Cost of raising a child outstrips wage growth

Last updated: Mar 4th, 2013
News by Hugh Morris

The cost of raising a child has risen twice as fast as the average British income, leaving the UK as one of the most expensive countries in the world to raise a family.

According to research collated by KidStart, a shopping club for families, the real cost of raising a child (once inflation has been accounted for) has risen by 11% since 2003.

Meanwhile, the average cost of raising a child has increased by 55% in that time but the average income has risen by only 25%.

This means parents on the average UK single income of £21,473 a year could spend half of their income on their child, compared to 38% in 2003. The global average for percentage of income spent on raising a child is 13%.

Support and advice

Julian Robson, chief executive at KidStart, said: "With the recent cut in child benefit, parents will need all the support and advice they can get to help make their money go further and combat the rise in living costs."

The news comes at the same time Investec Wealth & Investment released figures showing more and more grandparents are gifting money to their grandchildren instead of their children.

According to research, 2.1 million British grandparents are providing financial support to their grandchildren, to the tune of £2,500 a year.

Nick Gartland, senior financial planning director at Investec Wealth & Investment, said: "We have seen many cases where a grandparent's son or daughter has lost their job and they have had to provide significant financial help to ensure their grandchildren don't lose out.  

"Many grandparents are also conscious of the impact of inheritance tax and believe it makes more sense to see the younger generation benefiting from their assets during their lifetime."