As I neared the end of my first year back in the workforce after having a child, I sat down and calculated exactly how much money we had spent on childcare.
The figure was staggering: we were $23,700 out of pocket for the year. Had the government's Child Care Rebate not existed, we would have spent $31,200 in post-tax dollars on childcare. And it's not because we were cruising on easy street and had expensive taste.
Our daughter attended a terrific early learning centre in Sydney's CBD four days a week. Neither myself nor my husband worked in the city so the location was hardly convenient but it was the only spot we could get. The price tag of $156 a day was steep but, again, there was no choice: despite a comprehensive search we could not secure a position anywhere else.
We don't have grandparents or family in Sydney who could look after our daughter on a regular basis and hiring a nanny was out of our reach.
At the time we committed to the childcare centre in the city, we were under the mistaken impression that the government's Child Care Rebate – often expressed as covering 50% of fees – meant we would have half of the daily fee subsidised. While still extremely expensive, this would have rendered the cost more manageable.
We were wrong: the CCR cuts out once the government has contributed $7,500 a child, per year.
We reached that cap after 24 weeks, so for the next 28 weeks we were left paying $624 a week. It was more than we were paying to rent a two-bedroom flat at the time and explains how I landed on the figure that drained the blood from my face: $23,700.
Fast-forward five years and two more children and I could not give you an accurate figure of what we have spent on childcare. It would, more than likely, bring me to tears and there are other numbers – and things – I'd rather focus on.
For example, the superannuation my husband and I have both put away in the intervening years. The gradual increase in our individual earning ability. The security that offers us and our children. The education, stimulation and community our daughters have enjoyed at the brilliant centres they have attended.
Of course, none of this helps when you are haemorrhaging money on a cost that is entirely unavoidable if you want to work. But taking a long-term view of the expense and absorbing some very tight years might.
In 2014, it was estimated that there were 165,000 parents in Australia who would like to work, or work more hours, but were not able to because of the cost of, or access to, suitable childcare. The cost of childcare is a genuine deterrent.
Working parents go to great lengths to balance the cost of care with their work hours to maximise income while minimising the outlay. The Productivity Commission found that for many families, a mother working more than three days renders her income void once the cost of care and tax is taken into account.
Of course, childcare is a household expense not a cost that should come from one parent's earnings.
Before you pull your child out of care or mentally resign yourself or your partner to not working once you have children, consider this.
Last year Michael Madowitz, an economist for the think tank Centre for American Progress delved into the economics of childcare and his verdict was clear: childcare is expensive, but not working costs a lot more.
An average American woman who takes a five-year break from her career starting at age 26 will lose out on $US467,000 ($620,000) in income, wage growth, super and benefits over her lifetime. An average American man of the same age will lose $US596,000.
That is based on an average full-time salary of $US30,253 for a female and $US33,278 for a male. The average full-time salary in Australia is just above $80,000 so the cost of an Australian parent forgoing work for five years would cost at least the same as the American figures, if not considerably more.
So if you're starting the year dreading the money you are going to pay on childcare, consider what you would be missing out on if you didn't. Financial security isn't everything but it's impossible to overlook and staying in the workforce is the single most effective way you can boost yours. Even if it costs a lot upfront.
This article was originally published by the Sydney Morning Herald on 29 January 2017. It represents the views of the author only and does not necessarily reflect the views of AMP.
Staying on top of family finances
Our short online learning module looks at the importance of budgeting and protecting your family through things like insurance.
Cost of education calculator
The cost of educating your children could be one of the bigger investments you’ll make in life. Get an estimate of what your children’s education may cost you.Calculate now
If you want to turn passion into profits, ask yourself these seven questions.