The latest LV= Cost of a Child Report, shows that the cost of raising a child to the age of 21, has risen to a staggering £222,458.
The new figure is an all-time high, up £4,000 on this time last year and a rise of over £80,000 compared to a decade ago. LV=, who are a mutual insurer, also revealed that if the current trend continues the cost will increase to a staggering £350,000 in 10 years’ time.
The largest single area of spending is still education and costs have shot up over recent years. A decade ago the average cost of education, including university, was £32,593; this has now risen to £72,832, a massive increase of 123%. In years to come this figure is undoubtedly set to rise further, with more parents deciding to pay their children’s tuition fees.
Perhaps as a result of an increase in households where both parents need to work, childcare costs have also increased significantly, rising from £39,613 10 years ago to £63,738.
Struggling to cope
The rising cost of bringing up a child, coupled with the withdrawal of child benefit and subdued wage inflation, will mean many families struggle to cope. Indeed a recent survey by debt charity StepChange warned that many families were seeing their savings eroded by interest payment on debt.
Families where one parent earns over £60,000 had their child benefit removed from early January this year, whilst households with one parent earning between £50,000 and £60,000 will lose a proportion of the benefit.
The report reveals that over 40% of families are spending less on ‘luxuries’, including holidays, to try and make ends meet, whilst others are taking more drastic action, with a third of families reducing their spending on essentials, worryingly including food.
Responding to the survey Mark Jones, Head of Protection at LV=, said: “The cost of raising a child continues to soar and is now at a ten year high.”
He continued: “Everyone wants the best for their children, but the rising cost of living is pushing parent’s finances to the limit. There seems to be no sign of this trend reversing. If the costs associated with bringing up children continue to rise at the same pace, parents could face a bill of over £350,000 in ten years’ time.”