The costs of raising a family hasn’t ever been cheap. From clubs and activities, clothes and shoes, food bills, holidays, parties to school fees; the expenditure list for children is endless.

Parents are now spending around £87,000 bringing up each child to the age of 11, new research from Halifax has revealed. This works out at more than £650 a month*.

With all of the necessary purchases needed for a new baby, as expected the first year of raising a child is by far the costliest. The research revealed how parents are spending almost £10,000, or £820 a month, on their baby.

Starting a family may seem financially overwhelming when faced with these huge costs, especially if you are also thinking about private education or would like your child to go to University. However, planning ahead for the future and implementing some savings goals can relieve the financial burden for when the time arises.

Start by saving a small but regular contribution each month. When children are very young, you may decide that they don’t need presents from wider family members, and instead you may invite grandparents or aunts and uncles to make a donation to their savings. By setting up a way to save now, you are able to offer this as an easy route to investing for your child’s future.

Putting money aside for when children are older is fairly common these days, but ensuring that your money is in the right place can make all the difference. There is a range of saving vehicles to choose from including a simple cash savings account with a bank or building society, premium bonds, a Junior cash or stocks and shares ISA or even a pension. Deciding on which method would be best for your child will depend on what you want in terms of access to the money or tax efficiency for your child, both now and in the future. A financial adviser can help you with this, by understanding the purpose of these savings and at what point in the child’s life it will be used for.

Whether saving or investing is a better option will depend upon a number of factors, including the length of time before which you anticipate the money will be used, and how you feel about taking any risk with the money.

Over the longer term (5-10yrs+), investing can achieve a greater return than saving (particularly when interest rates and savings rates are low) but it involves taking some risks as to whether the value of the investment will rise or fall in order to aim for some investment growth.
Different options will suit different people based on what they’re looking to achieve. A professional financial adviser will help you explore options further and create a specific goal that can be reviewed annually. A financial review will provide the opportunity to discuss what can realistically be achieved and how much risk may be involved if investing the money. 

If you would like to discuss your family finances or the different saving options available for you, please say hello, we’d love to help.

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