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Saving advice for raising a child in 2014

Saving advice for raising a child in 2014

How to manage your finances to ensure the best possible start in life for your child.

When you are starting a family, there is no single answer to the question: “how much do I need to put aside for my child’s future” as the amount needed depends, in part, on the lifestyle choices made along the way.

Preparing yourself financially could offer your child the very best start in their life. Allowing them to grow and develop in a money savvy household could also help them grasp an understanding of the importance of being financially aware.

Listed below are some hints and tips for growing families. Making yourself aware of the most common household expenses parents face will allow you greater peace of mind and could save you cash later.

Food: Recent research has shown that, a couple without children spend an average of $207 per week on food and drinks. Add a couple of growing teenagers into the mix and that food and drink bill rises to an average of $314 per week – or an extra $5,500 per year. Shopping smartly and avoiding costly brands will help keep the costs low.

Clothing: According to a recent Moneysmart survey, buying the latest high waisted shorts or skinny jeans for your style savvy teens can add approximately $1500 to an annual clothing bill. Encouraging your teen to get a part time job to pay towards the latest fashions could save you money on a hefty clothing bill.

Education: Where to send your child to school is an important decision, we all know education is paramount for your child’s future. According to the Australian Bureau of Statistics (ABS), education costs have risen by 54.1% over the past decade. That’s almost double the rate of overall inflation, 27.7%. While the five-figure yearly fees at some independent schools tend to grab the news headlines, the fact is that any school choice will cost money.

Income: When you are planning to start or expand your family, one of the biggest budget considerations for many parents-to-be is around income. Deciding if and when you return to the workforce after maternity/paternity leave is not always an easy or straightforward decision. Clever budgeting, which looks at your new income as well as new expenses, ahead of maternity/paternity leave could leave you with greater peace of mind with your decision. 

The earlier you save, the easier it can be

Anything that you can put aside either before you have children or while they are still young can  allow you to focus on spending precious hours with your child instead of counting your change. Setting up a savings account with a regular savings plan can provide a handy cash buffer.

If you choose an account that pays bonus interest when you make regular monthly deposits, it may motivate you to keep it going.

No matter how large or small the amount that you can afford to save towards future family costs, it all helps. Just knowing that you have a plan and that you’re working towards it can be great for peace of mind. 

For more articles on kids and financial literacy, visit The Beanstalk.

Executive General Manager, Retail Sales

Lyn is responsible for all aspects of the Commonwealth Bank’s Branch Network, leading a team of over 12,000 staff across Australia, UK and China. With an extensive banking career spanning over 20 years, Lyn joined the Commonwealth Bank in 2007 and has a passion for management and transformation projects. She was recently named as one of the 100 Most Influential Women in Australia 2012 by the Australian Financial Review.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.