Where your Money goes

Where your money goes

Got £277,508 to spare? If you have a child you’re going to need it

The cost of children lasts as long as your love for them.

As you gaze down at the incredible newborn baby cradled in your arms and those huge, unblinking eyes stare back at you, there is something you should know. That sweetly cooing bundle of joy you’re gazing lovingly at is a financial black hole.

Kids cost and while that might sound like a hackneyed old phrase, exactly how much they cost is quite an eye opener.

Put it this way – if you had to choose between the latest 2012 Ferrari or a child you’d no doubt plump for Junior, but in terms of cost there’s not much in it.

According to various reports it costs, on average, between £200,000 and £240,000 to bring up a child until the age of 21.

That takes the cost to an astonishing £10,000 a year.

Of course, it’s all worth it. But it just pays to be prepared. So here’s how some of the major costs break down.

Image: Fotolia


Great expectations - £5,000
Before their newborn has even arrived they are estimated to cost their expectant parents close to £1,800. Aside from all the clothes and accessories a newborn requires, there’s the pram (which can easily push £500), toys, the new nursery to kit out and a million-and-one gadgets that they’ll probably never need.

By the time baby has reached their first birthday the doting parents will have spent as much as £5,000 on their bundle of joy.

And it’s then that things start to get even more expensive. HSBC estimates that the costs amount to £165,648 to raise your first child up to the age of 18.

Cut your costs - As tempting as it to buy every gadget, every cuddly toy and every cute outfit you see, rein in your spending and work out what you really need once baby has arrived.

Childcare - £15,300
According to the Daycare Trust’s latest annual survey of childcare costs, the average cost of having a child under two in day care is now £5,103 a year. The most expensive nursery recorded by this year’s survey costing £300 for 25 hours care – that’s a staggering £15,000 to keep an under-two in childcare while you go out to work.

Cut your costs - Make sure you take advantage of your employer’s childcare vouchers scheme, if they run one, as it can save you thousands of pounds a year, and don’t forget that all three and four year olds are entitled to 15 hours of free nursery education for 38 weeks of the year.

Image: Fotolia


‘Free’ schooling - £19,139
The costs, while admittedly a little lower, don’t end altogether when Junior starts school.

A study by insurer Sheilas’ Wheels, found that parents spend an average of £1,247 a year on their children's education, before school fees. Add in a private school education between the ages of four and 18 and you could more than double that £200,000 bill.

The biggest expense for most parents is school meals at an average of £242 a year. That’s followed by uniform (£143) and class trips (£137). Add in music lessons and /or after-school sports and you can add a further £66 and/or £68 to the overall sum, respectively.

And the costs only increase with age, with the report showing that families spend £1,137 a year on children in primary school, and an average of £1,319 a year when they reach secondary school age. Add all that up and you’re looking at £19,139 for their school years.

Then it also seems the pressure’s on to give kids the latest ‘must haves’. This means forking out an average of £149 on the latest gadgets and gizmos and over £250 a year on excursions. According to the Sheilas’ Wheels survey, children go on an average of four school trips a year and nearly a third of children under the age of 16 have been abroad with their school.

Cut your costs - Don’t forget, if you’re on a low income your child may be entitled to free school meals.

After school clubs - £8,400
Childcare, yet again, is another big expense when children are school age. According to the Daycare Trust’s latest survey the average cost of one week of full time holiday childcare is now a few pence shy of £100.

Add up all the school holidays in the year and with a conservative estimate of just four weeks’ full-time childcare, plus an average of £200 a year on after-school clubs, you’re easily looking at a bill topping £600 a year or £8,400 for their school years.

Christmas presents


Presents - £3,348
Trying to deny a small (or even large) child presents at Christmas or their birthday is something that only the very brave would even contemplate.

Aviva calculates parents spend £82 on birthday presents for each child with More Than working out that - on average - £104 a year goes on Christmas presents to each boy or girl. That adds up to £3,348 over the child’s life, not that presents stop at 18.

Of course, young children don’t need expensive gifts to be happy and generally can’t tell the difference between second-hand and new. Older children can have the financial realities explained to them if times are tough.

Pocket money - £2,488
Giving your children a little money of their own is not just important in teaching them about everything from budgeting to the value of work, it also means they don’t have to nag you for everything. 

Average  pocket money dropped a little this year, Halifax’s annual survey reveals, but it still works out at an average of £5.93 a week. That works out at almost £2,500 from the age of 8 until they’re old enough to get a job at 16.

Extra costs while they’re at home
Not all your spending on children is so easy to break down as handing them cash each week. Having children living with you means more electricity, more food, more expensive holidays, more petrol used and even a bigger home needed.

The minimum amount needed to raise a child until the age of 18 is almost £150 a week – adding up to £142,680 from birth until their 18th birthday – according to the child poverty action group. The actual amount people spend is far higher, at £165,648 HSBC research shows.

And even after they’ve reached voting age, the costs don’t stop.

University – £32,000 a degree
Now that free university places are a distant memory and the recently hiked minimum fee band has kicked in, the cost of further education is certainly something parents need to think about in advance.

Add in tuition fees, accommodation rental, equipment, clothing, travel and books and you’re looking at a cost of around £32,000 to put your child through a three-year degree course. 

And, if you dream of your little angel becoming a high-flier then you’d better get saving straight away. For parents of would-be doctors and architects the final bill is more likely to be closer to £70,000, according to The Children’s Mutual. Ouch! It’s time to get saving.

Over 21s – a further £21,540
If HSBC’s eye-watering figure of £165,648 was too much to bear, look away now.

Because it doesn’t end there. The truth is that today, as a parent you’re going to be supporting your grown-up child long into adulthood – and maybe even supporting their children before you’re done.

A separate survey carried out by insurer LV tots the ongoing costs up to a further £21,540 on average.

Some 63% of parents have contributed more than £3,000 to help their child get a foot on the property ladder, 19% help out with more than £5,000 towards their child’s wedding, 42% of parents contribute more than £1,000 to the cost of their first car and 25% of parents forked out more than £1,000 so their grown-up child could go travelling.

But it’s not just weddings and first-time buyer deposits that the good old ‘Bank of Mum and Dad’ helps out with, over half those surveyed said they still helped their adult children out with general living costs too.

Image: Fotolia


Supporting your child’s children - £58,320
When grandchildren come along it carries on, with a staggering 2.3 million couples financially contributing to both their children and their children. And don’t think that come retirement the boot will be on the other foot if the 46% of over 70s who are still supporting their kids financially are anything to go by.

According to RIAS figures, grandparents spend £135 a month per grandchild on average. Currently the average British mother has two children, so that’s £3,240 a child, per year.  With average ages rising, you can expect to easily see them through to adulthood themselves, meaning at least 18 years of support – coming in at £58,320.

Taking HSBC’s cost of raising a child to 18 as a base, then adding in the cost of university, adult life and your child’s children into account, that pushes the amount of money you spend on your little bundle of joy to an astonishing £277,508.

Thank goodness that the lifetime of love, support, care and kindness you’ll also have to throw in as a parent, at least doesn’t add further to the financial strain.

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