EXPENSIVE CHILDREN
New research suggests that the cost of raising a child has now risen above the $1 million mark. The claims have been made by social researcher Mark McCrindle, whose figures seem to make a mockery of the Federal Government’s estimate of $384,543 to raise a child to 18. He estimates that the real cost to raise a child totals $1,028,093.
McCrindle claims his research was carried out on 4,500 Australians, with different calculation methods to the Federal Government’s research. He has used a longer calculation period since he claims that the average child now stays at home until 24 years of age, and added in further allowances for expensive toys, high priced electronics, sports and dance lessons, and private tutoring.
Combining the cost of raising a child with McCrindle’s figure of the average family consisting of 2.7 children, this equates to the total average cost for each family to raise children being $2,775,581. With most people struggling to earn this amount in their lifetimes, it raises questions as to how McCrindle came up with his figures.
CURRENT STATE OF SOCIETY
Regardless of whether McCrindle’s figures are correct or not, his observations on the tremendous amounts of money being spent on children are spot on. He has mentioned that parents are now spending more money per child than ever before, including moving away from sharing items and making sure that their children had their own set of everything.
There has also been a shift of consciousness towards parents wanting the best of everything for their children, such as the example of spending on private education which could otherwise be obtained free from the government. The spending on birthday presents and Christmas gifts has reached astronomical proportions, with parent no longer giving a small $10 or $20 gift, and instead forking out large sums of money for expensive Playstations, iPods and Laptops.
Much of the lavish spending can be attributed to parents trying to keep their children entertained. Children used to play in parks or vacant land, but this is now hard to find or too dangerous to send them to. Parents are also spending far less time with their children, with a shift towards both parents working and jobs requiring later work hours. Many parents also need to satisfy their own needs, so the neglected children are dumped with electronic fun.
FAT KIDS & PARENTAL WARS
In addition to the reduction in family bonds, the electronic era and subsequent changes in society are leading to a number of other problems. Parents suffering from a lack of time not only replace their parenting with electronic toys, but also replace home-made cooking with processed foods and take-away meals.
Fruit snacks have been replaced with expensive sugar treats, walking or riding a bike to school is now done by car or bus, playing with friends has now become watching TV, movies, and playing videos games. OECD Health Data ranks Australian as the sixth fattest nation in the world, which should come as no surprise considering our changing lifestyle habits. The changes in lifestyle habits are also a contributing factor behind the increased cost of raising children.
There are other societal changes which are contributing to a large proportion of pay-packets being spent on children. In the last 20 years, the number of children born out of wed-lock has risen from 15% to 34%, and divorces or de-facto splits continue to rise. This has led to ‘parent wars’, where each separated party tries to outdo the other one to gain their child’s affection. Lavish spending is often seen as the key to winning, leading to extreme amounts of money being spent to win their child’s love.
CALCULATIONS OFF
Although the amounts spent on children have increased dramatically over the past few decades, they would still be nowhere near the astronomical million dollar figure estimated by Mark McCrindle. Averaging these expenses over his 24 year calculation period equates to $42,837 per year just to raise one child.
Considering that the average family has 2.7 children, this would mean that on average a family would be up for $115,660 per year in child-raising expenses. The ABS (Australian Bureau of Statistics) August 2009 average annual wage is listed at $48,771, which would be a tad under $40,000 after tax is taken out. Even with two parents working and earning the after after-tax income of $80,000, they would still not be able to afford to raise the average family, let alone pay for a house, car, food or clothing for themselves.
Quite frankly, Mark McCrindle’s figures are utterly ridiculous. What is more disturbing is that reporters and news organisations across Australia have gobbled up this rubbish and printed it. The media is supposed to have checking mechanisms in place to ensure all stories are verified as being accurate, yet nobody has decided to do some simple maths and work out that McCrindle’s claims are so far past being impossible.
MCCRINDLE MADNESS
It is fair to wonder why Mark McCrindle would make such ridiculous claims and even fairer to wonder why the media would go along for the ride. The media introduced him as a Social Researcher from McCrindle Research, and my first thoughts were that he has simply sensationalised his claims in order to win some more research grants. But when conducting research on Mark McCrindle, I uncovered some different information.
He is the owner of at least three websites promoting his work: mccrindle.com.au, markmccrindle.com and researchrooms.com. The websites are very amateur and contain a number of problems. The first site I viewed wouldn’t even align in the browser properly, while grainy images and pictures, as well as dodgy page navigation button coding were consistent problems throughout.
One quote I came across regarding Mark McCrindle read “As a Social Researcher, Mark has gained the Industry’s highest accreditation of Qualified Practising Market Researcher. His highly regarded research and reports into the changing times and emerging trends have developed his reputation as a futurist, demographer and social commentator.” This type of hype was spread across numerous websites, as McCrindle seems to be involved in ‘Expert Prostitution’.
IS HE REALLY AN EXPERT?
‘Expert Prostitution’ is when a person seeking to build a business in a particular field, offers their services as an ‘Expert’ to news organisations and other businesses to boost their image and credibility on their stories and services. In return, the ‘Expert’ gains valuable media time and boosts their public image. Appearances often coincide with the launch of a new product or service, or in McCrindle’s case, a new book. It just so happens that he has authored a new book about global generations called ‘The ABC of XYZ’. There is nothing like getting your name in the news and generating controversy to boost your book sales.
It appears the child raising cost estimates are a deliberate tactic to increase book sales. The media has gained by creating interest in their news, so it has been a win-win for both parties. On the other hand, if it is not a deliberate tactic, then McCrindle must surely be mad. His figures are beyond impossible and rightfully deserve their place in the garbage pile.
McCrindle and his company McCrindle Research seem to have built a strong reputation in Australia, as well as generating an impressive list of corporate clients. But when his latest claims about the cost of raising a child are taken into account, one must wonder whether he is really an expert in his field, or if he has just built his reputation through dubious claims topped with a bundle of fluff. I for one will have trouble believing even a single word that comes from his mouth in the future.
Parenting in the 21st Century: the $1,000,000 role
The Federal Government’s Child Support Agency (www.csa.gov.au) has tables which outline the care costs of raising children and to raise 2 children to 18 based on an average household income will cost $384,543. However this figure does not include private education, holiday or other “non-essential” items.
In 2007 NATSEM calculated the cost of raising 2 children to age 21 including the education, travel, and real-life expenses was $537,000 (www.canberra.edu.au).
However, even this estimate that raising children today will be $537,000 is an underestimation for the following reasons: first, the average number of children per household that has children is 2.7. Therefore based on $537,000 for children, the average parental expense to raise their (2.7) children is $724,950. Second, the figure assumes that by 21 the children will be independent. Yet in today’s Australian families the majority of young people stay in the parental home and rely on their parents for some of their expenses until their mid 20’s. Therefore the cost per household to raise children to age 24 is $834,000. Further, when the additional, non-essential yet “usual” child rearing expenses are added (toys, holidays and travel, dining and entertainment, private tutoring and education, sport and activities, furniture and household equipment dedicated to the children’s use etc) the cost increases by additional $3000 per child per year. This takes the total parental cost to raise the average number of children in Australia to $1,028,000.
Rising costs of parenting
Here is a breakdown of the costs which total $1,028,000 to raise the average family (2.7 kids) to independence (24) today per category:
$206,000 Food
$165,000 Housing & utilities
$157,000 Recreation & entertainment
$153,000 Health & other services
$129,000 Clothing & equipment
$123,000 Transport
$95,000 Education & child care
Note: the costs (e.g. housing) are not the total household costs but only the amount apportioned to the children.
Mark – You can quote all the studies you like or provide a million different breakdowns, but the fact remains that your figures are still IMPOSSIBLE.
Your figures suggest that the average family would be up for $115,660 per year in child-raising expenses. How is that possible Mark? Surely you can work out that it is IMPOSSIBLE for people to afford that much.
Let me put it another way – Lets say someone was attempting to calculate how long it would take for them to travel around the world by boat, and the answer they came up with was 1 second.
Your method would be to quote impressive studies and detail the breakdowns in your calculations to prove that your answer is right. My method would be to realise that the answer was impossible and come to the conclusion that the calculations must be incorrect.
If the boat traveller decided to use your method and keep telling people that it was possible to travel around the world by boat in 1 second, then that is fraud, which is defined as an intentional deception made for personal gain. So tell me Mark, how are the book sales going?