Kids cost more than you think – so plan ahead

Financial planning
Views & insights

Many people vastly underestimate the cost of raising a child. Plan now to avoid nasty surprises scuppering your finances


27 February 2023 | 3 minute read

Raising a child is one of the most rewarding things you can do in life – but it can also be eye-wateringly expensive.

We all know things like childcare, private school and university are costly, but you might be shocked to learn just how much they really are. In our recent survey1, we found respondents vastly underestimated the cost of raising a child, meaning you could be in for a nasty surprise if you’ve got your heart set on private schooling or helping your children on to the property ladder.

To ensure you can give your kids the opportunities you want for them, it’s crucial to plan ahead. Saving and investing might not be the most exciting subject but, with some expert help, it could make a huge difference to you and your children’s financial future.

How much does a child really cost?

The basic cost of raising a child over 18 years is £113,000 if you’re a single parent, or just under £70,000 if you’re a couple2. While this includes things like birthday presents, parties and a self-catering holiday each year, it excludes childcare. The average full-time nursery place costs a whopping £14,000 a year, before any government funding kicks in3.

Many parents don’t appreciate that childcare fees can continue once your child goes to school. The average cost of a daily after-school club is nearly £3,224 a year during term time, while holiday clubs cost an average of £138 per week3.

These fees could easily add up to almost £200,000. Yet our recent survey found six in ten respondents thought raising a child to age 18 would cost less than this, meaning they could find their household finances squeezed without careful financial planning.

And that’s just the beginning…

Things can get even more expensive if you choose private schooling. Average fees are £15,1914 per year but many people don’t realise this excludes the cost of uniform, trips, sport equipment, music lessons, and wraparound care. If you send your child to private school from reception to year 13, you could be looking at an overall figure of almost £300,000. This is a huge sum of money, yet in our survey the majority of Brits thought private school would cost much less than this.

Many parents also want to pay for their kids’ further education, so they can graduate from university debt-free. Tuition fees are currently up to £9,250 per year, but you also need to consider living costs, which are typically £924 per month5. According to our calculations, three years of tuition fees and living costs would amount to over £80,000 in 15 years’ time, assuming an inflation rate of 2% per annum. If you haven’t factored this into your financial plan, you might not be able to make the contribution you’d like.

Fancy paying for your offspring’s wedding? This could set you back another £30,0006, yet 93% of our survey respondents thought the average wedding would cost less than this. And if you want to help your children on to the property ladder, paying a 10% deposit on the average UK house price would cost around £29,0007 but house prices could be significantly higher in ten to 15 years’ time.

Don’t despair (just yet)

These are daunting sums of money, but seeing your child walk for the first time, win at sports day, star in the school play, and earn a place at a top university will make the financial, emotional and physical struggle of raising kids well worth it. And the financial burden could be far more manageable if you put a solid financial plan in place today.

Let’s take university fees as an example. Our research shows that if you invested £500 a month from your child’s third birthday, you could build up a pot worth just over £114,000 by the time they turn 18, assuming an annual return of 3% after inflation and fees. This could cover the cost of university tuition and living expenses (£80,000), leaving an additional £34,000 to put towards a wedding and / or house deposit.

History shows that over long periods investing your money offers the opportunity for higher returns than leaving it in a savings account or cash ISA. However, you must be comfortable with the fact that investments go down as well as up.

Paying for school fees is a bit more complicated. If you pay fees out of your monthly salary, it could be a significant financial burden – possibly even higher than your mortgage costs. Another option is to use existing savings, in which case you may wish to invest your savings in the stock market while holding a few years’ worth of fees in cash as your child prepares to start school. This is a hugely important decision which very much depends on your individual circumstances. To avoid getting it wrong, speak to a financial adviser. They can help you choose the option that’s best for you and devise a solid savings plan that makes paying for school fees less onerous.

Next steps

Taking control of your finances can feel daunting, but sticking your head in the sand isn’t the answer. The impact it can have on you and your children’s long-term financial wellbeing makes it well worth it, and it’s not something you want to get wrong. Taking some really good financial advice could make a real difference to you and your plans for the future. So why not speak to one of our financial advisers today?

1Survey by FindOutNow, 2,009 respondents, 16-17 June 2021
2Child Poverty Action Group:
3NCT / Money Advice Service:   
4Independent Schools Council:
5Save the Student:
7The average UK house price was £294,329 in December 2022:

The value of investments, and any income from them, can fall and you may get back less than you invested. Neither simulated nor actual past performance are reliable indicators of future performance. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Forecasts are not a reliable indicator of future performance.

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