Share your thoughts on our News & Insights section. Complete our survey to help us improve.

Personal finance

The cost of raising a child hits £163,175 – 5 top tips to help

We share five tips to help with the cost of children in 2024.
Mother and child at the supermarket.jpg

Important information - This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Having a child is one of the most expensive decisions you can make.

Recent figures from our Savings and Resilience Barometer hammer the point home.

Couples with kids spent an average of £6,969 more each year than couples without. Adding in the impact of inflation (at an assumed rate of 3% a year) over 18 years, this comes to £163,175.


The average cost of a child over 18 years.

Here are our five top tips for any parents feeling the pinch.

This article isn't personal advice. ISA and tax rules can change, and any benefits depend on your circumstances. If you're not sure what's right for you or your children, ask for financial advice. Investments rise and fall in value, so you could get back less than you invest.

Parents’ financial resilience suffers across the board. For single parents, life is even tougher, and they face far lower resilience on almost every measure. It means we need all the help we can get.
Sign up for Monday Money Matters. Get the top stories from HL, including top tax-saving tips and the latest on pensions, savings, annuities and the housing market.

Take advantage of childcare perks

Working parents of two-year-olds are now eligible for 15 hours a week of free childcare during term time.

This will be widened to include children from 9 months to 2 years from September, and then increased to 30 hours from September 2025.

There are a few caveats though.

If you need care beyond the school year, this works out at 11 hours a week, and nurseries might set boundaries on how you can use those hours. It doesn’t include ‘consumables’ like food or nappies either.

If you’re paying for additional care, or have slightly older children under the age of 12, you can put money into the tax-free childcare account.

For every £8 you pay in, the government will add another £2. The system lets you claim up to £500 every three months – up to a total of £2,000 a year for each child.

To qualify for either, you need to be working and earning at least the equivalent of minimum wage for 16 hours a week (£183) and both parents need to earn less than £100,000 a year.


Make the most of child benefit

You can get £1,331 a year for your first child, then £881 a year for any more children you have.

It can be paid to either parent. But if one of you stops work for a period, it may be preferable for them to claim. This way, they qualify for the National Insurance credits that come alongside it.

Higher earners have to pay at least some of it back. The good news is that the threshold at which you start repaying moved on 6 April 2024, from £50,000 to £60,000.

The rate at which you have to pay it back has also halved, so you only need to repay it all when you make £80,000 or over.


Think about other benefits

Check other help that could be available from the government, including the childcare parts of Tax Credits and Universal Credit.

You might be able to claim 85% of childcare costs if you’re eligible for Universal Credit.

Bear in mind, however, if you receive these benefits, you can’t use the tax-free childcare scheme.


Plan ahead

One of the best ways to help yourself as a parent is to plan ahead.

For example, get into the best financial position you can before you have children. By budgeting ahead, any cash you free up could be used to pay down expensive short-term debts and build savings.

How much do you need for an emergency cash buffer?

Or if you’re thinking further ahead, you could consider using any money saved or gifted by family to invest for the long term.


Give the kids a head start

Children have time on their side when it comes to money. Anything you invest in a HL Junior ISA should have more time to grow.

By making an early start with the 2024/25 £9,000 Junior ISA allowance, you could help give any young ones in your life a head start on university fees, their first home or a future nest egg.

  • Free to manage – we’ve removed our account charges, including online share dealing commission, so that more of what you pay in will benefit the child. Depending where you invest, other charges could still apply.

  • No tax you don’t pay any UK income and capital gains tax on profits in a Junior ISA.

  • The whole family can chip in – once set up, anyone from grandparents to family friends can pay into the account.

  • Everything in one place you can link Junior ISAs to your own HL account.

  • No need to break the (piggy) bank – top up a Junior ISA from £100 as a lump sum, or from £25 a month.

When the child turns 18, they can access and manage their ISA in the same way as adults.

The longer you invest, the less likely you are to lose money. But investments fall as well as rise in value, so you could get back less than you invest for the child.

The HL ISA Family

From newborns to new grandparents, we offer ISAs for everyone.

Latest from Personal finance
Personal Finance Newsletter
Sign up for Monday Money Matters. Get the top stories from HL, including top tax-saving tips and the latest on pensions, savings, annuities and the housing market.
Written by
Sarah Coles
Sarah Coles
Head of Personal Finance

Sarah provides insight and analysis to the media on topics such as savings and financial planning, and co-presents HL's ‘Switch Your Money On' podcast.

Our content review process
The aim of Hargreaves Lansdown's financial content review process is to ensure accuracy, clarity, and comprehensiveness of all published materials
Article history
Published: 1st May 2024