With the cost-of-living crisis firmly sitting on the shoulders of families across the country, fears for the future may begin to creep in. Like most things in life, taking the time out now to prepare and plan will be rewarding in the long run.
Having children is costly, and assessing your family’s needs over the next few years will not only create peace of mind, but you can also watch your savings grow for your children.
The types of account and investment or savings strategy you choose for child savings and investment will depend on when you will need the money and the age of the child now. We have mapped out some of the key costs you may be able to expect for your children:
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Age 17, learning to drive
This costs an average of just over £1500 according to the RAC, although this amount is likely to rise with the cost-of-living crisis1. This figure also excludes the cost of buying and insuring a first car if your child is not using yours.
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Age 18, university
University costs can be eyewatering, and although your child can get a loan for ‘maintenance’ (living costs) as well as for tuition, this loan is means-tested on parental income, meaning that parents are expected to bridge the gap. According to Save the Student – experts on student finance- on average parents contribute on average £149.80 every month (around £5,500 over a three-year course2. If you want your child to graduate debt-free you will have to save much more – English universities can charge up to £11,100 a year for undergraduate degrees3, and the average student’s living costs are around £924 a month.4
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Age 30, buying a first home
You may wish to help your child onto the property ladder, since it is far easier if parents can help with a house deposit. The average first-time buyer house deposit is now over £60,000, according to Halifax bank5.
Consider whether a Junior ISA is right for your family.
A Junior ISA can be a good way of saving for your child’s future, but before opening one, you need to consider when you will need the money. Any savings within a Junior ISA will only be accessible once the child turns 18. Junior ISAs can be a great tool for saving things like a first car, university living costs or money towards a house deposit, but, as with all investments, it is important to remember that the value can go down as well as up.
Take the first step in your financial planning journey now and book a free initial consultation with one of our independent financial advisers.
Monday 5 June 2023
1 https://www.rac.co.uk/drive/advice/learning-to-drive/how-much-does-it-cost-to-learn-to-drive/
2 https://www.savethestudent.org/student-finance/parents-guide-tips-university.html
3 University tuition fees and financial support in England (thecompleteuniversityguide.co.uk)
4 https://www.savethestudent.org/money/student-budgeting/what-do-students-spend-their-money-on.html
5 https://www.thetimes.co.uk/money-mentor/article/guide-buying-first-home/