We all know that having children is expensive, but most people don’t know exactly how expensive it is. Thanks to statistics from the Office For National Statistics, we have some precise figures for the average family.
Childcare costs in the UK are rising fast. In fact, they have risen more than four times as fast as wages over the period 2008 to 2016. In London, the effect has been even more dramatic, and childcare costs have outstripped wages by seven times.
This trend has held steady and looks likely to continue for some time yet. UK Childcare costs spiked in October 2018, when the government decided to end the childcare voucher scheme. Tax-free childcare, already widely available to many people, replaced this voucher policy. The Tax-Free Childcare scheme has been criticised for being clunky and awkward to use. Many people entitled to take advantage of the scheme have failed to do so because the system is so esoteric.
However, any parent looking to keep their costs as low as possible should find out what benefits they are entitled to and take full advantage of them.
Single mothers who have to return to work soon after giving birth face increased childcare costs. The number of women in this position has been steadily on the rise for several years now.
Household Spending Costs
UK households spend an average of £585.60 per week, according to the Office of National Statistics. This figure represents a slight increase (£3.20) from two years ago when adjusted for inflation.
The ONS statistics show that the cost of raising children is on the side. The same trends that have persisted for a decade now, of the costs of childcare outstripping wage increases, continue to hold. Between 2012 and 2019, weekly spending has risen by just over 9%. Spending on recreation and culture have driven this increase, closely followed by household goods, services, and transport.
Food and housing together account for 42% of total household expenditure for families at the bottom of the income distribution. Meanwhile, the top 10% of earners spend just 26% of their earnings on these essentials.
For many families, food and accommodation account for the bulk of their budget, with utilities comprising most of the rest.
The UK education budget has suffered numerous cuts and reforms over the last couple of decades that have left schools without the funds they would like. In many cases, parents are expected to make up the shortfall through voluntary payments.
Because of this, despite the UK having a free state school system, education still accounts for 1% of the average household spending. Costs for education include things like supplies, uniforms, and occasional school trips. There is no obligation for parents to pay in most cases; payments are voluntary.
Spending on education increases for parents that opt for independent or private schools. Some of these are notoriously expensive. However, there are some, like The Independent Grammar School: Durham, which is much more affordable. Durham charges parents just £52 per week.
Whether you plan on sending your child to a private school or not, you should start saving for their future education as early as possible. If they pursue higher education, it will benefit them and you to have some funds in place beforehand.
Financial Planning For New Parents
Most people realise that raising a child is expensive, but don’t have any concept of the numbers of involved. Parents in a position to carefully plan out their finances before having children can prepare themselves for at least some of these inevitable costs.
No one wants to think about writing their will, especially not after they’ve just had a baby. But it is important to get your estate in order when you have children. Estate planning will give you control over what happens to your money if you or your spouse die.
If you aren’t used to budgeting, get ready to love it. Budgeting is a very effective money management technique. It is also one of the most straightforward; anyone can start budgeting if they want to start managing their money more effectively.
With the costs of raising a child in the UK on the rise, many parents find themselves in need of financial support. New Horizons has a useful guide to help parents manage their finances from when their baby is born, right through to the teenage years. You can compare some of the options for finance and credit on their site. New Horizons is a fully authorised and regulated credit broker that works with numerous lenders to connect borrowers with the most suitable finance options.
Having a child is expensive, there’s no getting around it. But with careful financial planning and responsible budgeting, you can ensure you never have to worry about your finances when raising a child.