Tuesday, March 3, 2009
Category:
Consolidation
According to the annual survey conducted by LV=, titled ‘Cost of a Child’, parents could spend £193,772 on raising a child from birth to 21 years of age. This equates to £9,227 annually, £769 monthly, or £25 daily.
These figures mark a 4 percent increase since the last survey in December 2007, and a 38 percent increase since the first survey was embarked upon in 2003. The most significant expenses remain to be childcare at £53,818, and education at £50,240. LV= Group Chief Executive, Mike Rogers, commented: "Every parent knows how their hard-earned savings can dip thanks to eye-watering education and childcare costs. It is also likely to be of little comfort to mums and dads to hear that pocket money costs are at their lowest level since 2004, or that expenditure on family holidays in 2008 was only 4% up on the 2003 cost."
The Credit Crunch has seen 81 percent of parents cutting back on spending with family activities being most significantly affected area. 52 percent of parents revealed that they have tightened their belts where holidays and short breaks are concerned, with the same number curbing their spending on leisure and recreational activities. Other areas of reduced spending include clothing (47 percent), savings (42 percent), furniture and furnishings (38 percent) and food (35 percent).
In light of strained finances parents would also appear to be economising, with 79 percent opting for lower cost items and supermarket ‘value’ items. In addition, 35 percent are making second had purchases to get by, whilst the same number are selling unwanted belongings via car boot sales, local newspapers, and online sites such as eBay.
Financial pressures have also resulted in 37 percent of parents having to reduce their regular savings, and 23 percent cancelling or reviewing their life insurance and income protection cover. Both factors could have a particularly adverse effect on future finances.
Childcare costs are on the rise. A typical UK household of two working parents, with children between six months to 14 years of age, are looking at a monthly expense up to £332 or £53,818 in total. The sum includes nursery fees to the value of £35,854 from six months to school age, £14,319 for after school clubs, and £3,645 for holiday clubs. Compared to the LV= survey of December 2007, there has been a 6.5 percent rise in costs.
Education is also costly for parents, with the average household potentially spending £50,240 on over their child’s lifetime. University expenses account for a large proportion of this sum due to a three year degree course costing £34,300. This is comprised of annual tuition fees, travel, books, living costs, rent, bills and household items.
On top of this, parents who decide to put their child through private school could pay an extra £71,660, rising to £129,260 if their child boards. This results in the total cost of raising a child from birth to the age of 21 as being £265,432 for a child who attends private school on a daily basis, and £323,032 for a child who boards.
In addition to all of the aforementioned costs, parents also face a total outgoing of approximately £4,144 in pocket money, equating to £319 annually, whilst their child is between 5 and 18 years of age. This figure is £1,325 less than the total in December 2007 when it stood at £5,469, and £1,374 less than that in 2006.
When the cost of raising a child is broken down into annual terms, it becomes clear that the most expensive years are those during which the child is attending university. However, new parents can also find themselves facing hefty outgoings during the first 12 months of their child’s life. Parental spending stands at £8,853 in the first year, £50,732 from 2 to 5 years, £51,760 from 6 to 11 years, £43,236 from 12 to 18 years, and £39,191 from 19 to 21 years.
Excluding the impact of any future inflation, the total cost of raising all the children born in the UK in 2007 could be a staggering £133.7 billion. Regional variations are apparent and the research points to the fact that parents in Outer London spend the highest amount on bringing up a child (£211,977). Parents in Inner London come in second (£202, 644) and East England in third (£200, 274). The least expensive places to raise a child would appear to be the West Midlands (£188,641), the North East (£186,818) and the North West (£188,847).
Mike Rogers continues: "Our research shows that parents are being very resourceful when it comes to budgeting and cutting back on non-essential spend. Planning ahead is more important than ever though, and saving as much as you can, just a little and often, could help to ease the financial pain."
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Parents that are feeling the squeeze and who have spent up on credit and store cards, wish to consider consolidating these with a secured loan. This option would leave the borrower with just one simple, potentially lower, monthly repayment. Secured loans are repayable over a term to suit the borrower between 5 and 25 years. However, please remember that when
consolidating your debt may increase the amount you pay back overall and extend the repayment period of your debts.
