Ask most people with kids how much it costs to raise them and you will most likely be told “a small fortune”. But while that seems to be the general consensus, new research has found that many UK parents are actually unaware of the full cost of raising a child to the age of 18.
What’s perhaps even more surprising is the amount by which parents are underestimating the cost of raising a child to the age of 18: a whopping £60,000.
On average, parents expect to spend £123,365 raising their child to the age of 18. The reality, however, is that the true cost is £184,392, according to Legal & General.
Research by the insurer found that since 2013, the cost of raising a child has risen by £29,952. This has meant the amount parents spend on a weekly basis raising a child has risen from £165 two years ago to £197 today.
Food is the Biggest Expense
Feeding their child accounts for the biggest proportion (35.5%) of money spent by parents: £70 per week, on average; while technology subscriptions, such as phone and broadband, cost £16.78 per week. Entertaining their kids costs an average of £14.93 per week.
Legal & General says that parents spend £2,430 every year on their kid’s pocket money, treats and entertainment.
Interestingly, most parents said that they expected to help their kids financially until the age of 22, which is also when they expect them to move out of the family home and find their own accommodation.
The Legal & General research comes in the wake of the Chancellor’s Budget, which laid out new changes to government-funded childcare support that could push costs up further in the future. The plan is to replace employer-supported childcare vouchers with tax-free childcare, which is likely to launch in 2017.
Financial Protection Should Not Be Underestimated
Steve Bryan, director, intermediary at Legal & General Insurance, said the rising costs should serve to highlight the importance of having financial protection in place to parents.
“Parents should speak to an adviser who can help them decide which financial products would be able to help them if they were unable to work for any reason. Although it can be a difficult topic to talk about, having this kind of protection in place will help parents feel much better prepared for whatever the future holds,” he said.
The Legal & General research coincides with a report released by Suncorp Bank, entitled Tots, Tweens and Teens – the Real Cost of Raising Kids report, which reveals that children in their ‘tweens’ (9-11 years old) cost the most per month. This is because it’s at this time in their lives when kids want to become “digitally connected”, which leads to an increase in parent spending.
The Suncorp Bank report also shows that most parents are mistaken when they think they spend the most money on their first child. The cost of each child actually rises as the family gets bigger.
It is vital people realise the importance of protecting their income. If people are ill and cannot work their income will be impacted. Protecting this is probably less expensive than people think but so much more important.
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