The rising costs of raising children

The average cost of raising a child from birth to the age of 21 has risen to a staggering £165,000. That works out at £657 a month and £22 a day so it's no wonder that parents are looking for ways to reduce that cost. Pregnancy is the time when you need to do some serious budgeting. The bad news is that this is not the most riveting activity in the world. The good news is that for many of us it is relatively simple to make some significant improvements to our finances!

• Planning - the essentials
• Budget cuts
• Benefit from parental entitlements
• Financial family planning
• Money saving tips

Even before your baby is born, researchers estimate that parents spend an average of £1,560. A third of this goes on things like maternity wear, health supplements, books, magazines and pampering beauty treatments with the rest going on prams, car seats, changing and feeding equipment, baby monitors, toys and clothes. And according to research you will spend a minimum of £424 to buy the basics for a new-born baby, based on the lowest prices available in the high street.

According to Elizabeth Martyn, author of Babyshock! the most important thing you can do when you're pregnant is to plan ahead. "Decide on what you need to buy for your baby, how much you are willing to spend per item, and stick to it." Caroline Flakelar, babyworld's e-commerce manager, and mum to 18 month old Zander, suggests the essential baby buys:

1. Sleeping - cot, mattress and bedding

• Some parents like to have a Moses basket but there is no reason why your baby can't go straight into a cot.
• If grandparents or relatives want to get something for the baby, ask for bigger items like the cot.
• If you have the space, buy a cot bed that can last your baby for up to 8 years - (if you buy a cot bed, invest in a decent mattress (+ mattress protector!) that will support your child as they grow)
  
• 2 x sleeping bags and a bottom sheet is really all the bedding you need (and more and more Mums are swearing by sleeping bags as the secret to a good night's kip).

2. Feeding

• Breastfeeding is obviously cheaper than bottle feeding but you will still need a couple of good nursing bras and breastpads.
• A simple breast pump, a couple of bottles and a simple steriliser become important once breast feeding is established and you want to take a break from your baby - you don't need them immediately
• If bottlefeeding you need bottles, a steriliser and formula milk. Bottle feeding costs over £900 a year -- and that's not including all the sterilising equipment you have to buy and the bottles themselves. A year's supply of formula costs about £230.

3. Clothes - 8 vests , 6 babygros, 2 cardigans and a baby blanket are the bare essentials. A warm suit, booties and hat if it's wintertime.

• Babyworld member and mother of 2 Lisa says, "Never be too proud to accept any hand-me-downs. If anyone offers you anything, just accept it. Children's clothing is often used for such a little time that in most cases it's like being new."
• Supermarkets generally have packs of bodysuits and sleepsuits that are good quality, wash well and are great value. Larger stores are also doing a wider range of clothing which is great value and if you shop carefully, can form a great basis for your baby's wardrobe.
• Family and friends will tend to buy the high fashion items for your baby, which cost more. This means, you don't have to!

4. Travel - pram or pushchair, car seat and/or a sling - make sure you try before you buy all these items and get your car seat fitted. Make sure you get good individualised advice so that you don't quickly regret your purchase e.g. if you need to use public transport regularly, certain pushchairs won't cut it!

5. Nappies

• Disposables cost about £10 a week and, according to the Women's Environmental Network, will average a total cost of £600 from birth to potty training. If you do choose to use disposables, then buy the cheapest supermarket own-brand value ones. If you want only to use the premium brands, get them when they're on a Buy One Get One Free (BOGOF) special.
• Reusables have an initial outlay of about £100 plus cleaning, can be used for more than one baby and can also have great resale value

6. Toiletries - cotton wool, soap, wipes.

Liverpool Victoria's group chief executive, Malcolm Berryman, says "Everyone knows that raising children can be expensive but few will have realised that bringing up three children could cost nearly half a million pounds." But Child Psychologist, Anne O' Connor thinks the question is how far published figures apply to the typical family. "Are they based on parents who are spending above and beyond the average?"

Finance expert Chris Edwards from Yorkshire Building Society suggests the following budgeting strategies.

• Draw up a simple budget to get an overview of your income and expenditure.
• Be honest about any debts you have and pay off as much as you can afford to, or think about consolidating them.
• Review your store and credit cards. It's too easy to spend when you have lots of different cards, and interest rates on these are often very high.
• Check out interest rates and special offers for changing your mortgage, especially if you're moving to accommodate your growing family.
• Put some money aside, even if it's only £10 a month it'll accumulate into a handy lump sum in an emergency or for those unexpected extras.

In April 2005, the Child Trust Fund was launched as a new savings and investment account designed to give children a financial head start in life and to help teach them the value of saving.

David White, Chief Executive of Children's Mutual said, 'We hope that the Child Trust Fund will encourage the four out of five parents who do not currently save for their child to start thinking seriously about preparing for their child's financial future'. During the first year of CTF, almost a third of parents did not invest their child's voucher. Carl Emmerson, deputy director of the Institute of Fiscal Studies said, "Parents may be very busy and not have time to open an account."

To make the most of your child's trust fund

• Invest it as soon as you receive it so it can start earning interest immediately
• Encourage family and friends to add to it up to a total of £1,200 per year

Be aware of the benefits you may be entitled to as a parent. Click here to find out more.

• Statutory Maternity Pay (SMP) lasts for 26 weeks and is paid by your employer as long as you have been in continuous employment for at least 26 weeks by the 15th week before your baby is due.
• Statutory Paternity Pay (SPP) A standard rate of £100 a week for 2 weeks paid by your employer.
• Child benefit Available for every child - £16.50 a week for a first child and £11.05 for subsequent children
• Tax credits includes Working tax credits and Child tax credits, available if you have responsibility for a child and work at least 16 hours a week.
• Sure Start Maternity Grant a lump sum available if you're on a low income
• Nanny tax credits provides tax relief if you employ a nanny

Having a child means you're in it for the long haul and that's going to take some planning. Things to think about which will help ensure a secure future for your child include:

• Insurance Although never exciting, insurance is important. Accidents, illness, redundancy and death could all mean a sudden stop to family income without insurance cover.
• Wills According to the Law of England and Wales, a Will is the only legal way that you can ensure that your wishes are honoured. If you're not married your partner may not be entitled to anything without a Will. You can also ensure your child's upbringing if you die by choosing a legal guardian.
• College According to the Halifax, sending your child to state school is much cheaper than private school but will still set you back more than £7,700 and the National Union of Students puts the cost of university, including tuition fees and living expenses, at an estimated £8,500 a year. Taking advantage of tax-free savings such as ISAs and the Child Tax Fund will all help your child's future education.

Understandably, you want to give your child the best of everything but this quite often leads to some impulse buying of things that never get used. A recent survey by SMA found that with the benefit of hindsight, new parents said the biggest waste of money was baby carriers, followed by bottle warmers. John McGinley, of SMA Nutrition, said "With so many magazines and books dedicated to parenthood providing advice, it can be easy to be swept away by the wide choice of nursery kit available to supposedly make life easier.

Some simple strategies, however, can help cut the costs:

Nearly new You don't have to buy everything new. Take full advantage of friends and relatives offering second hand goods. However, always buy a new cot mattress and never buy a second hand car seat unless you can be 100 per cent sure it hasn't been in an accident.

Forget labels Babies in particular will often only wear a new outfit once or twice before they've grown out of it so don't worry about labels. Even your toddler doesn't know the difference between George and Georgio Armani!

In the club Most supermarkets and large retailers have baby clubs, offering money-off coupons and freebies and they don't cost anything to join.

Coupons and BOGOFS Collect and save money off coupons and take advantage of buy-one-get-one-free offers

Supply switch Babyworld mum Louise suggests changing electricity and gas suppliers is often financially rewarding. To save money she says "Visit uswitch.com and check out your service providers."

Swap and save Fellow babyworld member Karen suggests, "I would recommend registering on your local freecycle website. It's a non-profit organisation, if anyone has something they don't need any more then they list it and you mail them to say you'd like it and go and pick it up.

Having a family costs money but Dr Carol Cooper, GP and author says, "You don't need to lavish a lot of money on your child. Time is far more important than material things, and a great mother makes her child feel good about himself.

And as mum of one, Kate Lovegrove said, "I don't regret a penny of it. Having my son is the best thing I have ever done and I'd pay twice as much, just for the privilege of him coming up and cuddling me and saying 'I love you Mummy'. You can't put a value on that."