In the newspapers today, there has been lots of coverage surrounding the soaring cost of parenting a child from birth to the age of 21. It’s been rather pitifully described as having ‘hit an all-time high’, according to insurer LV=’s annual Cost of a Child Report, and shows that the total cost of a bringing up a child has reached £222,458 - more than £4,000 higher than last year and up £82,000 on ten years ago.
I would have thought that the rise was fairly obvious to be honest. With inflation, I shouldn’t expect this figure to ever actually fall, particularly when comparing against the preceding decade. Having said that I am dubious about the breakdown of costs as reported in the Telegraph.
| Category |
Ten years ago: 2003 |
Last year: 2012 |
This year: 2013 |
% difference from last year |
% difference from 2003 |
| Education* |
£32,593 |
£71,780 |
£72,832 |
1.5% |
123.5% |
| Childcare & babysitting |
£39,613 |
£62,099 |
£63,738 |
2.6% |
60.9% |
| Food |
£14,918 |
£18,667 |
£19,270 |
3.2% |
29.2% |
| Clothing |
£11,360 |
£10,781 |
£10,770 |
-0.1% |
-5.2% |
| Holidays |
£11,458 |
£15,532 |
£16,195 |
4.3% |
41.3% |
| Hobbies & toys |
£8,861 |
£9,248 |
£9,316 |
0.7% |
5.1% |
| Leisure and recreation |
£6,366 |
£7,303 |
£7,353 |
0.7% |
15.5% |
| Pocket money |
£3,386 |
£4,337 |
£4,458 |
2.8% |
31.6% |
| Furniture |
£2,074 |
£3,373 |
£3,462 |
2.6% |
66.9% |
| Personal |
£925 |
£1,143 |
£1,155 |
1.0% |
24.9% |
| Other |
£8,845 |
£13,761 |
£13,909 |
1.1% |
57.3% |
| TOTAL |
£140,398 |
£218,024 |
£222,458 |
2.0% |
58.4% |
SOURCE: The Telegraph
That total figure equates to roughly £11k per year. If we consider the average income for a British family with two adults working is around £40,000 (before tax) then that would suggest that almost half the average income of both parents is spent on parenting before any household debt is taken into the equation (mortgage, credit cards, personal loans). That’s a mammoth figure to get your head around.
But is it really as bad as all that?
When I first sat down to write this post I was convinced I could attack each and every category and suggest them to be spurious and misleading - but my argument seems to be faltering the more I think about it. I’m also not an economist, mathematician, or statistician - I’m a mummy (and like everyone else, I sometimes struggle with that). Still, I wanted to write about it as I thought it might be interesting to Dexter when he’s older.
No, I don’t want to bash Dex over the head with it and make him question what sacrifices we’ve made to bring him into the world; He is our World and our lives are richer because of him. I just thought he might like a giggle at some of the figures as I suspect they’ll seem so little to him when he’s older - and if he’s anything like me he’ll be fascinated by them.
So why am I dubious about the breakdown?
Well firstly I find it curious that the report covers up to 21 years of your offspring’s life - and therefore includes the spurious cost of financing your child through university.
It’s true that I went to university with considerable help from my parents and a (still unpaid) student loan. My parents didn’t get means-tested as their combined income took them significantly over the threshold where this would be beneficial to them.You might therefore think that I’m the perfect case study for the report and that it’s appropriate that university costs are factored into the total cost of raising a child. However, I’m not convinced they should be.
Indeed the cost of university education is staggering, and yet the benefits are not in question. If Dexter asks to go to university then we’ll bend over backwards to make it happen and neither Craig nor I will ever hold this against him (in fact, we’ll be the proudest parents on the planet). We simply have to concede that not all school leaver’s will go on to higher education.
You see, I’m just not sure it’s right to factor these costs into the real costs of raising a child when fewer than 50% of 18-21 year olds in the UK actually go on to university (in fact, there were less than 150,000 applications from inside the UK in 2012 by school leaver’s). There isn’t any real point in examining the reasons for this decline in applications (in short, they include but are not limited to, a relative decline in population of 18-21 year olds from 2011, a rise in Non-EU overseas applications, prospective students deterred by fees) we only need to point out that the government has failed to reach its target of achieving 50% of school leaver’s entering higher education.
If your child doesn’t go to university then this ‘education’ cost will be considerably lower owing to the fact that the government provides free primary and secondary education. So is it really necessary to include such inflated education costs when they will be irrelevant to half of us parents?
According to this report, these education costs represent almost 33% of the total cost of raising a child. All of a sudden you begin to see why the student protests were so fervent last year.
The total cost of university for students who started (last) September is an average of £53,330. Aside from average tuition fees of £8,770 per year (£26,310 for a three year course), parents and students footing the bill will spend an average of nearly £12,500 on accommodation and over £4,300 on food over three years. Essentials such as household bills, books, and travel expenses also escalate the total cost of attending university dramatically.
SOURCE: The Cost of University study from LV=(2) 2012
If we were to take the above into account and remove the cost of university education from the table above - this figure plummets from £72,832 to £19,502 (I’m still a little lost as to what we’d spend this £19,502 on but hey ho - you can’t argue with numbers, right?)
Moving onto childcare costs, the sum also seems extortionate. I can only surmise that this average takes into account both working parents, and non working parents. For a stay-at-home-mother, or part-time worker they will absorb the vast majority of this cost themselves. Kara Gammell from The Telegraph also has it right when she states that these costs will fall as “a child gets older and the ratio of children to adults required for good-quality care begins to fall” - suggesting the report does take into account the child care costs of babies, as well as pre-schooler’s.
Purely for the sake of argument, we might consider the Mill’s household. I will be staying at home with Dexter until he starts nursery. At this time, we hope there’ll be another little Mill’s in the house so I will continue to care for him / her until they are in nursery also. This effectively means we’ll miss out the most expensive phase of childcare (for the under two’s) as I will provide all day-to-day care for my children.
According to figures from the Daycare Trust, the average cost of 25 hours’ care in a nursery for a child under two costs £103. However, in England, once your child is three, they are entitled to a state-funded nursery place, which can help dramatically with costs, which is good for 15 hours a week. You can use this entitlement to get a place in a nursery attached to a state primary school, which will usually offer either morning or afternoon sessions.
SOURCE: The Telegraph
That is not to say we’re able to afford this lifestyle (although we are indeed in a better position than many of my peers). Far from it. If I don’t bring anything into the home, the burden on Craig is enormous and unrealistic. I will need to seek a part-time role with hours outside of Craig’s core working day. This means I can contribute where necessary and no costs are incurred. Similarly, we have extended family who are very involved in Dexter’s life, and can provide additional support if needs be.
In our example, the childcare costs in the table above therefore aren’t representative of our circumstances. If we can manage zero child-care cost until our children are all in primary school (when I would return to full-time work), then we would only incur after-school child-care fees of on average £40 per week - enough to ensure that we do not have to pick our children up until 6pm every night of the week (of course this is only true of term-time and we will incur full day childcare expenses during the holidays)
If I were therefore to apply my example to the table above then I would only incur approximately 8 years of after-school care costs (for Dexter between the the ages of 7 and 13, + 2 years for the younger Mill’s) - that’s £20,800 compared to the £63,738 quoted above.
Now, taking clothing, hobbies and toys, and furniture in one big gulp - I’m not hugely surprised by the figure of £23,548 over 21 years (£1,121.30 per year). I think this is actually quite optimistic and we’ve probably spent a little more than this in Dexter’s first year. There are however some gaping great holes with this figure that it’s worth pointing out.
The first year of a baby’s life is undoubtably the most expensive. For want of a better word “start-up costs” will include nursery furniture, clothes that are outgrown far too quickly, and weaning food that has to be bought separately outside of the wider families food bill. As is true with childcare costs, these costs will fall as your child gets older and is able to entertainment him / herself, eat the same foods as the rest of the family, and wear clothes for an entire year before outgrowing them. My point is that I can not see us continuing to spend so wantonly when Dexter is out of nappies.
As we are in the grips of recession, we are also entering a more frugal age. Twinned with the growth of social media, a culture of online shopping, and the sheer brilliance of sites such as eBay, Gumtree and Facebook Buy and Sell groups - the market for secondhand items has never been so accessible. As more of us turn online and reject the high street, we’re actually helping keep costs lower. Retailer’s are saving money by shedding physical outlets, and are literally clambering over one another to secure online sales. As consumer’s, I believe that we’ve never had it so good! Barring the odd special purchase, we’re now able to compare the ‘price-of-new’ at the click of a button, and source secondhand items easily. This is bound to have an impact on the table above (I suspect it already has in respect of clothes - toys and furniture will soon follow suit).
Finally, by the age of 16, your child will hopefully have taken on a part-time (or indeed full-time) job of his / her own and should be partly funding themselves (particularly in respect of toys, clothes and recreational activities).
My point? We simply don’t need to spend this much, and there are ways of capping spend on discretionary items.
One thing, I can’t see ourselves ever compromising on however is technology.
More than a quarter of parents (27%) had bought their child an electronic gadget in the last 12 months, with 16% buying a laptop or tablet computer.
On average, they revealed they spent around £302 on gadgets for their children.
SOURCE: Sky News
Again, I think this is optimistic. As much as you can try and limit your spend, as far as gadgets go, I should imagine, by the age of 21 Dexter will have owned 3 or 4 laptops (£2000?), 3 or 4 games consoles (£1200?), and several mobile phones (£???). Although, in time, some of this will be financed by himself, until he’s working this will be be our responsibility. There’s simply no telling what sort of things he’ll ask for for Christmas and birthday’s but I suspect gadgets will be high on the list… All of a sudden £302 per year seems like an incredibly meagre sum considering the increased reliance on technology in our day-to-day lives…
To this end, I’m not going to adjust the figures above for these discretionary items as I don’t feel they are inaccurate or unbelievable - they are entirely a product of your circumstances at the time.
The only other thing to perhaps point out is that this total cost of £222,458 is in no way reflective of expenditure for families with more than one child. Even if you’re nodding your head in agreement at the costs contained within the table above, you wouldn’t simply times by 2 if you have 2 children.
For a family with more than one child we’d expect to see huge adjustments to most of the figures. This is particularly true of discretionary items such as clothes and toys (where families can pass down clothing, toys and furniture to the younger child), but also of food and holidays where economies of scale would come into play. I’m not clever enough to even hazard an estimate on the adjustments but can appreciate that they would be significant.
Finally, like many surveys of this nature, they always add the imputed value of the home in these figures. Someone quite rightly pointed out in the comments of the Telegraph article that “If I purchase a 3 bedroom home, and have 2 kids, it is assumed that half the expenses of the home are for the kids, including interest on the loan payments” - although neat in theory, this argument is surrounded in a bubble of conjecture as we simply do not know what the people polled were asked - never-the-less it makes for compelling discussion.
What do you think? I’d love to know.
