Listen: Think you’re ready to have kids? Let’s first do some math

Have you been considering having a child? Well, then you should also be thinking about how much it will cost, because from the birth right though to university and even beyond, having kids can drain your finances like few other things can.

Many people approach starting a family in the same way as doing Christmas shopping: we charge full-steam ahead with much excitement and little thinking before we jump – and deal with the financial fall-out later.

It seems that when it comes to the size of our families, things have slowed down in recent years, with current research showing that more people are choosing to have children later in life, having fewer children, or not having children at all.

South Africa’s birth rate was 19 328 births per 1 000 people in 2022, a 5.2% decline from 2019. In 1971, the average number of children per woman in South Africa was 5.6, but that number dropped significantly by 2020 to 2.36 children per woman.

Having fewer children appears to be a global trend, with an average of 1.93 children under 18 recorded per family in the United States in 2021, a decrease from the average of 2.33 children per family in 1960.

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Personal and circumstantial factors

Johan Werth, a father of three who is a franchise principal and financial planner at Consult by Momentum, says that there are several factors at play here, both personal and circumstantial.

“From a lifestyle perspective, more women choose to prioritise their careers in their twenties and even thirties. Climbing the corporate ladder generally involves long hours and less time for personal endeavours, which means that they start families later in life.

“In addition, as things slowly equalise between men and women in the workplace many women are actively choosing not to have children, or to have fewer children than if they were not pursuing a career.”

Werth says the other reason is finances.

“The cost of living relative to income has skyrocketed and this means that there is less disposable income to devote towards starting or growing a family. Added to this is the fact that as more of us start our families later, we want to give them the possible start in life.

“We have an idea of how we would like to provide for them and if this is not financially possible, we simply decide to have fewer children or not have any at all.”

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The cost of having a child

Having a child is expensive and the most recent government calculations put the cost of raising a child for an average middle-income family at R1 681 470 from birth to age 18, not including their tertiary education, but Werth believes that this figure is probably too conservative.

He says while it will differ from household to household and depends on various factors, the real cost could amount to significantly more.

“For essentials such as clothing, food, toiletries, basic medical care and schooling, you can expect to pay around R90 000 per child per year, or R7 500 per month.”

Assuming an inflation rate of 6% per year and the cost of raising your child at R90 000 per year, you are possibly rather looking at around R3 million from birth to age 18, he says.

“Prospective parents also need to consider that this estimation, staggering as it may seem, still does not account for tertiary education, specialist medical treatments or developmental care, childcare (babysitter, nanny or day-care), activities, entertainment and transport costs to extra-mural activities.

Werth reminds prospective parents to also keep in mind that tertiary education, which is already very expensive, is also subject to inflation.

“Three years of university education currently costs up to R350 000, which covers tuition and other related expenses such as books, university accommodation and laptop. Based on the current rate of inflation, you can expect this amount to hover closer to the R1 million mark by the time today’s six-year-old attends university.”

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Remember the moving targets

You also have to factor in ‘moving targets’ such as the state of the South African economy, possible ratings downgrades and inflation which will give rise to daily living and educational expenses when calculating the cost of having a child.

“It’s not unreasonable to assume that the cost of raising a child may double within the next 20-25 years.”

Now, if you still think you can afford to start a family, Werth says it is important to ensure that your financial affairs are in order. He believes medical aid and gap cover for each family member are not negotiable, as well as life cover for the parents.

“Parents must also make sure that their wills are up to date in case something happens to them to ensure that they provide for their children financially.”

Werth says his advice to would-be parents is to plan on having the number of children their hearts desire, but to understand and budget for the expenses involved.

“Now is not the time to bury your head in the sand when it comes to the real cost of raising a child. With a little planning and the help of an experienced financial adviser, you will be in a better position to give your child the best start in life.”