The Increasing Costs of Raising Children

To bring new kids or grandchildren into the world and watch them develop is a fantastic pleasure. It is precious to see the happiness and share the joy when they reach new milestones.

Raising a child is expensive, especially now as the cost of living continues to rise, so there is undoubtedly a genuine cost. Although estimates from the few studies that have been done vary greatly, it is reasonable to conclude that over the course of a child’s lifetime, families can spend hundreds of thousands of dollars on their children’s living, medical, and educational costs. Therefore, putting a plan in place to pay for the expenses and utilising government assistance when it is offered can significantly impact outcomes.

Managing the Rising Costs of Raising ChildrenPhoto Credit: https://www.tag.nsw.gov.au/wills/make-will/what-will

How To Manage the Costs of Growing Kids

Managing the cost of raising children can be a challenging task, but with proper planning and budgeting, it can be made more manageable. Here are some tips to help you manage the cost of raising children.

Providing for the Necessities

Update your will to name guardians for your children in case the worst happens as the first step. To make sure your family is safeguarded, you might also think about life insurance and income protection.

A savings and investment plan will then give you more assurance as you navigate the years to come. Financial stress can be reduced by routinely contributing small sums of money to an account designated for educational and other costs. The savings goal calculator on MoneySmart illustrates what is possible. As a strategy to save money for immediate necessities, you might consider fee-free high interest savings accounts or your mortgage offset account.

Meanwhile, some longer-term assets, including stocks, exchange-traded funds, or listed investment businesses, may help pay for future costs. For a relatively little investment, they can provide the potential for capital development and diversification.

Superannuation Splitting

A future-focused approach also entails considering your superannuation. The other partner can split the super contributions with the partner who stays at home to look after the kids. You will need to check with your fund to see if it’s permitted, see if there’s a fee, and fill out some paperwork.

Make sure you comprehend the ramifications for you because there are some tax considerations as well.

Government Assistance

Spend some time learning about the government aid and assistance programs for families. For instance, the Paid Parental Leave Scheme offers financial assistance to mothers up to three months prior to childbirth.

Parental Leave Pay and Dad and Partner Pay have recently been combined into a single payment that is accessible to both parents for up to two years following the birth of the child.

You must submit your claim within a set amount of time and pass income and work requirements.

You could still be able to submit an application for both the Newborn Upfront Payment and the Newborn Supplement even if you are not qualified for parental leave pay.

The Family Tax Benefit, a two-part payment to assist with the cost of raising children, is another option. To qualify for the benefit, you must meet certain income requirements, have a dependent child or be a full-time secondary student between the ages of 16 and 19 who is not receiving any other payments or benefits, such as a youth allowance. You must also provide at least 35% of the kid’s care.

Grandparent Gifting

Money can be given as a present to children or grandchildren by grandparents who want to support their families financially. Be mindful of Centrelink’s gifting policies if you get an age pension. Without affecting your pension, you can donate up to $30,000 over five years or $10,000 in a single year. If you donate more, it will be considered as though you kept the extra money for your own use.

However, for tax reasons, gifts and inheritances are typically not regarded as income. According to the ATO, a gift is not taxable for either the giver or the recipient if:

• There is a transfer of funds or assets.
• The transfer is done on purpose.
• The donor has no expectations regarding compensation.
• The giver receives no tangible advantages.

In rare circumstances, tax may be due when gifts of stock or property are made.

There are numerous joys in raising a child, and having a strategy to handle the financial repercussions might allow you to enjoy the trip. Make contact with us to establish a strategy for securing the future of your family.

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