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Cost of raising a child rises to £218,000 - Guardian

Read the original story on the Guardian website

By Rebecca Smithers

LV='s Cost of a Child survey says rising education costs and childcare are the biggest expenditure, as three-quarters of parents admit to making cutbacks in everyday living.

The cost of raising a child from birth until their 21st birthday has soared to more than £218,000, according to research from insurer LV=, which makes more gloomy reading for the UK's cash-strapped families.

With university tuition fees set to rise from this September to as much as £9,000 a year, the cost of putting youngsters through higher education is heaping the biggest financial pressure on parents, while creating more financial headaches for the future.

The report, Cost of a Child: From cradle to college 2012, reveals the overall cost of raising a child has increased by 3.3% since the last survey, with education and childcare remaining the biggest expenditure, costing parents £71,780 and £62,099 respectively. The figures in the report do not include loss of earnings from parents taking time off to raise their children.

Rising inflation and reduced disposable incomes are shown to be increasingly taking their toll. More than three-quarters of parents (76%) interviewed in the poll for LV= admitted they were making cutbacks to the family budget due to financial pressures.

In order to reduce outgoings, 67% of those planning to make savings are hunting down lower cost items or "value" goods in their weekly shop. More than a third (35%) of those on an economy drive are buying items from second-hand shops, and 34% are making extra cash by selling goods on eBay and at car boot sales. At the same time, two in five parents (43%) have cut back regular savings and only a third (32%) have life cover in place. The parents with thriftier tendencies have cut spending on their children's hobbies and toys by 5%.

The survey also found that overall, parents have found themselves having to pay 5% more for essential items related to education, including school uniforms and sports equipment, after-school clubs and university tuition fees. But that does not include private school fees, confirming that even the necessities of a state education cost families thousands of pounds.

Over the past 12 months the cost of raising a child has increased the most during university years (18-21) when parents could fork out as much as £17,459 a year – up 5% from 2011. New parents have also seen the cost of the first year of their child's lives increase 2.8% to an average of £10,261.

A recent report from Aviva also revealed a "notable" drop in the amount spent by families on children's activities, from 4% of monthly income in January 2011 to just 1% in the same month this year. The Aviva Family Finances report showed the typical debt owed by a UK family has soared by 48% since January 2011, as rising inflation takes its toll on household incomes.

Mark Jones, head of protection at LV=, said: "Our report shows education costs have increased dramatically, and despite financial pressures many parents are seeking out savvy ways to ensure they can still afford their children's higher education prospects. With tuition fees increasing this year we expect to see more parents making significant cutbacks across the family budget to accommodate this."

The LV= report found 42% of parents who thought their children would to go to university still hoped their child would do so despite the increase in fees. But many cash-strapped parents are being forced to share the cost of university with their children – 15% of parents said their children will need to fund part of it themselves, 10% will be cutting back in other areas to fund the costs, and 8% will plunder their savings.

Calculations for the LV= report were compiled by the Centre for Economics and Business Research. The report also includes omnibus research conducted for LV= by Opinium Research in January 2012 using a sample of 2,119 UK adults.

Thursday, 26th January 2012

Tags:   guardian  /  children  /  parenting  /  finances  /  saving  /  rebecca smithers  /  budgets
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