According to a new report, it costs over £180,000 to raise a child to age 21. With parenting being so expensive, it pays to plan ahead.
According to the latest annual "Cost of a Child" survey from Liverpool Victoria, the UK's largest Friendly Society, the cost of raising a child from birth to age 21 has now reached over £180,000. Given that the average house is now priced around this mark, having a child is, financially speaking, almost on a par with buying a typical semi-detached house!
In the past year, the cost of raising a child has risen by 9% (and 28% over four years), which is far in excess of both general inflation (rising prices) and wage increases, and even outstrips house-price growth. As you can see from the following table, the biggest expenses are childcare and education, which together account for almost £96,000, or more than half of the total outlay:
Expenditure | Total |
|---|---|
Childcare | 49,092 |
Education | 46,778 |
Food | 16,002 |
Clothing | 12,352 |
Holidays | 11,086 |
Hobbies and toys | 9,592 |
Babysitting | 9,232 |
Leisure and recreation | 6,896 |
Pocket money | 5,518 |
Furniture | 2,201 |
Other | 11,388 |
Total | 180,137 |
The report warns that one consequence of the high cost of starting a family is a move towards households having two working parents, which is a shift away from the traditional "dad at work, mum at home" culture of previous generations. Nowadays, in three in five families (61%), both parents work, largely in order to cover the high cost of raising children and owning a home. Furthermore, one in eight families (12%) relies on regular financial support from grandparents or other family members to make ends meet.
Of course, these figures are only averages, so there are wide variations, depending on the region and income group into which families fall. For example, living in London with two children, I imagine that my wife and I could easily spend £500,000 raising our young son and daughter. Overall, Liverpool Victoria reckons that it will cost £130 billion to raise the 772,500 children born in the UK in 2005 (excluding the impact of future inflation), which is no small amount!
On top of the above figures, private education sends the cost of raising a child spiralling upwards, costing an extra £71,000 for a day pupil and £130,500 for a boarder. Also, it now costs around £32,500 to send a child to university, thanks to higher tuition fees introduced this year, so it's important to take steps to meet the cost of tertiary education.
Finally, if you're going to make a financial success of raising a family, it pays to put some effort into planning ahead, which means paying closer attention to budgeting, saving and investing. These articles will help you to improve your family's financial fitness: Twelve Top Tips For Families, The Secrets Of Financial Success, How To Become Financially Secure and Make Your Child Wealthy.
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