picture of a mum and children putting money in piggy banks

PARENTS URGED TO PLAN FOR CHILDREN’S ‘PINCHPOINT YEARS’

The cost of raising a child from infancy to adulthood could fluctuate by as much as £8,000 year-on-year, totalling almost a quarter of a million at £214,155.16 over the first 21 years.

According to NatWest Premier, there are two distinct life stages, the ‘Twos and Teens’, which represent the biggest financial icebergs for parents.

Children aged between one and three cost parents the most to clothe, feed and care for, averaging £17,605 per year. After this the costs drop dramatically, and parents get a financial respite, with the average cost totalling £8,925 per year, between the ages of three and 15. Costs will then rise as many parents face expenditures such as the latest fashion items and other teenage ‘must haves’.

NatWest Premier research found that:

More than half (51%) of parents surveyed wish they had been better prepared for the cost of raising a child
Almost a quarter (23%) of parents expect their children to be costliest between the ages of four and six
22% of parents doubt they will be able to provide for their children in the same way their parents provided for them
When it comes to milestone moments in their child’s life, 24% of parents believe the most costly expenditure will be higher education, 15% think it will be the cost of extracurricular activities such as trips away, sports or music lessons, and 13% helping towards a deposit for a first home

Investing for success

Taking out a stocks and shares ISA, such as a NatWest Invest ISA can be a simple, easy way to begin investing for the future and preparing for the financial pinch points in a child’s life. The ISA allowance in the UK means that it is possible to save up to £20,000 without paying tax.

Like with all investment products, the value of savings can go up and down, but a stocks and shares ISA is aimed at long-term financial goals and savers can choose the level of risk they take. Even putting away a small amount such as £50 a month can build up and make all the difference in helping to pay the extra costs of children

Salaries stretched to breaking point

With the average parent having their child at the age of 30, NatWest Premier can reveal that, for most parents, the cheapest time in their child’s life will coincide with their maximum earning power, aged between 40 and 49 years.

After this age, average salaries decline, while those in their 30s – with the most expensive children – will still be building up their earning power. They may also be facing new mortgage costs – the average age for a first-time buyer is now 32.

Laura Newman, Head of Private Client Advice and Investment at NatWest Premier, says: “New parents often assume that children get more expensive as they get older. In fact, our research shows that the cost of raising children dips dramatically from the age of three, only to rise again just before GCSEs.

“The total cost of raising a child might seem alarming, but by knowing when the financial pinch points will come, parents can plan a strategy that will help them to pay for the pricier years.”

Sources of information

This analysis is based on several sources: