Childcare costs continue to rise

Nanny with child

Parents are paying as much as £8,684 a year for a full-time nursery place, with those in London facing the biggest cost.

The figures, from the Daycare Trust, show that the cost of sending a child to nursery has increased by up to 5% in the past year, with a typical nursery place likely to set you back £8,684 a year in England, £8,216 in Scotland and £7,592 in Wales.

Meanwhile, other research from insurer LV= shows the cost of raising a child has increased by 38% over the past five years, with parents forking out as much as £193,772 on raising a child up to the age of 21. This is equivalent to £9,227 a year or £25 a day.

The friendly society says childcare and education remain the biggest expenditures, costing parents £53,818 and £50,240 respectively.

Mike Rogers, group chief executive of LV=, says: "Every parent knows how their hard-earned savings can dip thanks to eye-watering education and childcare costs."

The sharp rise in the cost of kids and the economic downturn has prompted 81% of parents to cut back on family expenditure, with holidays and other leisure activities the first to go out the window.

Food shops have also come under the money-saving spotlight, with 79% of parents admitting they now buy lower cost items and supermarket 'value' items. Second-hand clothes and furniture have also risen in popularity.

A worrying trend picked up in the LV= research is that savings and financial security are also under pressure, with 37% of parents cutting the amount they save regularly and 23% cancelling or reviewing their life insurance and income protection cover.

Rogers says: "Although parents are feeling the pressure financially, it is important they try to look beyond the short to medium-term money worries.”