Thursday, October 1, 2015

When to return to work? This might help you decide - The cost comparison of childcare and schooling

It's a question every new mum faces: Do I return to paid work and, if so, when? There are so many factors at play (childcare availability, personal desire to work, child's health, work opportunities etc) but perhaps one of the most considered and impactful factors is whether it is a financially viable option to (or not to) work. This simple to digest article about Australian childcare costs gives you an idea of what you need to plan for, in terms of childcare costs, when returning to work as well as when your child starts primary school. It's a learned read!

Child care accounts for 20% overall education costs and is the steepest annual riser

Parents pay the equivalent of, or more than, private school fees for their children's child care, accounting for around a fifth of their child's total education expenses. Even if you're not even contemplating private schooling for your child, you're likely to have paid the equivalent of a few year's private school fees before they even reach the local Kindergarten.

And while independent private school fees are slowly increasing, child care outstrips their increases by far, rising by 8.1 per cent each year over the past five years. Private school fees have risen between 3-5%, still greater than inflation (2.3%).

As an example, a well-known independent private school for girls in Sydney's Eastern Suburbs charges between $20,940 (day school) fees for Kindergarten, up to $30,720 for Year 12, and between $14,000, and $18,800 for their Early Learning Centre (pre-school and child care facility).

A child care centre down the road, run by the local council, costs between $90-100 per day (depending on the child's age), an average of $475 for a 5-day week, the equivalent of $24,700 per year! It's also just as exclusive and harder to get into!

However, most families in Australia are eligible to receive the child care rebate (at 50% up to $7500 per year), even if they do not receive child care benefit, so this cost would decrease to around $17,000 pa, which still falls within the parameters of private primary school fees and depending on how many years your child goes to child care, this could be around 5 years of school fees before your child even starts school, even if you choose to go to the public system for their actual schooling! A scary thought.

Child care services are generally open from 8-6, a lot longer than your average junior school day and so by the hour, they are probably less expensive to a degree, but it's still a massive expense you need to plan in to your finances, even if you've no intention of going private for their "schooling".

A recent article by Alexandra Cain in the Australian Financial Review (AFR) published some research and interviews on the growing costs of educating our children, which confirms that the cost of child care is rising at a substantially faster rate than the cost of primary, secondary or tertiary education.

The article said that AMP and the National Centre for Social and Economic Modelling figures indicate a 48 per cent rise in the cost of early childhood education over the past five years.

Reported in the AFR article, AMP financial adviser Andrew Heaven said the cost of educating older children is five times as expensive as the cost to educate younger kids.

"The cost to educate children between zero and four makes up 20 per cent of the overall cost of educating a child," he explains.

"But when you look at the bigger picture, it's actually most expensive to send kids to university, assuming they will be financially dependent on the parents over that time. This also takes into account that kids are now financially dependent on their parents for longer than they were in the past."

AMP's 2012 Cost of Raising Children in Australia report, produced two years ago by University of Canberra in conjunction with AMP, looked into the cost of educating our children. Ben Phillips, the lead researcher on the project said that one of the reasons the cost of education increases as a child develops is because some parents send their children to a public primary school and then go private in high school.

Of course there are also all sorts of "extras" when you get to school that increase in cost as they get older - things like school day trips, away weeks at activity centres, music tuition, overseas trips for history or language purposes, more expensive books and extra tuition.

In fact, according to the report, families with an income of $1160 per week spend $86 on babies and toddlers but almost $500 per week on offspring over 18 years.

Then University cost of living as well as fees - assuming of course they don't pay for this themselves by (horror of horrors) getting a job!

Yes, with or without the private school fees, if you want to and need to work, it's an expensive thing having a child, and probably why over the last five years there has been a 13.54 per cent national rise in one-child families!

To get the average cost of child care in your area click here

Source: Care for Kids