your current debt level (credit cards, personal loans etc). Where possible, pay them off as fast as you can so you’re not wasting valuable dollars on excess interest.
4. Watch your savings
Use a separate savings accounts with a high interest rate to save for your new home. Automatically deposit a set amount each week or month when you get paid. The key is not to touch it. It is surprising how quickly the money adds up.
5. Create your dream home list
Before you even begin to search for a property, sit down as family and work out what you really want, need and can afford – your bespoke wish list.
Creating your dream home wish list offers two key advantages:
- You don’t waste time chasing properties you can’t afford
- When it’s time to buy, you can quickly hone in on the right properties as they hit the market. This can make a big difference in the competitive world of real estate.
When working out your list, pay particular attention to the age of your children. Try to imagine what types of spaces you will need to accommodate their changing needs.
Your children quickly outgrow all manner of goods from toys to clothing to play equipment. Don’t discount the old adage, ‘one person’s trash is another person’s treasure’. Your second-hand goods can bring you some much needed extra cash to put towards your new home fund.