Metro’s personal finance expert helps you through the costs at each stage of your child’s life (Credits: Getty Images/Image Source) Want to have a kid? You’d better get saving. We all know bringing up children is immensely expensive, but the price is not spread evenly over their lifetime, with the early years and student days being two of the costliest periods for parents. Figures from the Child Poverty Action Group suggest the cost of bringing up a child to the age of 18 is £260,000 for a couple, but that figure rises to £290,000 for a single parent. So how can you budget to meet the costs at different stages of your child’s life – and what help is available? Be prepared You’ll want to start by assessing your current financial situation (Credits: Getty Images) Being aware of the price of parenting before you have children will help you be more prepared for the costs coming your way. ‘One of the best ways to help yourself as a parent is to plan ahead, before you have children, and get into the best possible financial position before you start,’ says Sarah Coles, personal finance expert from DIY investment group Hargreaves Lansdown. She suggests drawing up a tighter budget in the years before you have children to prepare for the more expensive years coming your way – and to get used to living with less. ‘You can use the cash you free up to pay down expensive short-term debts and build up any savings you can.’ Of course, not everyone is in a position to do this – but if you can, you will make parenting life easier. Now is also the time to check out the realities of life on maternity or paternity leave. Find out what the policies are at your company and whether you will be paid more than the minimum. Most employees are entitled to up to a year of maternity leave, paid at 90% of average weekly earnings for the first six weeks and a lower rate for the rest. Some companies will be more generous, but statutory maternity pay is just £187.18 a week – not much to live on. You’ll also need to check what other benefits you might be entitled to once you have a child and think about the costs of childcare, in particular, as this often shocks new parents. While the government has put in some new free, funded hours of childcare for older children, the Coram Cost of Childcare survey, published last month, shows you’ll still pay more than £70 a week for 25 hours of nursery care for a child under two in England, and these figures will be higher in Scotland and other areas without the entitlement. In inner London, it will cost you even more and – of course – 25 hours won’t allow you to work full-time. The early years The years between one and four are often considered the most expensive period for childcare (Credits: Getty Images) Once your baby arrives, costs come thick and fast – whether you planned for them or not. According to savings group Shepherds Friendly, you’ll spend £917 on nappies alone over the first two years – while the cost of formula, baby food and transportation all add up. You may need no childcare while you are on parental leave, but this will likely kick in once you’re back at work. To make sure your money stretches as far as possible, ensure you apply for all the benefits you are entitled to. Child benefit is available if the higher earner in your family earns less than £60,000, while those on higher incomes may have to pay some back. Those on lower incomes may be eligible for more, so use the benefits calculator from charity Turn2Us to see if there is more you can get. Signing up to tax-free childcare can also give your budget a boost. This can give you up to £2,000 a year per child to help with the cost of childcare – find out more here. For every £8 you pay into the account the government pays in £2 and you can use this to pay your provider. It’s not all about them In the welter of your child’s early life do not forget your own later-life finances – not least your pension. A top tip is to ensure that even if you do not claim child benefit because you earn too much as a family, you still get the national insurance credits available for parents of those under 12. These credits count towards your state pension entitlement. You can apply for national insurance credits here. You should also ensure you keep up your own pension contributions when on maternity leave if you are in an employer’s pension scheme. Your contributions will be based on your reduced salary, but your employer’s contributions remain at your original level for much of your leave. ‘It’s crucial to carry on paying into your pension while on maternity leave, as your employer may not pay in at all if you stop contributing,’ explains Camilla Esmund at DIY investment group Interactive Investor. ‘Your contributions will cost less than normal because, while employer contributions are based on your full salary, yours are based on your reduced maternity pay.’ Primary schooling Working parents may still need to find childcare that fits around their work hours (Credits: Getty Images) Once your child reaches primary school age, some costs decrease as you will require less childcare. However, if you are working you will probably still require wraparound childcare, at least until the end of primary school. Shepherds Friendly puts the cost of afterschool clubs for primary school age children at £2,696.46 a year per child. You can continue to use tax-free childcare for this which can bring down the cost. Other costs include clothes, food at home, extracurricular trips and school meals. While packed lunches can be a cheaper way of feeding children, primary schools currently offer free meals for all infants, meaning that up to Year 3 of primary school your children can receive lunch for free. Those on low incomes can continue to get free meals throughout their time at school, and you can check eligibility and how to apply here. Secondary school age Growth spurts, school trips, extra-curriculars, mobile phones, learning to drive and a social life all come in at adult prices (Credits: Getty Images) Once your child reaches secondary age, some costs may reduce as you’re less likely to be paying for childcare – although you may find you’re shelling out for extracurricular activities, mobile phone packages and adult-sized clothes and shoes. Once your teen hits 17, learning to drive costs an average £1,363 according to Shepherds Friendly, while car insurance for a teen can be more than £1,500. If you find costs have reduced though, now is the time to start saving for the next stage in parenthood as supporting your child through university may cost more than you think. Dan Coatsworth, investment analyst at investment group AJ Bell, says starting to put money away when your child is 11 and childcare fees have fallen away can give you time to have a significant pot of cash by the time the child is 18. If you put the maximum £9,000 a year into a child’s Junior Isa (a tax-free savings or investment account) and it grew by five per cent a year excluding charges, you’d have more than £70,000, he says. ‘It’s worth noting that the full amount isn’t needed on day one as the costs are spread over a three-year course. Parents could keep contributing money once the child starts their university course if they want to avoid them getting into any debt,’ he adds. Uni and beyond If your child decides to go to university they will typically pay £9,250 per year for tuition fees, not counting living costs, transport or the price of books (Credits: Getty Images) While your child can take out loans for both tuition fees and maintenance to go to university, many parents will still be expected to make a contribution to their costs unless they are on a very low income themselves. The maximum loan a student can get is £10,544 if they are studying outside London – a figure outstripped by rents in many parts of the UK. The Bank of Mum and Dad The Bank of Mum and Dad does not shut up shop when a child comes of age. The average age when a child reaches financial independence is just shy of 22, according to a study from financial app Wealthify. Parents may hope to help children with a house deposit when they leave home, too.Sometimes helping them navigate the financial world as they progress through life can help them far more than one-off contributions could.A Lifetime Isa (Lisa) may help to turbocharge savings. A Lisa can be opened between the ages of 18 and 40 and the money in it can be used either to buy a house worth up to £450,000 or taken out after the age of 60.The government adds a 25 per cent bonus for every £1 put into the Lisa, and you can put up to £4,000 in a year. Parents share how they budget having children Hannah Salton, 38 buys secondhand and set up saving accounts for her children Career coach Hannah Salton, 38 from Hertfordshire has two children, aged four and one, and is becoming an expert at finding ways to budget. ‘We have avoided rushing into buying expensive things just because we think we should,’ she says. ‘We’re very invested in the second-hand market, especially for clothes. I don’t think we’ve bought any new clothes for our daughter, it’s all been gifts, hand-me-downs, or buying from Vinted. ‘We bought lots of equipment second-hand too – our cot, bouncer, baby carrier etc. We did buy our buggy new, which was a big investment, but we’ve got great use from it from both our children, and plan to sell it on when no longer needed. ‘Childcare is expensive, but I’m lucky that my work is flexible, which means I can fit it around when suits us as a family. Our son uses funded hours at a pre-school that doesn’t charge a top-up fee, which is a great help. It feels a long way off, but university fees scare me! I have no idea how we would fund that at the moment. ‘We’ve set up savings accounts and Junior Isas in the kids’ names, and try and pay in a little each month.’ Larissa Hazell, 33, made sure her finances were stable before having a child Larissa Hazell, 33, runs childcare platform The Childcare Guide, which connects parents with childcarers free of charge. She has a three-year-old son and says that she and her husband made sure they had stable finances before starting their family. ‘Before I got pregnant, we saved enough to pay the mortgage for a year,’ says Larissa, from Essex. ‘Now we put a little away each month to account for more expensive things that we might want or need, such as associated sports costs or tutoring. In addition to that, child benefit gets saved so it can have a bigger impact as our son grows. ‘We have also made adjustments to our way of life. Prior to having our child, we moved out of London and we holiday less and eat out less. This allows us to have the money we need to bring him up, while I work part-time and build a new business.’ Larissa has still incurred some serious costs and is worried about more in the future. ‘Getting an extended rear-facing car seat was really important to me, but they don’t come cheap. We budgeted for this by getting as much as we could free or second-hand. We got a buggy, baby carrier, maternity and baby clothes for free, among other things.‘I am most concerned about the cost that comes with sport. ‘I am keen that our child tries out different sports – most recently he has been trying ice-skating, but I am well aware that it is not a cheap sport if he wants to take it up seriously!’ Rosie Murray-West is Metro’s personal finance specialist. If you want more tips and tricks on saving money, as well as chat about cash and alerts on deals and discounts, join our Facebook Group, Money Pot.