When should you start saving for your child?
It’s no secret that having a child can put a serious strain on your finances. The average cost of raising a child to the age of 21 is now £229,251, which translates to approximately £11,000 each year, and £910 every month.
Studies suggest that almost a third of parents’ gross annual income is spent on raising a child, while close to half (44%) of parents have admitted to cutting back on their spending to make ends meet. Many parents will admit that just keeping a child fed, clothed and warm can be a significant financial burden, but the process of raising a child can become even more stressful when attempting to look ahead to give them a helping hand into adulthood.
Research suggests that the first four years of a child’s life are the most expensive for parents, so it’s perhaps unsurprising that setting additional money aside for their future is liable to slip down the financial agenda. But when, if ever, should you start saving for your child?
A study of 500 parents carried out by the British Bankers' Association (BBA) recently revealed that just over half (51%) of parents began the process of setting aside money for their children in the weeks following the birth of their first child, while around 3 in 5 (63%) said they have, at some point before the child's 18th birthday, put a sum of money away specifically to assist with their future endeavours, be that buying a car, a home, or going to university.
Anthony Browne, chief executive of the BBA, believes that savers have been ‘hard-pressed’ in recent years due to low interest rates, but is of the opinion that 2016 could be a good year for people to consider ‘boosting’ their savings, a view which has been backed by a number of media outlets, with many suggesting that interest rates could begin to gradually rise over the next 12 months.
If you are unsure about the options available with regard to saving for your child, or would like additional information about the processes involved, you could benefit from speaking to a financial adviser. To speak to a top-rated adviser in your area so as to ensure you are making the most of your money, visit the VouchedFor website.