Cost, Cost, Baby. How much does a baby cost?

Have you ever tried to type that question into Google?

I'm guessing that if you're reading this, the answer might be yes!

When you do, you'll see that there are lots of different answers to the question. The statistics on how much money you need to save for the first 12 months of a baby’s life vary wildly depending on where you get your answers from. The most commonly quoted ones that I have seen since becoming pregnant, then a mum and now a money coach are:

• £500 a month (that comes from an Aviva study)

• 29% of your net monthly income (this one originates in America)

• Or even a year’s salary plus £1,000 (I’ve seen that one appear on Mumsnet more than a few times!)

The truth is that there are lots of possible answers that you’ll be able to find if you plug that question into a search engine.

Alongside the how much should you save question; we should also ask ourselves the sister question – how much do babies actually cost? Well unfortunately, there’s no clear answer to that either. Depending on who you ask, you’ll likely hear helpfully vague phrases like “as much as you choose to spend on nappies and formula”, “more than you bargained for” or my personal favourite “the first year is the cheap phase!”

Even when you channel your inner accountant, and try to focus exclusively on the pounds and pence in the hope of becoming crystal clear on exactly how much money you’ll spend on raising your child, you can’t really get a clear answer.

I often tell clients that a child costs £23.25 per day, between the ages of 0-18. That’s roughly equivalent to £707 a month (not entirely dissimilar to your monthly mortgage payment). But even that shocking figure, (and yes, it is shocking, isn’t it?) isn’t actually fulsome in the amount that you'll spend. You see the calculation itself originates from a report created by the Child Poverty Action Group (CPAG), and whilst it gives you a broad overview of costs, it’s based on several heavy assumptions.

First, the research is based on something called a “Minimum Income Standard”, which is the basic income that members of the public believe people need in order to afford a minimum standard of living. Naturally, what you and I consider to be a minimum standard of living might be very different to the “baskets of goods” that the research uses to “price” a basic lifestyle for a family.

Secondly, when establishing exactly how much it costs to “raise a child”, this research doesn’t work by calculating what you need to “buy for a child”, but rather by how much they increase your “monthly budget” – so in many cases, the advance “furniture and big-item buying along with setting up costs” that we all tend to spend are excluded (so you’d need to account for those separately).

Finally, even when we do look at the figures themselves, and see that £707 per month “total cost”, you might be disappointed to know that that figure actually uses “local authority rates” for social rents when calculating your housing and council tax costs costs, so for many people that rent privately or own their own homes, the true cost might be MUCH higher. That £707 does include childcare (supposedly), but yet again this is based on averages, which in some parts of the UK are likely to be much more.

Because of the range of assumptions that these reports calculate the costs on, and given that many of these assumptions are likely to underestimate the real costs of housing and childcare for many many parents; that headline £707 a month probably isn't truly reflective of YOUR costs.

With that in mind, and because I like my blog posts to be accurate, I propose a different way of estimating your real expenses, and it happens in three separate stages.

1. For step one, I want us to take a second look at the “basic” costs – that is, how much your child will likely add to your monthly household budget, not including housing, childcare or your initial “pre-baby” purchases.

Those figures show that a child will probably add £71,611 to your family budget, between birth and 18. That’s an average of £331.53 per month for the next 216 months.

Now you might have just read that and thought “hey, that’s not THAT BAD. We can probably cover that”. Yes, you possibly can. But remember, I just told you that those figures don’t include childcare, or anything that you buy specifically FOR THE CHILD. Shall we proceed on to Step 2?

2. Let's consider childcare. The 2021 survey for childcare is not yet published, so we will use last year’s figures for our purposes. Let’s first assume that you need childcare for a child under 2 – but so that you aren’t absolutely crippling yourselves, you only want part-time care at 25 hours per week. The 2020 Childcare Survey estimates that a part-time nursery place will cost £131.61 per week, or £6,800 per year. That’s equivalent to £566.67 per month on average.

I just want you to take that in for a moment. Using the estimates we have created, for the first 24 months of your baby’s life, you are looking at £898.20 per month to cover JUST the increase on your household budget and part-time childcare. That’s nearly £900. A month.

For 24 months. Which is £21,600 over 2 years, or £10,800 per year.

Remember that still doesn’t include buying your initial items for your child – that’s only the increase to your household budget. So nursery furniture, the first pram and car seat, breast pumps, re-useable nappies if you chose to buy them would ALL BE EXTRA. If you're not feeling faint at already, I want us to cautiously approach step 3 of our "how much do babies REALLY cost" process:

3. To give you a real life example how much those initial set-up costs might be; one of the ways in which we run our household finances is that we have a 12 month “average” spreadsheet of costs in the main household categories that we spend on. I keep all my “old” spreadsheets for 3 years before deleting them.

When I was doing my research for this blog post, I looked at the spreadsheets that I had from Jan 2018-Dec 18 and Jan 19-Dec 19. Rosalind was born in June 19, and my husband and I had started buying the “big” baby items when we first started trying for a baby – primarily so that we could, like most first time parents, spread the costs to avoid a massive hit on our savings.

Having looked at those old spreadsheets, I calculated that we spent in excess of £700 just on set-up costs, and we tried to minimise our costs wherever we could. We bought a second-hand pram for £240, a cot in the same for £300, a car seat in the sale for £90, a high chair that was in a closing down sale for £100 and all of Rosalind’s baby clothes, changing mat and toys were from the supermarket or second-hand.

I desperately wanted a comfy rocking chair for feeding and night-time wakings, but to save money, we got my parents old wooden rocking chair for free. Just those bits alone cost us £730 plus all the money that we spent on clothes.

Even if I estimate that in the 2 years that Rosalind has been born for we’ve only spent £10 a month on clothes (and it’s a lot more!) we’re still looking at £240. So a total cost of £970.

Let’s add that to our £21,600 over 2 years, and we are now at a total of £11,285 per year in the first 2 years, which is equivalent to £940 per month.

That’s even with us buying several things secondhand where possible, free when we could, and underestimating the true cost of her wardrobe (and she only has secondhand clothes).

Results, upshot and what to do once you've picked yourself up

When you type into Google “how much does a new baby cost”, remember that the “headline” figure you read about is EXACTLY THAT. It’s a headline; an estimate, and probably not even a very accurate one.

The point of this blog post isn’t to scare you off having children, nor is it designed to make you think that one of you will have to give up work, or you’ll all have to wear eBay “finds” in perpetuity (although you might want to!)

Instead I want you to realise something else. I want you to realise and to remember that the truth is that whilst babies and children do cost, quite a lot, you do find a way of managing to afford what matters the most to you.

Facts and figures about the costs of raising a child are useful, to a point. They will give you a “target” to “aim for”, a “savings goal” for your pregnancy and your parental leave. But they aren’t the complete picture.

The complete picture is based on what you and your partner WANT. What non-negotiables do you both have around raising your child? What items and experiences do you value? Most importantly, when you think you “need” something for your child, ask yourself “why I am I getting this? What is it giving me in my life that I need, or what problem is it solving that we have?”

You already know that your baby is going to cost you around about £1,000 per month in the first two years – so the question you should be asking isn’t “how do we afford this”, but

“how do we best use the money we know we are going to spend, to best live the life that we want?”

It’s okay not to know the answer right “off the bat”. Richard and I didn’t. We had to talk about what we wanted, what we didn’t want, what our fears and our dreams were for A LONG TIME before we could get close to discussing how to best use our money to provide for our daughter.

The key isn’t knowing exactly what to do – it’s knowing exactly how to talk about what to do, because the moment you do, you can start working together to use your money in the way that works for you, and that will ultimately create the family plan that will work for all of you.