The cost of raising a child can be eye watering when you factor in the expenses needed throughout their childhood and teenage years.
Recently, some extra financial help for childcare was announced in the 2024 Spring Budget. It won’t solve all problems, but many parents will hopefully find childcare bills reduce, leaving some extra money to top up savings.
Read on to discover more about childcare, plus some savings tips to cover the early days all the way through to university.
According to The Times, the average amount of money spent on raising a child from birth to 18 in the UK is £233,256 *. This figure includes childcare costs and housing, with holiday clubs, school trips, and uni tuition fees often required.
Money.co.uk reports that parents spend an average of £11,236.92 each year for full-time childcare. The same money advice website reveals this equates to 23.82% of a two parent family’s salary.
Add to this school holiday prices and you can soon worry about mounting costs. BBC News states: “Six weeks’ worth of holiday childcare could cost working parents nearly £890 on average, for each school-age child”.
Depending on your financial situation, you may be entitled to tax-free childcare while living in the UK. Such incentives can pay for several care services, including:
Tax-free childcare can be used in combination with the 15/30 hours of free childcare announced in the 2024 April budget (details below).
Working parents in England have been offered financial support in the Spring Budget 2024.
The Chancellor, Jeremy Hunt, has announced additional childcare funding, introduced in three stages from April 2024 onwards. A set number of funded childcare hours will be available from the following dates:
As far as eligibility is concerned, this includes individuals and their partners, provided they earn at least £183 a week. If this is the case, funded childcare will cover 38 weeks of term-time childcare costs. Praising the 30 hours funding, Hunt said:
“It’s a package worth on average £6,500 every year for a family with a two-year-old child using 35 hours of childcare every week”.
The recent budget has also seen the net income threshold for the High Income Child Benefit Charge (HICBC) raised. Previously set at £50,000, it has risen to £60,000 following the start of the new tax year (6th April 2024). More details can be found at Gov.uk.
Laura Trott, the chief secretary to the Treasury, believes: “170,000 families with children would no longer be affected by the charge, and nearly 500,000 families would save an average of about £1,300 apiece in 2024-25”. These savings plus the increase in Child Benefit payments are helping to free up money for other bills such as school trips, or to allow parents to add to a regular savings account.
As children get a little older and move into full time schooling, new costs start to appear.
Providing lunch on school days is another cost of raising a child. A September 2023 Metro article reveals: “It’s estimated that school dinners will cost parents an average of £440 per child per year”. This total does vary, with the average daily expense of £2.30 per day for primary pupils in London being much lower than £2.80 in some other areas such as Hampshire. It is worth mentioning that children in the first years of school get free school meals, although the ages that this applies to varies across England, Scotland and Wales.
Buying used, across loads of different kinds of products, is a keen way of saving some money. From cars to textbooks, used items can be bought for much less than their brand new price.
For parents, the second hand market is a goldmine of opportunity. Toys and clothes are among the two greatest recurring expenses a parent will encounter. So, rather than buying new, check out the second hand market through sites like eBay, Vinted and Facebook Market Place, or even charity shops.
Saving for your children’s education can give them the best opportunities in life. Here are some ways you can think about savings for the years ahead.
If your children are a few years away from university, now is the best time to start putting money aside for when the time arrives. Before you know it, they’ll be getting ready to settle into hall s and stressing about studying – don’t let money add to their stress.
Start saving now by anticipating what sorts of outgoings they’ll have. Don’t just think of things like food; university textbooks are a substantial expense for any student, with some costing upwards of £35. Here’s a quick rundown of everything you should have on your mind:
Combined, this comes to around £16,960 per year. Of course, these prices will fluctuate depending on where you are in the UK, the course chosen, and inflation rates between now and when your child goes to university. Also, depending on the course and your financial circumstances, you may qualify for support in the form of bursaries or student loans to help towards some of the costs.
With your target figure in mind, you now have a clear goal to work towards. The simplest way of getting to this goal is to work backwards. Of course, the earlier you save, the easier it’ll be to reach such a lofty goal.
Saving for a single year of university, based on the figures above, will mean putting away approximately £942 each year of your child’s life, or roughly £78 a month.
Save for your childcare costs and beyond. All of our personal savings accounts are FSCS protected to support your family’s ambitions.
*Source: https://www.thetimes.co.uk/money-mentor/income-budgeting/family-finance/starting-family-baby-costs