When you have a baby, taking time off work, buying all the new things baby needs and arranging childcare can really throw off your budget. But if parents-to-be take a good look at their finances early on, they can enjoy their new-found domestic bliss without having to make major financial sacrifices.
Raising children is expensive. Many prospective parents wonder if they will be able to manage. It’s a great deal of responsibility. But most financial worries are unfounded. The most important thing is to make a realistic assessment of your financial situation and carefully plan your monthly household expenses.
The Zurich Department of Child Welfare Services estimates that expenses for a single child range between CHF 1,300 and CHF 1,800 a month. This adds up to CHF 18,500 a year. So by the time your youngster turns 20, you will have spent CHF 370,000 in direct costs. This is the amount of money you’ll need for food, clothing, household and living expenses, healthcare, entertainment and transportation. It’s important to note that this figure does not include external childcare. Nor does it account for indirect costs – specifically, your loss of income and the value of the unpaid work you do for your family. In a study (in German) conducted by the Federal Statistical Office some time ago, all these factors added up to an average total cost of around one million franks per child.
Compared to other countries, parents in Switzerland pay a lot for childcare outside the home. Daycares and preschools generally cost between CHF 110 and 130 a day. These rates vary greatly depending on your canton and town. Parents pay between 30% and 100% of these costs depending on their income. There are discounts for having more than one child attending the same facility. The prices for home-based family daycares, which are often organized in associations, vary even more. Many daycare parents are paid a before-tax rate of about CHF 8 per hour. Meals, transportation expenses and entertainment are extra. You can find detailed information about family daycare at Verband Kinderbetreuung Schweiz (in German).
This question is a common one when people are confronted by the dizzying figures of certain studies. It’s also a valid question, but at the end of the day perhaps not a very helpful one for making an actual decision. A better question is: “Do we want children?” If so, then the next question should be: “How are we going to make this happen?” There’s always a way. While many couples can maintain their standard of living, others have to cut back on their spending. Make sure to read our savings tips for families.
And there’s more good news: When you have two or more children, the monthly costs per child go down. However, this effect is greatest with little children. When they get older, it more or less disappears. It's also important to remember that another child can lead to greater expenses because you will need a larger car, a larger apartment or a bigger house.
The chart clearly shows that although you will need to buy a lot of new things for your baby when it arrives, the first few years are relatively inexpensive. If you can care for your child, then your average monthly costs should be around CHF 1,300. New costs come along starting with primary school. Let’s assume that your child will want to learn the guitar or play soccer. Then don't forget outings, spending money and more expensive expectations regarding clothing and entertainment. Costs are still manageable at just under CHF 1,500 per month at this age. By the time they are teenagers, however, average costs amount to CHF 1,800 a month because they start to develop more expensive needs even though they're not yet earning any money themselves. So, as you can see, children cost more every year right up until their last year of high school.
The figures in the chart for Zurich serve as a general guide, but they should also be put into perspective. Countless parents make do with less than this every month simply because they have to. Every family budget is as unique as the people in the family. Parents need to be interested in one thing only, and that’s how they are going to bring their expenses in line with their budget. And even if you do have certain fixed costs, there are still different ways you can save. A clear household budget and consistent spending checks help to maintain an overview.
Most mothers cut their working hours at least temporarily in order to take care of their children and keep up with things at home. According to the Federal Statistical Office (in German), some 60% of 25 to 54-year-old women work part time nowadays. This stands in contrast to seven out of eight men who still work full time. Since part-time employees earn less, their savings for Pillar 1 and Pillar 2 will also be lower. They can expect to only receive the minimum OASI pension and a considerably lower pension from their retirement fund. This is not enough to maintain the standard of living they are used to. In other words, if you work part time and still want to be well prepared for retirement, then you need to be proactive. One good option is to pay into a voluntary Pillar 3 account. Another advantage is that all deposits you make into your Pillar 3a account are tax deductible so you save on taxes.