Australian parents have been spending more on their kids over the past five years, largely thanks to technology and food, new research shows.
Suncorp Bank’s new 2021 Cost of Kids report shows the cost of raising a child in Australia has increased more than 10 per cent since 2016.
Technology and food are the main drivers of the cost increase, with parents becoming increasingly comfortable with using buy now/pay later services to keep up.
The cost of keeping kids connected
The report singled out technology and communication devices as the “single biggest expenditure blowouts”, with parents spending 186 per cent more to keep their children ‘connected’ since 2016.
Ebru Karapinar has two children, aged seven and five respectively.
She said she initially bought each child an iPad as a way to keep them happy on long car rides, but now the TV at home is barely used as everyone is content to watch what they want on their own devices.
“Do I think it’s a good thing? Not really, to be honest,” she said.
“It’s just the generation nowadays, everyone has one.”
Suncorp Bank’s data backs up Ms Karapinar. The average monthly spend on mobile phones, computers, and gaming consoles has risen from $37 per child in 2016 to $106 this year, and is projected to be more than $300 by 2026.
Food has also driven higher child rearing costs.
Full trolleys emptying wallets
Suncorp Bank executive general manager everyday banking Nick Fernando said rising food costs mean parents are spending more than ever to feed their families.
The average parent now spends $402 a month on feeding their child, up 60 per cent over the past five years, Suncorp Bank’s data shows.
“I remember when I was a child, we would have an overfilled trolley and we’d do the [shopping for] $100,” Ms Karapinar said.
“Whereas now when I go to do my grocery shopping for kids, I’ve got two bags and it costs me over $100.”
How parents deal with rising costs
Ms Karapinar said she hasn’t noticed any rise in the cost of raising her second child compared to her first, but expects that to change as the child gets to the age where they start developing more interests and hobbies.
But she said it’s obvious the cost of raising kids has increased since her childhood.
“My mom always says, ‘If I was to raise … kids now, we would never be able to afford to even have kids,’” she said.
But Ms Karapinar said she learned some lessons about spending money after her first child, which helped her save after she had her second.
“When it’s your first child, whether you can afford or not, you do tend to spoil them,” she said.
“So you’re a bit more wiser with what you spend money on [with your next child].”
The increasing cost of raising children comes as Australia’s fertility rate hit a record low of 1.66 in 2019.
Even families with two working parents could struggle in the face of rising costs, as OECD data shows Australian couples on an average income raising two young children spend roughly 17 per cent of their income on full-time net childcare.
Ms Karapinar said even with a working partner, it was hard for her family to get by, despite government payments she received as a stay-at-home mother after her first child was born.
Parents keen to pay later
Ms Karapinar said she has had to turn to buy now/pay later services to keep up with expenses so as not to empty her bank account.
She’s not alone, as Suncorp Bank’s report shows 40 per cent of parents are now opting to use a BNPL service.
“I do use [buy now/pay later] a lot actually, and I find it really helpful,” she said.
“I think if you’re responsible with it, it’s a really good and useful tool for everyone.”
She said while she had previously relied on BNPL services when she didn’t have money to spend, she now uses it for big purchases to make sure she has enough money left in her bank account for emergencies.
While BNPL can be useful, experts warn consumers should be careful to avoid racking up too much debt and late fees.
“Obviously don’t go crazy on it,” Ms Karapinar said.