Beyond emotions and magic, starting a family comes with a number of responsibilities, duties… and expenses. So how much does it cost to have a child?
Of course, you will say that love is priceless and you're right, but when planning your life together, the financial impact that the arrival of a child will have is a question legitimate that deserves to be examined. We hear couples say they want children, but wait until they have enough money to start a family, so we wonder: how much is “enough”? How much does a family really cost?
A complex calculation
Since each family has its priorities, it is a difficult calculation to make. For some, it will be necessary to travel, to have a chalet and two cars before thinking of starting a family. For others, you just have to make ends meet and be sure that this unborn child will not miss anything. When it still existed, until 2011, the Council for Family and Children looked into the matter and managed to establish an overview. Other organizations are also working to understand family budgets. So here's what the financial impact of a child looks like from birth to adulthood.
Multiple variables
Many factors come into play when calculating the income of parents of children under 5. For example, access to subsidized child care reduces benefits paid by the federal government, while a salary increase will also reduce family benefits. However, it is possible to establish an average by calculating the basis of what a child needs for food, sleep and hygiene.
A baby
In the first two years of life, a baby needs a lot of equipment. First you have to dress him knowing that he will have to renew his wardrobe very often because he will grow up for 18 years, get him furniture, buy him diapers and provide him with a multitude of care related to the fact that he does not have the capacity or the autonomy to take care of himself.
According to a study conducted in 2008 by ACEF de l'est de Montréal, taken from the document A baby at a low price… for informed parents,when a family buys everything New, a baby can cost up to $13,300 a year. This figure obviously depends on family income since the same study reported that some families had gotten away with as little as $1,100 by breastfeeding (free!), buying reusable diapers (about $750 instead of $1,500 for disposable diapers) and buying used furniture and clothes. On average, according to ACEF, a baby costs a family $5,200 a year.
Average per taller child
In 2013, Fraser Institute claimed that raising a family was much cheaper than you might think. Their study stated that to provide for a child's basic needs in terms of food, clothing, personal care, home accessories, entertainment and school supplies, it was only necessary to spend between $3,000 and $4,500 per year, which is very realistic. However, their assessment did not take into account activities, daycare costs, which disappear after a certain age, or lost income if a parent decides to stay home to care for their child.
By calculating the costs so poorly, many parents, including Janice Biehn, editor-in-chief of Parents Canada, criticize them for having neglected childcare costs and extracurricular activities that represent two vital and expensive expenses for parents. In fact, childcare alone at $7 per day and for a maximum of 261 days per year costs parents $1,827. When you calculate the price of the cinema, a day at the museum, a trip or the practice of an elite sport, this amount increases considerably.
In this sense, the average established by the Ministry of Justice in order to calculate the needs in terms of determining child support is perhaps more realistic.
According to Statistics Canada, a two-parent family with children earned an average of $93,700 per year in 2011, the most recent year on record. For the same year, JusticeQuebec calculated that the basic annual support contribution for a child born into a family where the parents earned between $92,001 and $94,000 was $10,210.
A child would therefore cost $10,210 per year on average according to these government data.
How much do children cost annually? |
|
| Source | Estimated costs |
|
Fraser Institute Study - 2012 |
3000 to $4500 - only basic needs |
|
ACEF Montreal East10 |
$1,100 to $13,000 - average $5,200 |
|
Ministry of Justice of Quebec6 |
$10,210 (family income of $92,000) |
|
MoneySense Canadian Magazine Survey - 2012 |
$12,500 |
|
United States Government |
$12,600 to $14,700 |
Adolescence and studies
This discrepancy between the needs of a baby and the average comes, among other things, from the growing needs of the child. It must be said that expenses increase considerably during adolescence. According to Anne Hélène Gauthier, a demographer, the expenses incurred for an adolescent are three times greater than those incurred during early childhood. This considerably affects the way of life of parents, especially when we know that thesupplements for the Canada Child Tax Benefit and the Quebec Child Assistance are no longer paid to children over the age of 7.
School is also relatively expensive in secondary school and not only if the child goes to private school. The Canadian Council on Social Development estimates that educating a child in secondary school in public schools costs between $800 and $2,000, while in elementary school these costs rise at around $130.
Total
The amount required to raise a child is therefore around $10,000, except in low-income families or those who do business with organizations like the ACEF and who take specific measures to save everywhere where they can.
On average, a low-income family can expect to pay around $100,000 for their child until their 18th birthday, a middle-income family will pay around $180,000 and a we althy family around $230,000 $.
Prevent excess with a budget
Parents love their children, it's a fact, and they would do anything to make them happy. Brands, the evolution of technologies, the desire that the child does not feel excluded, the availability of fascinating and useful products, spectacular parties and the lack of time compensated by the purchase of prefabricated products ensure that family expenses are increasing more and more. Parents also overestimate the needs of their children; a child who only “needs” a fewtoys will often have more toys than time to use them.
There are also quality levels for each item you buy. For example, a berth made of a finer species of wood can cost close to $2,000, a less delicate berth will cost much less, while a used and still regulation berth is easily found for less than $200. The same goes for clothes, strollers, car seats, etc.
For all of these reasons, it's important for expectant parents to set a budget and stick to it, to avoid the temptation to buy and do everything in the first few years of their child.
Support and help
Organizations are ready to help parents better plan their expenses by focusing on all aspects of life as a couple: living together, buying a house, having a child, planning for retirement, etc. The ACEF is one of these organizations. If you are planning to start a family, do not hesitate to contact an organization in your area for advice or to order the guide A baby on the cheap… for informed parents.
Financial Institutions
Banks and credit unions can also help you set a budget and split your savings into several savings accounts with a specific purpose (back to school, Christmas, travel, home maintenance, etc.). It's a good way to not get caught off guard or get into debtwhen Christmas, summer holidays or birthdays come. This method does not release the savings themselves - you will have to find ways to generate savings - but it avoids the repeated stress of large expenses that come up in the year.
Finally, we also have a Budget and Savings folder to help you reduce your expenses and manage your enthusiasm. Do not hesitate to consult it, you will find several solutions.
