Shocking report reveals raising a child costs £227,266 over the first 21 years.
When you decided to have a baby, did you give any thought to how much it’s going to cost to raise that child? If you haven’t, the results of the most recent Cost of Child report may come as a bit of shock.
The study, which was carried out by the Centre of Economic and Business Research for the insurer LV= reveals the cost of raising a child until the age of 21 is an incredible £227,266 – that’s a whopping 62% increase in cash terms since 2003.
So where is the money being spent?
The money experts at AOL analysed the data and came up with the following:
Parents now spend more than a quarter (28%) of their income on their offspring, with the lion’s share of the total cost (£73,803 in 2013), driven by rising university fees, followed by childcare and babysitting (£66,113).
Food is next (£19,804), then clothes (£10,935), holidays (£16,506) and hobbies (£9,433).
Pocket money adds up to £4,553 and furniture will cost £3,453, on average.
Boys cost more
Apparently, boys are more expensive to raise – up to £12,000 more – than girls because of their rough and tumble lifestyles. A report from Halifax Bank pointed to extra school uniforms and even furniture being needed for boys as well as more sports kit.
A baby’s first year
The first big payout comes even before the baby is born. Baby clothes, nappies, a cot, pram/buggy and maybe a car seat are all essentials that you can’t do without.
You could easily spend hundreds or even thousands of pounds on kitting out your baby, but there are ways of doing it more cheaply.
When parents go back to work, childcare is the next big expense. A full-time nursery place typically costs £177 a week for a child under two with Childminders charging £3.84 per child per hour on average according to the Babycentre says.
The good news is that when your children turn five, schooling is free unless you opt for private tuition. For both state and private schools, there is the cost of school uniforms, textbooks, lunches and trips to pay for.
The bad news is that you will probably still need extra childcare. The Daycare Trust reckons that parents fork out nearly £4,000 a year for two children to be looked after before and after school.
It gets even worse. You will need to put some savings aside over the years (for example, through a junior ISA and/or a child savings account) to support your child through university.
University fees have risen exponentially in recent years. In 2006, the government allowed universities to charge up to £3,000 a year. That figure rose with inflation each year, before being hiked to £9,000.
It doesn’t necessarily stop after your kids turn 21. A record number of young adults are still living at home because they can’t afford to live on their own. The Office for National Statistics says 3.3 million 20- to 34-year-olds lived with their parents in 2013.
High youth unemployment, soaring rents and stricter mortgage criteria mean that they could be stuck at home for years to come. But at least you won’t suffer from empty nest syndrome.
For more money saving tips visit money.aol.co.uk