Everybody knows that Switzerland is an expensive country. Zürich and Geneva regularly appear in lists of the world’s top 10 most expensive cities, with Basel not far behind. This article will help you get a better idea of the costs of raising children in Switzerland to help with your financial planning.
The Basic Figures
A 2023 OECD study found that the average Swiss resident spends an eye-watering 27% of their salaries on childcare costs, the highest proportion in Europe. Indeed, The Association of Cantonal Banks found that the cost of raising a child is roughly CHF 330,000 over 18 years. However, this figure is only in relation to direct costs. Added to this are the numerous indirect costs of raising a child. These include a reduction in the number of hours worked, career pauses, missed career opportunities (promotions etc), reduced pensions or even a difficult start to a new job after a career break. These are subsequently hard to quantify, but no less keenly felt.
The Higher the Income, the Greater the Costs
According to a pension specialist at UBS, "In a conservative calculation of the cost of two children for a median couple in Switzerland, we conclude that this couple is a good million francs worse off when they reach retirement age than if they had not had children." The higher the parent’s income the greater the children cost, due, in part, to the fact that higher incomes are usually accompanied by significantly higher expenditures for external care. Additionally, in most communities, it is the parents with lower wages who receive the greater share of state benefit for child raising. Using this notion, for parents with higher wages who require a lot of childcare, as well as those with children undergoing long educational programs, such as medical school, the total cost could cost reach up to CHF 2.5 million.
Direct Costs
These are lowest in the first four years of a child’s life*. Using the table above, a single child between the ages of 1-4 costs an average of CHF 1,320 per month in the canton of Basel. This figure includes the cost of food, clothing, housing and health and leisure expenses, amongst others.
From the ages of 5-12 the monthly average cost rises slightly to CHF 1,465.
For the ages of 13-18 it jumps again to CHF 1,790. This includes greater costs for food, leisure activities, public transport, clothing and larger expenses such as bicycles, laptops and smartphones etc.
The costs for the first child are generally higher than that for the second or third, so it is not a simple multiplication.
* According to the child cost table provided by the Zurich Youth Welfare Office
In 2021 the Swiss Federal Office for Statistics (SFOS) conducted a study detailing the average costs for couples with children (of all ages). This concluded an average of CHF 838 per month on food, with an average of CHF 1,313 for fuel, public transport and telecommunications, amongst others. This study posited that per child, the average cost of clothes, classes, smartphones and subscriptions, amounts to CHF 638 per month in two-parent households. In two-parent households with several children the expenditure jumps to CHF 1,405 for two children and CHF 1,783 or three or more.
Childcare Costs
Another direct cost, arguably the most keenly felt, is that of childcare. The SFOS study cites that these can vary depending on the type of care, the number of children receiving it and the amount of hours received. This equates to about 4.4% of the median gross income of such a household. However, per child in a private day care facility in Basel, parents can expect to pay up to CHF 2,600 per week for five days of care. Extrapolated over the average year the total can reach an estimated CHF 70,000-100,000 per annum. There is some good news on this front, as the city of Basel soon hopes to vote on implementing a cap of CHF 1,600 per child, per five days of childcare - a sizeable drop.
Indirect Costs
These are harder to quantify, but can be broken down into two distinct topics - lost opportunity costs (promotions, networking, rewards, higher salaries etc) and the financial ramifications of reduced workloads or even part-time work. This in turn creates a gap in the income of the household. Naturally, this is larger the greater the couples’ combined salary.
17% of households struggle to make ends meet when only one person is employed, according to the SFOS. For a household with two people working it is still 8.5%.
Other Considerations
Divorce
Though not something anyone wants to consider, it is, sadly, a fact of modern life. In this instance, who cuts back professionally? Does the mother cut back, but then run the risk of being in a poorer position should divorce occur, or does the husband do so, thus running the risk of losses and opportunity costs?
Government Support
Different cantons offer different monthly contributions - though they are intended to act as a bonus, not something to be relied upon.
Working Mothers
Rightfully or wrongfully, it is generally the mothers who cut their working hours, at least temporarily, in order to take care of their children. According to the FSOF, 60% of 25-54 years old women work part-time. In contrast, 7/8 men still work full-time. As part-time employees earn less, they contribute less to their savings in the 1st and 2nd pillars. Thus, they can only expect to receive the minimum OASI pension and a considerably lower pension from their retirement funds. This heightens the need to be proactive when it comes to private personal pensions, such as the pillar 3a or 3b.
Final Numbers
CHF 18,300 per year on average x 18 years = Total cost CHF 329,400
Education costs of a 4 year degree in Switzerland (tuition & living costs (minus inflation)) = CHF 116,000
Total costs = 445,400/ child
I hope this article has given you some important information for your family financial planning. If you would like to arrange a consultation to discuss these or other financial matters please refer to the information below.
Charles Glover
Charles is a Brit, based in the Zürich area, but who’s first Swiss experience was in Basel. He loves to travel to Greece (with his Greek wife) and Italy. He speaks 5 languages, loves to read and collects art.
If you would like more information or to discuss your financial planning, please contact Charles Glover, at Imperial Wealth Planning.
Email: charles.glover@iwp.ch
Telephone: 044 5520378
Calendly: https://calendly.com/charles-glover
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