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Raising a child now costs more than a house

How much would you say it costs to raise a child until they are 21? For some of us this may seem like a really difficult number to guess – after all 21 years is a long time to factor in.  Would it surprise you to know it now costs more than the average semi-detached house?

In fact, the cost has now reached a staggering £231,843. In London, the cost is even more and is now more than a quarter of a million pounds, at £253,638.

This is more than a third (38%) of the average UK household’s net income, according to the research by insurance and investments company LV=.

The most expensive years are between one and four, with the cost of childcare and babysitting in particular adding to the financial strain, amounting to 30% of the total cost of raising a child.

If these expenses are really putting you off, don’t let it yet. It is better to be prepared rather than suddenly have these costs come as a huge shock, and there are plenty of things you can do to help lower them.

Costs of having a child – your four steps to success

1.Prioritise any debts

Before you go out and pay for all the new bits for your new arrival, have a look at any existing debts and think about how you can reduce them so you don’t get caught out further down the line. Knowing how you should prioritise your debts is a great step towards reducing them. Your mortgage or rent should be prioritised, as should your gas and electricity bills. If you owe money on credit cards, tackle the one with the highest interest rate first.

2.Work out what you’ve got, and what you’ll need

Next, you should pull together a budget to get a quick idea of how much spending money you currently have after you’ve paid your most important bills. Don’t forget your  income is likely to drop if you are on maternity leave – plus, it’s likely you’ll be spending more on bills if you are in the house with your little one all day, so make sure you take this into consideration.

Buying all the things you need for the baby is a really exciting time.  But, from cots to clothes, it can seem like there is a lot to buy for someone so small, especially if it’s your first.  

But you don’t need to get everything brand new either. Babies grow and they grow quickly, so buying lots of new clothes may end up being a mistake. Why not consider buying second-hand instead?

Take the time to shop around too. There’s usually a sale on somewhere. Shopping online can prove cheaper than the high street too. 

3.Get clued up on help with childcare costs

There is plenty of help available from the government and employers, from tax credits and tax-free vouchers, to free childcare, so make sure you’re accessing everything you’re entitled to.

Claiming Child Benefit can give an extra boost to your income, which you can spend on any extra bits for your child that come up. You get £20.70 per week for your first child and £13.70 a week for any further children.

You can also start accruing childcare vouchers during your maternity leave, if your employer offers them.

The amount you get depends on what level you pay tax at, but you could be looking at up to £243 a month, which can really help ease any stress when it comes to sorting childcare. Bear in mind these vouchers are a salary sacrifice, not extra money, but you will not be taxed on them.

4.Consider protection insurance

Half (49%) of parents don’t have a plan in place if the main breadwinner were to lose their income due to accident or illness.

It is important to think about you would do if your family experienced a loss in income.

Protection insurance could be a good idea in this instance.

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