For most of us there are several steps to becoming an adult. Moving out of our parents’ home, getting married or making a lifelong commitment, buying a home of our own – and starting a family.
But if we decide that having children is a step we want to take, we have to ask ourselves whether we can afford them.
What does it cost to have a child?
The cost of raising a child will depend on your personal circumstances. But the costs of food, clothes, toys, a home, education (even if they go to the local state school) add up fast
According to the Child Poverty Action Group the average cost of raising a child including housing and childcare from birth to 18 is around £185,000 for lone parents and £152,000 for couples.
And the costs don’t stop there
As well as the cost of children, there is the loss of earnings that come with them. You may be able to go back to work, but a career break will probably be part of the plan of most would-be parents.
Some support is available of course. Mothers with the same employer for at least 26 weeks up to the 15th week before they are due to give birth and who earn an average of £120 per week and provide correct notice and proof of pregnancy to their employer should be eligible for Statutory Maternity Pay (SMP).
This is six weeks at 90% of average gross weekly earnings and after that you can claim either £151.97 a week or 90% of weekly earnings, whichever is lower, for the next 33 weeks. If you are self-employed, you should be able to get Maternity Allowance instead which gives you the same amount as SMP (depending on whether you have paid enough Class 2 National Insurance to get the full rate)
The costs of children are high, but if you are set on having a family you may be unlikely to be deterred.
Children seem to come along when they are ready, rather than when their parents are, but it still makes sense to plan ahead.
Look at the income you will need to replace if you are out of the employment market for a year or two. If the payments from SMP are not enough, or you want to spend more time with your offspring, you will need to find a way to deal with the shortfall. Saving, or even better investing for a year or two first could be a big help in building up the kind of sum you would need to get through any cash shortfall.
It may also be an idea to look into the possibilities of working part time or working at home. Many employers have become more receptive to alternative working arrangements and may be flexible if it makes it more likely that you will eventually return full time.
Providing for your family if you could not
But children mean ongoing responsibilities and you need to find ways to meet them even if you could not do it yourself.
This makes insurance essential. A basic life insurance policy could protect your loved ones financially if you, your partner or both of you should unexpectedly pass away. Just as important, an income protection policy could help if you became unable to earn due to an illness or injury.
You would also need to write a will to ensure your children’s’ inheritance is protected.
Getting some expert help
All this can sound a little daunting, but at Continuum we help people with their financial needs through every stage of life. That means we have the answers you need when the questions about children and money come up.
We can help you find the investment products you need to build up a nest egg, if you are planning on waiting. We can help you find all the insurance cover you will need.
We can help you deal with tax and other aspects of your financial planning before you start a family, during that career break, and in the years to come afterwards.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Protection products or investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.
The Financial Conduct Authority does not regulate taxation advice or will writing.
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