Parents set to spend nearly a quarter of a million pounds on raising a child
According to a new study by insurance specialists Liverpool Victoria (LV=), the costs of raising a child in the UK up to the age of 21 has risen to £227,266, nearly £5,000 more than just a year ago. Just the first year of a child’s life costs a shocking £11,025, which is double that of the cost in 2003.
Mark Jones, head of protection at LV= said, “Having children has never been more expensive. The costs associated with raising a family are set to remain a pressure point for families across the UK.”
Parents are cutting back on toys and even food in order to cope, reveals the study, but are still finding it hard to stay afloat. This had led to drastic decisions, such as giving up plans for a larger family, with mums and dads restricting themselves to just one child, or delaying expanding the family until a later date. If this trend continues, there will be a noticeable impact on the population in the future.
The study also suggests that these expenses mean that stay at home mums could be in decline, with almost half of mothers saying that they have had to go back to work sooner than hoped for, or that they had to take on extra work to make ends meet.
The main costs are in childcare and extra expenses relating to education, like uniforms, books and school trips. And it’s not just an increase in costs that’s a problem: the changes in child benefit that came into effect early 2013 really hit families hard, as it meant that fewer families are eligible for extra governmental money.
The need to make money stretch further has caused many parents to drop the amount that they save, with a third of parents saving less than before and ten per cent cancelling or reviewing insurance. Nearly half of parents now say that they have no income protection, critical illness or life cover at all.
This could have a huge impact on parents as they become older. With a lack of savings or pensions, the UK population may struggle to support itself adequately in old age. This is particularly worrying because financial experts suggest that the age for receiving the state pension can only rise, as more people are living longer and therefore there is less money to go around. Mums and dads are therefore urged to continue to invest as much as they can afford into an ISA or other savings plan. David Macmillan, Managing Director of retirement planning specialist Retiready, encouraged this when he said, “Showing people how to take small steps that will make a difference is vital. We must empower, rather than frighten people, and help them take control of their future finances.”
For parents, this may seem a daunting task with a little one at home, but the future is clear: Family life is not going to come cheaply, so it’s best to be prepared.
Image via Flickr Creative Commons: Mum and baby