The real cost of kids

...and ten clever ways to cut the costs throughout their childhood

Updated: 
Presented by NatWest

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If prospective parents realised how much they were going to end up spending on their children, no-one would ever start a family - they'd see it was far too expensive and that there's no way they could ever afford it. A recent study put the cost of raising a child to the age of 17 at £307,083. If you're planning on having a couple of kids, you'll need to somehow find a spare £600,000 in your budget - and who on earth can manage that?

Of course, the joy your children bring you far outweighs the costs but I think we'd all rest a little easier knowing we're keeping an eye on our spending! Fortunately, there are lots of easy ways to bring these costs down - and we've teamed up with NatWest to give you some helpful tips on cutting the costs of raising kids.


1. Set your budget
NatWest has a calculator which is really helpful here. It starts with the average cost of everything a typical family spends on a child - broken down into different age groups. It shows you the budget you'll need for your child at these ages. Then it lets you tinker with the costs. So, for example, by far the biggest cost for a baby's first year is childcare, with a national average cost of £8,139.69. However, if you can come up with ways of cutting that cost, you can re-set your calculator and see how much you need to save. Whatever stage you are at, it's worth trying the calculator, seeing whether you have room in your household budget for the typical outlay, and then working out the costs you can cut to make the finances work.The Natwest Budget calculator can also help you work out your monthly budget.

2. Get your childcare tax-free
The cost of childcare is a major chunk of the budget until the child hits the age of 13. However, you can take a slice off this total by getting at least some of this care tax-free. At the moment this is done through a voucher system - which your employer provides out of your income before tax (which is therefore tax-free). There's a limit to how much you can get, but you could save £1,195 a year using the scheme. The programme is set to change in 2015, but will still be designed to save you tax on your childcare.

3. Get your childcare entirely free
Unless you're on an enormous salary, you have to be creative about childcare if you're going to make ends meet. Most families will need to turn to grandparents in the early years for some help - some people will rely on them for one or two days of childcare a week. You can also talk to your other half about shift patterns, and whether you can arrange to work on different days to one another so you don't need care. Some parents with young children will even team up, and take it in turns to look after each other's children on alternate days. These sorts of things can be complex to arrange, and difficult to ask for, but can leave parents paying for little or no childcare.

4. Fight the baby peer pressure
When you're in the baby zone you'll find yourself bombarded with adverts for things you never knew existed - from top-and-tail baby baths to change tables, swings and bouncers. At this stage it's vital to talk to parents about what they really needed, and cut out hundreds of pounds of wasted spending.

5. Never buy new
Apparently we spend £800 on clothes for the first year of our child's life. After that the costs continue to rocket, so between the ages of 4 and 12 we spend £8,640 on clothes. There's a simple way to cut this cost dramatically. Once they hit their teenage years they may get more picky, but at least until then you should never have to buy any new clothes. Try nearly-new sales, eBay, or even talking to friends with slightly older children about what they do when they've grown out of something. Hand-me-downs are an essential part of childhood. The same goes for large toys like bikes - which cost hundreds of pounds new and the kids grow out of in a matter of months.

6. Say no
Pester-power is responsible for an enormous amount of wasted spending. You might love them and want the best for them, but that doesn't mean giving into every half-baked short-lived notion or you'll end up with a house full of unridden skateboards and unplayed guitars. Saying no may feel unkind, but it's essential for your finances and also for them to learn to prioritise the things they want.

7. Get them to stop asking
Once they are old enough, you can stop saying no forever, by giving them an allowance to cover all their costs. If you set an allowance for their entertainment, hobbies, snacks and clothes, it's up to them to prioritise what they value the most and make their own decisions about what they spend the money on. The only time when you have to say no is when they come to you for a top-up. At that point you need to stay firm or you'll undo all your good work.

8. Get creative about holidays
Holidays with children are ludicrously expensive. Suddenly everything has to be done in peak season, and with more of you in tow, a week in the sun becomes a matter of thousands rather than hundreds of pounds. However, when weeks in the sun are beyond your budget, you can travel the country for nothing. If you're easy-going enough, then a house-swap will let you trade homes with someone elsewhere in the country for a week, so you get accommodation at no cost. If that sounds a bit stressful, then you can swap with friends, or plan a road-trip to see friends and family. There is also an art to cheap or free entertainment. It tends to involve lots of internet searching and planning, but the school holidays are packed with free activities in museums, libraries and parks: you just need to track them down.

9. Eat together
Between the ages of 4 and 12 a child will eat their way through £18,783.90 of food, so it's essential to think carefully about how you spend and cook for the family in order to cut this cost dramatically. As a basic rule of thumb the cheapest approach is to buy own-brand food from a discounter, cook from scratch, make up dishes in bulk, and then freeze them. That way you have no overspending, no waste, and over the years you could save £6,000.

10. Borrow wisely
The costs of raising a child can fall particularly heavily at certain times, and can include surprise expenses out of the blue. It's not always possible to plan and save for every eventuality, but if you do have to borrow, you need to be sure you're doing it wisely. Think about the most suitable methods of borrowing, at the lowest cost, and set this up as a contingency.

The NatWest Clear Rate credit card charges a low 6.9% p.a. (variable) on purchases and balance transfers, no balance transfer fees, just a single annual fee of £24, which helps you see clearly exactly where you stand. The card isn't designed with attention-grabbing introductory offers, so there are no nasty surprises when a 0% period runs out and no need to move around to avoid higher charges after a 0% period. You'll need to factor in the cost of the fee.

Representative example: Representative 11.1% APR (variable) based on an assumed Credit Limit of £1,200. Standard interest rate for purchases: 6.9% (variable). Annual fee: £24.

Your actual credit limit and the interest rates you receive will depend on our credit assessment of you and the interest rate could be up to 14.9% p.a. (variable). The APR you'll receive will be based on your interest rate and credit limit and will take in to account the annual fee, so may be higher than Representative 11.1% APR (variable) which also takes into account the annual fee.

To apply you need to be aged 18 or over, a UK resident and earn at least £10,000.

Visit NatWest for further details.