Are you prepared for the cost of having a baby?

Are you prepared for the cost of having a baby?
IFA assistance can help ease the financial burden associated with raising a child.

If you are contemplating having a child, or have recently added a little bundle of joy to your family, then long-term financial considerations are perhaps not at the forefront of your mind. More likely you’re worried about when you’ll next be able to get a full night’s sleep, or if you’ll ever be able to catch up on that TV series everyone at work is talking about.

While it is assumed that bringing up a child will put in a dent in your finances – it is another mouth to feed, after all – research carried out by the Centre of Economic and Business Research (CEBR) has laid bare the immense financial cost associated with having, and subsequently bringing up, a child.

According to the study, the average cost of raising a child to the age of 21 is a staggering £229,251, which equates to approximately 29% of parents’ gross annual income. That’s a 63% increase since 2003, the year the first CEBR study was carried out, meaning the cost of raising a child has risen 50% faster than inflation over the last decade.

Cost of having a baby image

Let’s break that figure down:

£46,695 – Cost for first five years of child’s life

£10,916 – Cost per year

£909 – Cost per month

£10,942 – Total spent on clothing

£74,319 – Total spent on education (does not include private school fees)

£67,586 – Total spent on childcare and babysitting

£19,517 – Total spent on food And, should you have twins, the financial outlay is likely to be far greater.

Estimates suggest that the cost of raising twins is at least 50% higher than bringing up a single child, and could set parents back by as much as £1,200 each month.

So, how can a financial adviser help?

  • They can help you prepare for big purchases, such as a new home/car
  • They can give you an overview of your financial situation, so you have a detailed breakdown of what can be spent each month and what can be saved
  • They can assist with choosing the best banking/savings options for your specific circumstance
  • They can give guidance that will ensure you don’t fall behind on other payments, such as a mortgage or household bills
  • They will be able to provide information about taking out life insurance
  • They can offer guidance about writing a will (though a solicitor will likely have more expertise in this particular area)
  • They can help select a suitable savings option – such as a child trust fund – that will enable you to set aside savings for your child’s future
  • They can help you work out your entitlement to childcare tax credits Bringing a child into the world is a huge commitment both personally and financially, and the benefits of careful planning coupled with stringent management of your money should not be underestimated.