What damage is your child doing to your credit card?

11th February 2012  

Its common knowledge that having kids is an expensive lifestyle choice. But a recent report commissioned by insurer LV and compiled by the Centre for Economics and Business Research (CEBR) has put a terrifying number on the table that’s bound to send parents scurrying for the hills.

According to the CEBR, one child will cost you an eye watering £218,000 over the course of 21 years. The majority of that goes on food, education and childcare. That figure breaks down to a cost of £28.44 a day or £10,382 a year. And that’s without counting the latest Nintendo DS for Christmas or trying to keep up with the latest teenager fashions!

The report was first published in 2003, when the figure was a more modest but still scary £140,000. This year’s total is an increase of 3.3% on last year’s numbers, putting it very close to the average inflation rate of 4.1%.

A rise in the cost of food and clothing could have contributed significantly to this rise, and although VAT is not applicable on children’s clothing or some types of food, it still plays a key part in the average household expenditure. Combine that with low interest rates wiping out many people’s savings accounts, and little Jack or Jill’s university fund is looking decidedly under threat.

Continuing pressure on families

With no end in sight to this ‘period of austerity’ and continuing pressure on families to make ends meet, it could be time to break out the credit cards again. A report released in December by high street bank Santander found that more families than ever are using their credit cards to pay essentials such as utility bills, mortgage payments and the rent.

A second report by the Post Office also suggests that 42% of credit card customers used their cards for grocery shopping in January. If that trend continues, it could mean that the figures for personal debt start to edge back up again too, adding to family woes.

For parents, the single largest expense during a child’s life is education, weighing in at a colossal £71,780, and the rise in university tuition fees will have done nothing to bring that figure down. Second comes childcare and babysitting, averaging £62,099. Food brings up the rear with a grand total over 21 years of £18,667. Regional location also plays a part – it’s no surprise to find that having a child in London is the most expensive at £240,000. Move to the North East and it will cost you a slightly more manageable (but still frighteningly high) £202,000.

Predictions for the future make sombre reading, as the squeeze on family budgets continues. With a dramatic shake up in the benefits system set to make things even tougher for parents, the cost of raising a child could have a key effect on the demographic future of the country as a whole. As couples recognise just how much money it will cost them to have a child, it could mean that they delay having children until they feel they are financially secure enough to afford them, or even put them off having kids altogether.


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