Money News

Cost of raising a child increases to £218,000

Thursday 26 January, 2012

By Martin Fagan

Soaring cost of childcare, education and food hits parents, as overall cost of raising a child increases 3.3% in a year.

The cost of raising a child from birth to their 21st birthday now totals a record £218,024, according to LV=.

The protection and retirement specialist’s annual Cost a Child Report reveals this equates to £10,382 a year, £865 a month or £28.44 a day.

The report shows the overall cost of raising a child has increased by 3.3% in the last year with education and childcare remaining the biggest expenditures, costing parents a massive £71,780 and £62,099 respectively.

The cost of education, including school uniforms, after-school clubs, and university tuition fees, has experienced the biggest rise, with a 5% increase in spending over the past year.

However, some expenditure has decreased since last year as three-quarters of parents looked at ways to cut back, with spending on hobbies and toys down 5% on the previous year.

With university tuition fees rising from September 2012 to a possible £9,000 a year, the cost of educating children is putting the biggest financial pressure on parents.

The report found 42% of parents who thought their children would to go to university still hoped their child would go, despite the planned increase in fees.

Many parents will be sharing the cost of university with their children. 15% of parents said their children will need to fund part of it themselves, while 10% of parents will be cutting back in other areas to fund the costs associated with university, and 8% will plunder their savings.

Significantly, one in five (21%) parents who thought their child would go to university has now said they won’t due to the increase in tuition fees.

“Our report shows education costs have increased dramatically and, despite financial pressures, many parents are seeking out savvy ways to ensure they can still afford their children’s higher education prospects,” said Mark Jones, head of protection at LV=.

“With tuition fees increasing this year, we expect to see more parents making significant cut backs across the family budget to accommodate this.”

Since LV='s first Cost a Child Report in 2003, the overall cost of bringing up a child has increased by 55%.

When safe-guarding the family finances, the report found 50% of parents don’t have any life cover or income protection in place. Just 32% of parents have life cover, but only 11% have both life cover and income protection.