15 Jul 2010 | Ian Bruce

Does it really cost over £200,000 to raise a child? 

The headline from the annual ‘Cost of a Child’ survey from LV= (Liverpool Victoria) jumps out ‘In 2009, the cost of raising a child topped £200,000’. A lot of parents, including myself, will be shocked by this figure, which equates to £9,610 per year or £800 per month.  If, like the average British family, you have more than one child then it is time to get worried as the costs start to multiply. And, according to the survey from LV=, the yearly cost of raising three children would be nearly £29k which is more than the salary of the average UK employee.

As any parent knows, the cost of raising a child does not stop when they turn 21. The leading Child Trust Fund (CTF) providers’ websites highlight future costs I may want to invest for - these include their first car (£8,300), a deposit for a house (£33,000) and wedding costs (£20,000). Furthermore, what if they want a gap year? I haven’t even considered the impact of inflation on these costs. The Children’s Savings Plans I’ve taken out are going to have to grow somewhat to meet all these costs. Maybe I should be reckless and gamble their birthday money on lottery tickets instead?

As the saying goes, there are ‘lies, damned lies and statistics’. The survey will have had the desired effect of creating press coverage for LV= but does it actually help promote the message of investing for a child’s future, especially when some of the sums quoted are far out of reach of the average parent? If you look at the survey in more detail, it shows that the £200,000 headline figure includes £55,000 for childcare and assumes both parents are working full time. It also assumes the child goes to university where the yearly parental spending leaps to £13,677 a year. Whatever happened to university students getting part-time jobs to pay for some of their living expenses? I also suspect there has been some very generous allocations made on how much is spent in categories such as food, clothing, hobbies and toys. 

For most parents I suspect, a more prudent approach is followed. According to F&C, a CTF provider, basic essentials can include a high chair costing £320 but you can get a perfectly functional one from Ikea for around £15. In terms of investing for their future, it’s unrealistic to expect to be able to provide for everything but, if you can invest on a regular basis, you could build up a lump sum to help your child in the future. My children all have Baillie Gifford Children’s Savings Plans and contributions start from only £25 per month.

For more details see www.bgchildsavings.com

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