Updated 08 October 2021
Let’s face it, kids are expensive. Most of us don’t want to think about how much we’ll end up paying for our bundles of joy. The only silver lining is that all these expenses are predictable – so we should be able to plan for them. Article by Nick Green.
Unbelievably (or maybe not), the Centre for Economic and Business Research found that raising one child to the age of 18 costs almost exactly as much as buying the average UK house (£227,000 versus the average house price of £230,292). When you consider that a mortgage term is usually 25 years not 18, and that children haven’t even attended university by that age, it’s fair to say that each child costs about one house. Shocking, isn’t it?
Where does all that money go? Here’s where.
Everyone remembers their first time. Be honest, how much useless baby kit did you buy? Terrified of being a second-rate parent, we fill the house with Mozart mobiles, scented nappy bins, monster truck buggies, Moses baskets and baby slings bristling with bottle holders so that you look like Sigourney Weaver in full alien-busting regalia. By the second child, of course, you know that most of those things were unnecessary, that nappies can go in old plastic bags and baby would be happy sleeping in an open sock drawer – but it’s too late, you’ve spent the money.
Full-time childcare costs more than private education – between £11,000 and £14,000 a year versus only £9,000 for one of the top independent schools. Of course many parents will work only part-time, but what you save in money you will lose in, erm, money. In this Catch-22 balancing act, you may just trudge through this stage barely breaking even on the deal, for the sake of retaining your job. This is an area where childcare vouchers can help a lot – talk to your employer about this. The government’s tax-free childcare scheme is an alternative way to help towards these costs.
Some parents wonder ‘State or private?’ but sometimes there’s not a lot to choose between them, cost-wise. As pricey as a private school can be, one whiff of outstanding results in a nearby state school and local property prices skyrocket. So assuming you want the best education for your DS/DD (that's 'Darling Son / Daughter' in Mumsnet-speak), you’ll probably end up paying top whack for it either way.
And school fees or not, remember that schools are a minefield of not-so-optional extras. Uniforms, shoes and sports kit, usually from a shop with a monopoly (as in ‘pay £200 or Go To Jail’), school trips, overpriced school fetes… so be sure to read the small print on the letters the kids forget to bring home.
One of the most startling discoveries of being a parent is how going on holiday suddenly requires a small defence budget. It’s not just that you now need three, four or five tickets instead of two… it’s that the times you can go are ruthlessly restricted to the school holidays, when – by an amazing coincidence – the airlines and travel companies charge their highest prices. If you don’t want to be branded a hardened criminal by taking your child out of school during term time, you have to cough up regardless.
You may shed a tear on the day your PFB (Precious First Born) schleps off to university – maybe in nostalgia for the long-lost days of not just free tuition, but student grants (remember those?). Now putting a child through higher education is like having them in full-time childcare all over again – the only consolation being that they no longer puke everywhere and need you to do their laundry… no, wait…
Unless your child becomes a social media millionaire before leaving school, higher education will always loom ahead like a giant iceberg made of bills. You can only hope that when they finally emerge with a first-class degree, there’s a job waiting for them at the end of it.
What has all this told us? We all knew that having children was expensive. Well, exactly. The costs of children are high, but they are expected costs – so there’s no excuse for being caught by surprise. If you know what’s coming, you can put a financial plan in place to give yourself a better chance of keeping up with it all. Good luck!
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