Children are not cheap.
Whether your family is already growing, or if you are thinking of starting one soon, you have probably considered some of the obvious costs, such as private school and eventually, university. But what about those things that might not be so apparent?
Research from American Express demonstrates one of these expenses; birthdays. Each birthday before the age of 18, costs parents an average of £415. Over the course of 18 years, that equates to £7,470, for a single child. For parents of multiple children, the combined cost of birthdays is likely to be much higher.
And that’s just part of the story…
What does raising a child cost?
According to Child Poverty Action Group, the average base cost of raising a child, born in 2017 to the age of 18, is £155,142 for a couple or £187,120 for a single parent.
Naturally, having children comes with increased living costs, that much should be obvious. But, there are a few costs which might surprise you, including:
1. Special occasions
We’ve covered the cost of birthdays, but that amount doesn’t account for the costs of attending friends’ birthday parties, which could include buying gifts and paying to go on a trip.
Once birthdays are out of the way, there are holidays to think about. Unfortunately, the Easter bunny and Santa are not going to foot the bill for presents and sweets, even if they do take the credit for bringing them!
2. Rewards and treats
Sometimes, you may want to treat your children to an event or activity outside of special occasions.
Whether it’s a special meal, or a day trip, the cost of rewards and treats will soon add up. Of course, we’re not suggesting that you stop giving your children these experiences, but it is important to keep track of the costs and ensure that your spending remains within budget.
You may have factored professional childcare costs into your budget, but domestic childcare can also have hidden expenses. For instance, even if Grandma and Grandad can look after the little ones for free, you might still need to pay to get the kids to their house or give them some spending money if they go on a trip. They might seem like small amounts, but they can add up over the course of the year.
4. Increased bills
Even the most energy-savvy couple is likely to see their bills increase when they start a family. From getting up (and turning the lights on) at all hours of the night, to washing more clothes, running your home will take more energy, and thus, more money.
There are ways to reduce your energy bill, such as shopping around and finding the best supplier for your needs, but, overall, your outgoings are going to increase as the family grows up.
5. Hobbies and toys
Research from Halifax shows that the average amount spent on children’s hobbies and leisure activities is £45.31 per month, that’s £543.72 per year, or £9,786.96 over 18 years, on average.
Of course, some hobbies cost more than others, and there’s no telling what your children will be interested in as they grow up. However, the cost of equipment, lessons and potentially uniforms can quickly add up over time; especially during the years where clothes need to be replaced on a regular basis.
The report shows three quarters (75%) of parents have made one-off purchases that they had not planned for before having children. Among them:
- 32% have bought new furniture
- 29% needed to change their car
- 23% had to buy a bigger house
These expenses are much bigger than those mentioned previously and are more likely to be a one-off thing. However, the need for more space, or a bigger car is often unavoidable, but it needn’t be unexpected.
If you are afforded the luxury of foresight, take advantage of that. Start planning as early as possible to make sure that everything is in place before starting a family. Of course, life doesn’t always go to plan, but if you start preparing for family life as soon as you know that it is an eventuality, you will at least have a bit of preparation behind you, no matter when your family starts to grow.
If you already have children, time is of the essence. If you already have a financial plan in place, it may be a case of making some adjustments to redistribute your money and make sure everything is positioned to provide the best life for you and your family.
While making plans and ensuring that everything is in place to support your family as it grows, it is a great opportunity to make sure that you have a plan in place for the twists and turns of life. That includes illness, injury and death, all of which can have a huge impact on your family and household finances. Now is the time to make sure that your insurance, income cover and emergency fund are all in place and up to date.
If you have not yet considered financial advice or planning, there’s no time like the present, so why not get in touch with us?