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The average cost of raising a child reaches £200,000

Written by on 19 February, 2010

The price of raising a child from birth to the age of 21 has now hit over £200,000, a rise of 4% since last January, a recent report has revealed.

The report, the seventh annual survey from insurance and investment group LV=, shows that parents are now paying more than ever to bring up their children, spending up to £201,000 in the twenty one years. The figure equalises £9,610 a year per child. The findings show a 43% increase since the original survey carried out in 2003, where total costs averaged just over £140,000.

Childcare tops the list as the biggest expense, draining parent’s pockets of up to £54,696 for one child between six months and sixteen years old, in a typical family where both parents are working. This cost covers everything from nursery school to after school clubs and is over £20,000 more than the original 2003 survey. The increase in childcare costs does however appear to be levelling, having only risen 1.6% since January of last year; the lowest increase of all the categories.

Second on the list of biggest expenditures was education, which now costs parents £52,881 compared to £32,593 seven years ago. This figure is unsurprising given that the child’s university years are the most financially draining on parents. For the years when a child is aged 18-21, parents are forking out up to £13,677 a year, a similar cost to raising them as a toddler between the ages of one and four.

Despite the increase, families in the UK are still trying to tighten their belts, with 77% admitting they have cut back on family expenditure due to the recession. Most parents are reducing savings as a first step, as well as spending less on furnishings and food. 70% now opt for cheaper value food in supermarkets in order to save, although this is a drop from last year’s figure of 79%, suggesting that these good intentions may be waning.

It’s not just the parents feeling the pinch either; 13% of parents questioned in the survey reported having been specifically asked by children for a reduction in pocket money, suggesting that children too are realising the need for family finances to go further. However, pocket money has had a slight year on year increase of 5% despite a fall back in 2007, so parents are now paying out £4,338 to their children over the years. This is almost £1,000 more than the figure back in 2003.

Unsurprisingly, there is quite a difference in the cost of raising children depending on location in the UK. As expected, Southerners are most affected, with families based in outer London facing the highest cost of raising a child, a massive £220,769. This is quite a large sum compared to the cheapest area to bring up kids, which is now Yorkshire and Humber where it’ll set parents back a more humble £177,706.

The figures are perhaps a cause for concern as parents may be setting themselves up for trouble in the future, the report says, as 35% are saving less money as a way of stretching budgets further. With reduced savings, it may be more likely for families in the UK to find themselves in financial difficulties. If you feel like you family may find itself in debt, it is often advised to seek professional debt help.

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