Rising parenting costs are causing difficulties for families, whether it’s childcare or higher education fees. What will 2023 bring, and how can parents manage their finances?
The average cost of raising a child to 18 in the UK is £202,660
The total cost of raising a child is the highest it has been since calculations started in 2012 according to the Child Poverty Action Group (CPAG). This increase has been attributed to higher prices caused by inflation as opposed to a change in the basket of goods needed to raise a child.
According to The Times, the average cost of raising a child from birth to 18 in the UK is £202,660. This includes housing and childcare costs. That’s around £11,250 a year, or £938 a month.
Children in the UK receive free pre-school education from the age of three. Up to that point, parents who want to send their children to nursery have to pay for it themselves. The cost of sending your child to nursery has increased compared to last year. In 2022 the average cost for a part-time nursery place was £138.70 per week, meaning that families sending one child to nursery for 25 hours per week could expect to fork out more than £7,000 annually.
A recent 2022 Childcare Survey from Coram Family and Childcare, which is recognised as one of the most comprehensive industry surveys, found that parents were paying on average 2.5% more for childcare in 2022 than they were a year previously for children up to 24 months, and 2% more for children aged two.
Based on this growth, childcare costs are expected to increase in 2023 as well. Parents have already experienced rising childcare costs over the past five years with the government ending the childcare voucher scheme in October 2018. The vouchers have now been replaced by Tax-Free Childcare.
‘We missed out on the first few months of Tax-Free Childcare after our daughter went to nursery as it's so badly promoted', says journalist and mum Shannon Kyle (@ShannonDotKyle). ‘It was only through a friend we heard about it and immediately signed up. The system is hard to navigate and sometimes goes wrong, but it saved us 20% per month on fees, which adds up to about £150 – a great saving.’
Data from the Office for National Statistics (ONS) suggests that mothers often have to return to work after giving birth due to high childcare costs. From April to June 2021, 75.6% of mothers with dependent children were in work, up from 66.5% in 2002, reaching its highest level to date.
Of course, money is only one factor. Women are now less likely to choose being a stay-at-home mother over their career ambitions. In fact, 24% of new mothers were more interested in their career after having a child.
With the UK currently in a cost of living crisis, inflation continues to remain at a high level. According to NimbleFins the estimated average UK weekly household spend was £671 per week in September 2022. This has increased by around 11% from September 2021.
The average UK weekly household spend was estimated at £671 per week towards the end of 2022
‘Without a doubt household bills continue to climb,’ says Shannon. ‘We order things in bulk where we can, such as pet food, and we change our electricity and gas suppliers and insurers every year to get the best deal. It takes time to shop around but is often worth doing when we can.'
Continuing cuts to the education budget could see schools relying more and more on parents’ voluntary payments.
Parents in the UK don’t actually spend much on education when compared to their other costs, due to the state school system. In fact, only 1% of the average household spend goes towards education, according to the ONS.
Parents aren’t obliged to help fund their schools, though, and children can’t be exempted from activities that need parental funding because their parents can’t pay. Of course, there will be parents spending more on education.
There are establishments that are finding novel ways to provide affordable private education despite the cuts, including The Independent Grammar School: Durham – a private school that opened its doors at the start of the 2018 school year, which is charging parents £75 per week.
It is when children reach 18 and begin considering higher education that the real costs begin to kick in. University fees for home students in the UK have risen to £9,250 per year, with a total average cost of £22,200 per student to achieve an undergraduate degree.
‘If your child is still young, then start saving for their higher education now,’ recommends Kalpana Fitzpatrick, financial journalist and founder of MummyMoneyMatters.com (@MumMoneyMatters). ‘One if the best ways to kick start their university fund is a stocks and shares Junior ISA. This is a long-term investment option for five years, or ideally ten years, but the return potential is much higher than that of a cash ISA.
‘But beware: once the money is in, it belongs to the child to do as they please with when they’re 18,’ she adds.