The £186,000 cost of raising a child

Parents could spend £186,032 on raising a child from birth to the age of 21. This is equivalent to £8,859 a year, £738 a month or £24.30 a day, according to the annual Cost of a Child survey from insurance and investment group LV=.

The survey shows that the cost of raising a child has increased by 33% over the five years since the survey began in 2003. Childcare and education remain the biggest expenditures, costing parents £50,538 and £47,310.

Cost of a child could rise to over £265,500 by 2012

Looking into the future LV= has predicted that by 2012 the cost of raising a child in the UK could reach £265,577, equivalent to more than £12,500 each year. This means that over the ten years since the study began in 2003, the cost of raising a child in the UK would have almost doubled, increasing by a staggering 90%.

Nigel Snell, Communications Director at LV= comments: “The projection figures are quite staggering and it’s unrealistic to expect people’s income levels will increase in line with this rising level of expenditure. This means parents will need to be switched on about their family finances more than ever, even though they have always known that raising a child is costly. With UK debt figures rising we would recommend starting financial planning as early as possible to help meet the various costs associated with raising a child.”

Where the expenditure goes

The £186,032 total cost of raising a child in the UK is spent in the following principal categories:

Expenditure - Cost
Childcare £50,538
Education £47,310
Food £16,386
Holidays £13,359
Clothing £12,650
Hobbies & Toys £9,822
Babysitting £9,523
Leisure and Recreation £7,062
Pocket money £5,469
Furniture £2,253
Personal £988
Other (includes driving lessons, first car, birthday and Christmas presents) £10,673
Total £186,032

£140 billion cost of raising all children in the UK

The cost of raising all the children born in the UK in 2006 could be a massive £140 billion, not including the impact of any future inflation.

Cost of childcare

Childcare from six months until the age of 14 could cost as much as £50,538 for a typical working parent household in the UK. This breaks down into nursery fees of £34,320 from six months to school age, £12,654 for ‘after school clubs’ and £3,564 for holiday clubs. This is equivalent to £312 each month from six months to age 14 for just one child, which is a significant financial commitment for any household.

2012 projection in line with house price forecasts

The projected increase of 43% in the cost of a child from 2007 to 2012, from £186,032 to £265,577, is in line with house price forecasts in England. The average cost of a home is expected to rise by 42% between 2007 and 2012, according to housing market forecasts commissioned by the National Housing Federation.

Cost of education

The average household could spend £47,310 on a child’s education which includes a bill of £32,667 for a three year university degree course. The cost of attending university includes annual tuition fees, travel, books, and living costs, including rent, bills and household items.

Parents choosing to put their child through private school can expect to pay an additional £72,957 for a day pupil, and a further £130,557 if the child boards. This means that, for a child who attends private school as a day pupil and goes on to university, the cost of education alone could be as high as £120,267. The total cost from birth to 21 years for a child attending private school as a day pupil, and then going on to university, is more than a quarter of a million pounds at £258,989.

Food, holidays, clothes and toys

From birth to age 21, the LV= Cost of a Child survey shows that the average UK household could spend £16,386 on a child’s food, £13,359 on holidays, £12,649 on clothing, and £9,822 on hobbies and toys.

In addition, if parents were to splash out on this year’s top 12 most popular toys for Christmas for their children, the bill would come to over £406 for the girls’ list, and £416 for the boys’ toys. The favourites for Christmas 2007 are the Sylvanian Families Grand Hotel and the Transformer Optimus Prime.

Parents becoming less generous?

Across the UK children receive £5,469 in pocket money between the ages of 5 and 18 years, which is equivalent to £420 each year. However, this is almost £50 less than the 2006 amount which parents were handing out to their children (£5,518).

Annual breakdown – university years are most expensive

The university years remain the most expensive, with an average annual cost of £12,249. The next most expensive period in a child’s upbringing is between the ages of two and five (£12,129 per year) and new parents can expect to pay as much as £8,184 in the first year of a child’s life alone.

The breakdown of parental spending by years during a child’s life is as follows:

1st year - £8,184
Years 2 to 5 - £48,517 (£12,129 per annum for these years)
Years 6 to 11 - £48,595 (£8,099 p.a.)
Years 12 to 18 - £43,992 (£6,285 p.a.)
Years 19 to 21 - £36,746 (£12,249 p.a.)
Regional variations – Central London is most expensive

Regionally across the UK, the research shows that parents in Central London spend the most on raising a child (£199,869), followed by Outer London (£199,578), and the South East (£195,396). Wales is the cheapest place to raise a child (£179,317), followed by the East Midlands (£180,298) and East England (£182,355).

Nigel Snell, Communications Director at LV= comments: “As a parent of three, I know from experience that sacrifices have to be made in the early years, and many parents will have had to put some plans on hold to manage the costs associated with raising a family. Of course, every parent will tell you that it is all worth it, but making even small provisions and doing a little extra planning now could help new parents see their way more easily through the next 21 years.”

For information about savings and investment products from LV=, to help save for the family and your future, including Child Trust Funds, visit LV.com.