4 Costs to consider before having a child

It takes a lot of hard work to raise a child. But, more than that, it costs a lot of money. If you’re planning to start a family, you need to be aware of how it will change your current budget. 

Outside of the basics, such as three daily meals and a roof over their heads, we have a look at some less-obvious costs you should be aware of.

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Pat Magadla, senior business development manager at Old Mutual Investment Group, notes four important costs to consider outside of food and housing.

1. Your child’s education

Magadla says that basic and university education can be free in South Africa – depending on whether you can prove that you cannot afford it yourself. This is a tricky process, and only a certain number of students can benefit from this.

Those who don’t qualify for this aid, Magadla says, need to pay for their children’s education to reduce the burden on the state.

“The costs are significant, whether you decide to go public, model C, or the private school route. Over and above fees, you need to consider stationery, textbooks and transport,” says Magadla.

“The cost for uniforms is also very high. The Competition Commission recently issued guidelines to schools to curb uncompetitive behaviour, which was pushing prices up exponentially,” he explains.

In addition, parents need to consider extramural activities, such as sport and art, to enhance their children’s development. The equipment for these can be extremely costly, especially if there is a need for private coaching or lessons for specialized activities.

READ MORE: How to save for your child’s tertiary education

2. Their medical costs

Although children tend to have potent immunity to illnesses, Magadla says it’s advisable that parents have some kind of medical cover – especially hospital cover, as the costs of a hospital stay can be astronomical.

“For children involved in sport, injuries are likely at some stage. Our country also has a very high car accident rate and, unfortunately, we need to plan for this,” says Magadla.

3. Keeping them entertained

Although budgeting for entertainment is necessary, Magadla believes this is the one area in which parents can save money by being more creative.

“Our country has an improved provision of safe and open spaces, such as parks, and we have beautiful beaches and outdoor areas.”

For cold days at home, Magadla suggests stocking up on board games. Advancements in technology have also enhanced access to online games - although it is of course critical for parents to monitor this. The cost of extra data is also important to consider.

4. Gifting your child

Magadla recommends that parents consider opening a savings and investment account for their children to teach them about the power of compound interest.

“With as little as R500 a month, you can open a unit trust account where you can save up to R35,000 a year, tax free. Your kids will thank you when they are older but, more importantly, you will have demonstrated to them how accessible investing is,” says Magadla.

Investment options are available for you and your family – click here.