Cost of raising children in the UK
Starting a family is one of life’s most fulfilling experiences, but it’s also among the most costly. From baby essentials and daily expenses to long-term aims like university savings, the cost of raising a child in the UK continues to rise each year.
According to the Child Poverty Action Group, the basic cost of raising a child to age 18 now exceeds £260,000 for couples and £290,000 for single parents. With living costs and childcare fees increasing, many parents are reassessing how to balance their family goals with financial security, planning earlier, budgeting more carefully, and exploring support options to make informed choices.
Planning for the early years
Preparing for a baby involves both budgeting and excitement. Besides prams, cots, and nappies, a significant hidden expense comes from reduced income during parental leave. Reviewing your household finances early, including potential income changes during maternity or paternity leave, is essential. Creating a baby budget that accounts for both one-off purchases and ongoing costs helps families avoid debt and gain more control.
Building a small savings buffer is another wise step. Having funds to cover several months of expenses can reduce stress during those initial sleepless months. Many parents find it helpful to break costs into stages, from pregnancy to school age, so spending feels manageable and planned rather than overwhelming.
Understanding financial support
Government support can significantly benefit new parents. Statutory maternity pay offers up to 39 weeks of payments, with the first six weeks at 90% of average weekly earnings and the remaining period at a lower rate. Paternity leave provides up to two weeks of paid leave, while self-employed parents may be eligible for a maternity allowance based on their National Insurance contributions.
Once your child arrives, registering for child benefit can help with ongoing costs, which are currently £26.05 a week for the first child and £17.25 for each additional child. Even if higher earners face a partial or full clawback through the High Income Child Benefit Charge, claiming still provides National Insurance credits for non-working parents, protecting future state pension rights. The payments can be turned off if the claimant knows there will be a full clawback.
Navigating childcare costs
Childcare is one of the largest expenses families encounter. Often, fees for nurseries or childminders can be as high as a mortgage. Through the government’s Tax-Free Childcare scheme, eligible working parents can claim up to £500 every three months (up to £2,000 a year) for each child to help with childcare costs. This amount increases to £1,000 every three months if a child is disabled (up to £4,000 a year), and parents of disabled children can receive double that amount.
Starting from September 2025, parents in England with children under five will also be able to access up to 30 hours of free childcare per week, matching schemes already available in Scotland and Wales. These programmes can considerably reduce household costs, although availability and eligibility vary by region. Family support, whether through shared care or financial assistance from grandparents, remains a crucial yet often overlooked factor in alleviating childcare pressures.
Keeping your family finances healthy
While raising a child inevitably shifts priorities, it’s important not to neglect your own financial future. Continuing pension contributions, even at a lower level, helps ensure long-term stability. Maintaining a separate household emergency fund is just as valuable for covering unexpected expenses, such as home repairs or healthcare costs, without upsetting your monthly budget.
Protecting your family against unforeseen events is another essential step. Life insurance, critical illness cover, and income protection can safeguard your household if illness or loss of income occurs, while updating your Will ensures that your children are cared for and your assets are distributed according to your wishes. Unmarried couples, in particular, should seek professional advice to make sure their arrangements are recognised.
Investing in your child’s future
Once the immediate costs are managed, families can concentrate on longer-term goals. A Junior Stocks & Shares ISA (tax year 2025/26) allows up to £9,000 annually to be saved tax-efficiently for your child until they reach 18. The earlier you start, the more you can benefit from compound growth over time. Friends and family can also contribute, making it a strong collective effort towards future milestones, such as education or buying a first home.
Planning your family’s financial future?
To assess your future plans regarding starting a family and how they align with your financial goals, we can help you create a realistic financial plan that balances short-term expenses with long-term ambitions and identifies the best strategies to safeguard and grow your family’s wealth. Contact us for more information on where to begin.
This information has been prepared using all reasonable care. It is not guaranteed as to its accuracy, and it is published solely for information purposes. It is not to be construed as a solicitation or offer to buy or sell securities and does not in any way constitute investment advice.
Information based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
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