This week the yearly research (Cost of a Child) carried out for insurance company LV by the Centre of Economic and Business Research hit the headlines. The takeaway from the findings was that the cost to raise a child from birth to 21 was measured as £231,843, an increase of more than £2,500.
First thing you have to ask yourself about this report is – why are LV (a for profit company) investing time and money in to this if there isn’t a measureable gain to show to their shareholders? The answer I believe to this question, is partly that it is good publicity for LV and secondly because they provide a range of insurances, which people could be, more willing to buy based on the figures produced in this report. Both the publicity and a possible surge of people buying insurances wouldn’t happen without some big numbers, hence where we get £231,843 and why on the LV website they are saying this is more than the price of an average house, when no comparison was needed.
On the LV report on their website (https://www.lv.com/life-cover/cost-of-a-child/the-facts) they have listed percentages of vague, generic areas next to some cute graphic to depict that area. They have called it the facts yet it is filled with opinions.
The small print
One of the interesting things about the report is the small print at the bottom, as unlike how the press is reporting that the research came from the Centre of Economic and Business Research, there was another body involved:
Additional research was conducted by Opinium Research from 22 to 27 January 2016. The total sample size was 1,000 UK adults with children under the age of 18 and was conducted online. Results have been weighted to nationally representative criteria.
This additional research has been heavily used by LV and it means that out of the 8 key facts they list on their review of the report, 5 are opinion based and nowhere near representative of the UK as a whole.
Out of the 8 opinions they chose to highlight as ‘key facts’ the last one floored the whole research for me as they listed – 49% of people didn’t have a plan in place for a sudden loss of income. When a quick look at the LV website shows they sell Income Protection insurance. This shows me that this document isn’t to help us; it is to encourage us to take out insurance, as having no plan in place for a loss of income has nothing to do with the cost of raising a child.
So if we go back to the start and take the number they are banding about of £231,843 that means they reckon on average a child costs £11,000 a year to raise (I am raising a child with no pay increase of a penny a year let alone £11,000). For the first year of our daughter’s life our actual costs are going to run around the £1,000 mark, far short of that yearly average.
Breaking it down
Looking closely at the numbers here are some breakdowns and numbers that amused me:
Education: £74,430 – Cost of schooling is taken out in our taxes so not a cost that we see and there is no guarantee every child will go to University. When they go to University there are things like loans, grants and working. If as a parent you want to contribute you can start up savings accounts now with good levels of interest and pay in a slow, constant and manageable way.
Childcare and Babysitting: £70,466 – For us this will cost us nothing and I know for lot of people it will too. This is one of the many reasons why I think having a parent at home instead of working, works during the pre-school years. As parents we sacrifice, we don’t both go out with out our baby. We will go out individually or take her with us; it’s not that difficult.
Clothing: £10,942 – So far for our daughter we have paid the grand total of £4 on clothes. The rest of her clothes have been hand-me-downs from friends or gifts. At her age she doesn’t care what she is dressed in or if it is new or if it is the most fashionable thing. Yes I daresay as she gets older and builds her own style that clothes will become more expensive, but nowhere near this £10,942 number bounded about.
I could go on and on but will stop there. I just wanted to show how the actual cost of raising a child can be so cheap. Research like this really annoys me, as it is why people buy in to the lie that raising a child is expensive. Before I knew of this report I wrote about the lie the media pumps out about the cost of children here:
If you want to have children, have children you will find a way of making it affordable if you truly want to.