One common method of estimating the cost of raising children is the “budget standards” approach. This method calculates the value of a set collection of goods and services for families both with and without children, with the difference indicating the cost of having children.

Alternatively, our focus lies on a survey-based statistical technique known as “iso-welfare.” This method evaluates the living standards across various households by determining how much additional income or expenditure is needed to maintain the same quality of life between families with children and those without.

While there are many advantages to using this method, a major drawback is that it doesn’t give you an estimate for how much a family needs to spend, rather how much they do spend. Families may well spend more than what they strictly need to.

So, how much do families spend on children?

Lower income families spend a higher share of their income on children, at around 17 per cent for the first child and 13 per cent for subsequent children. But these households spend a lower absolute amount on children.

These estimates are not set in stone. There are different ways to estimate such numbers and they can differ depending on what definitions you adopt and methods you use to analyse the data.

Ok, do kids cost more now?

Our research doesn’t provide clues as to why fertility rates in Australia have dropped (as they have in most developed nations). Other data such as Australian Bureau of Statistics income survey and financial stress data suggest real incomes for couples with children have increased over the longer term (although not by much, if at all, in recent years).