Friday, February 25, 2011
Category:
Consolidation
According to LV=’s annual Cost of a Child Report, the cost of bringing up a child until they reach 21 years of age has now exceeded £210,000, which is equivalent to £836 per month. This reportedly marks a 50 percent increase on the cost recorded in 2003.
The insurance, investment and retirement group’s report also uncovered that the cost of raising a child has risen by 4.5 percent in the last 12 months – more than the 3.7 percent rate of inflation.
Childcare at £67,430 and education at £55,660 were found to account for parents’ greatest outlay during their children’s youth. In fact, findings have shown that the cost of education has increased by 5.3 percent during the last year. Educational costs are reportedly inclusive of school uniforms, after-school clubs and university tuition fees, but do not include any private school fees.
The report revealed that in 2010 there were also significant increases in expenditure on clothing, which increased by 11.7 percent; holidays, which increased by 6.4 percent; and personal care (toiletries and bath equipment), which increased by 5.1 percent.
LV= head of protection, Mark Jones, commented: "Parents are all too aware that having a child comes with a hefty bill when you factor in things like childcare, schooling and holidays over a 21 year stretch. Childcare and education must feel like another mortgage payment for some parents as this is still the biggest outlay and shows no signs of slowing down, particularly when many universities are set to increase tuition fees up to £9,000 a year from 2012. Despite this, I don't think any parent would begrudge any spending on their children and savvy ways to reduce costs and protect income are all sensible measures to consider."
The research revealed that more than three quarters of the parents surveyed admitted that the economic climate is ‘really hitting them hard’; with financial pressures having caused 78 percent to make cutbacks or economise in the last 12 months. Furthermore, 42 percent of respondents were found to be selling unwanted possessions on eBay and at car boot sales. Findings also showed that 39 percent of respondents have reduced their savings, whilst 30 percent have cancelled or reviewed their insurance products.
Mark Jones continued: "We have all considered short term measures to stretch the family budget and try to save money. Yet it's important to keep the bigger picture in mind and understand the impact that cancelling insurance policies and cutting back on savings would have on your family if you or your partner were suddenly unable to work due to accident, illness or unexpected job loss. With 14% of parents saying they have made cuts specifically to their life, health, or unemployment cover people could be leaving themselves and their families at risk."
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Homeowners who may be juggling their finances amid the challenging economic climate could consider taking out a
secured loan to consolidate existing credit. One of many finance options available, a secured loan could be used to tie up existing debts, putting them into one place. In taking this approach, borrowers could replace multiple, expensive repayments each month with a single monthly repayment, which could be lower than the sum of current outgoings. However, if opting for a secured loan to consolidate debt, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
