Money Expert > Life Insurance > The Costs of Starting a Family
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Last updated: 20/05/2025 | Estimated Reading Time: 7 minutes
Starting a family is an exciting and fulfilling time in a couple's life, but it comes with a host of new worries, financial obligations, and the cost of starting a family. While the months of pregnancy might be spent purchasing Babygros and the most high-tech, roadworthy buggy on the market, your new financial commitments don't stop at the door of Mothercare.
You'll also have to consider the lifetime costs of raising a child, and start making preparations for those expenses now: opening savings accounts to save for their education and taking out a life insurance policy to ensure they will be provided for if you should die.
While buying financial products might not be as soul-melting as selecting a crib, and may involve an uncomfortable reckoning with your own mortality just as you're bringing a new life into the world, it's just, if not more important, than purchasing all those bottles and socket covers, especially when you think about the money involved. For parents working full-time, full-time childcare can take up a huge portion of disposable income.
Newborns require both constant care and feeding and a lot of kit, from rocking chairs to bottles. In the first few months of your baby's life, the expenses will come thick and fast. Costs for nappies, clothing, food (and feeding equipment), and toys and furniture all add up. The average amount spent on baby essentials in the first nine months often surprises new parents. Insurer Liverpool Victoria has estimated that the cost of the first year of a child's life soars to £11,498.
Expectant parents typically spend between £1,500 and £3,000 preparing for a newborn. These costs include prams, cribs, clothing, nappies, and other essentials, before your baby even arrives. Some families opt for buying second hand clothes and car seats to reduce initial costs. You’ll also need to prepare for a potential drop in income during maternity or paternity leave, so building a savings account and n emergency fund in advance can make a huge difference.
So after you get through all the sleepless nights and expenses of the first year, how much does it cost to raise that toddling kid and continue raising a child to university age? Estimates vary, but let's just say that little bundle you brought home from the hospital is a very expensive proposition. The total cost from birth to adult life can exceed £200,000, depending on lifestyle and education choices.
According to the Child Poverty Action Group (CPAG), the cost of raising a child from birth to 18(including childcare and housing costs) £150,753 for a couple and £183,335 for a single parent. Full-time childcare is among the most burdensome expenses, running at £80,000 over the course of a childhood. One parent households often struggle more with these costs, relying on government support like Child Benefit.
This is a key form of financial support offered by the government to help parents with the costs of raising children. All eligible families can claim this benefit, which provides a weekly payment for each child, which is free for eligible families with higher rates typically paid for the eldest child. Recent data shows that many parents rely on this income to help cover essentials like food, school supplies, or after-school clubs. Unlike means-tested benefits, Child Benefit is available to most families, though higher earners may have to repay some through tax. Claiming it also helps protect your state pension contributions, making it an important part of long-term financial planning for families.
A study conducted by the Centre of Economic and Business Research (CEBR) for the insurer Liverpool Victoria suggests the spending is even steeper: £229,251 to raise a child from birth to age 21, from the maternity ward to university graduation. This includes average expenses of:
After-school clubs and swimming lessons add to the financial burden, especially for children aged 5–12.
None of these calculations account for the life insurance policy you'll likely want to take out when you become a parent and pay for monthly until the term expires. If you take out a life insurance policy for yourself at the average age of first parenthood (first time mothers are an average of 28.8 years old; all fathers average 33.4 years old), on a 20-year term, you'll pay £204.96 a year, or £4,099.20 over your kid's childhood. Financial planning early on can help cover these long-term expenses.
Let's just hope they're grateful.
The full financial impact of having families spans nearly two decades—and often beyond. In addition to everyday living costs, you’ll need to factor in:
Parents find that budgeting for school holidays is particularly challenging due to extra childcare needs. For larger families, or those with a single income, these costs can be overwhelming. That’s why many parents choose to budget carefully, buy second-hand items, and make the most of government benefits to make ends meet.
Running a family involves various costs that go beyond baby bottles and nappies. You’ll need to plan for monthly expenses like rent or mortgage, utilities, transportation, school fees, holiday childcare and even entertainment for the kids. Recent data shows that families with one child spend nearly 25% of their income on childcare alone.
The CPAG’s estimates again highlight the cumulative nature of child-rearing expenses, especially with rising childcare fees and housing costs. Many families also underestimate the financial hit during school holidays, when after school clubs and childminding services are needed to fill in the gaps. Saving money where possible, such as through second-hand purchases, can ease the burden.
If you or your partner were to die, would the surviving parent be able to meet the staggering costs of raising a child alone? How would you provide for the child, to the tune of £150,00 to £225,000, if you both were to tragically die? Life insurance can meet these expenses after death and provide financial support to spare you some sleepless nights in life, but you'll need to make sure you're taking out enough coverage, especially as your family grows. Single parents in particular need robust financial support to manage these costs alone.
When considering the value of your life insurance policy (the sum insured) you'll want to account for the total cost of raising a child to adulthood, possibly multiplied by the number of children you have. If you have more children, you may want to extend coverage. Some insurers will allow you to add additional coverage to your policy without further applications or underwriting as your life circumstances change, but be aware that you'll pay higher premiums for it. It's always worth comparing life insurance policies online to find out how much it'll actually cost you to get the cover you need.
Absolutely not. In fact, many parents today choose to start families later due to career, financial, or personal reasons. While there can be increased health considerations, there are also several financial advantages:
Parents in this age group often have higher disposable income to allocate toward savings accounts and education funds. Starting a family in your 30s might mean you're better equipped to afford life insurance, set up child savings accounts, and budget for education and housing with a clearer long-term vision.
Financial planning is just as essential as choosing the safest car seat or stocking up on nappies. That includes:
The teenage years bring new expenses, from school trips to technology, so forward planning is crucial. Whether you’re raising one child or several, the financial demands of parenthood are high. But with proactive planning, budgeting, and the right financial products in place, you can meet these challenges head-on and provide a safe, secure, and loving home.