Families are grappling with unprecedented financial pressures, as the cost of raising children continues to soar amidst persistent inflation and escalating childcare expenses.
The challenge of planning financially for an uncertain future only adds to the burden on households.
Rajan Lakhani, a personal finance expert and head of money at smart money app Plum, highlights the severity of the situation, drawing on his own experience as a father of two young children. “I know first-hand how costs for looking after the kids can quickly add up,” he states.
Lakhani acknowledges that “working families with children of all ages are really feeling the pinch, more so than ever before.” He points to the broader impact of inflation, noting that while the latest reading stands at 3.4 per cent, the cumulative effect since 2021 has seen prices surge by a significant 25 per cent overall, representing “a major increase on our day-to-day finances.”
Despite these challenges, Lakhani offers a glimmer of hope, suggesting that “all is not lost.” He believes that with strategic budgeting hacks, parents can effectively cut costs, potentially freeing up more money for either spending or saving.
1. Commit to a quarterly spending review
“Firstly, you need to go through your finances and check what’s really needed and to see if you’re getting the best deals on things like insurance, mobile phone contracts and streaming packages,” says Lakhani.
“It can be really hard to find the time to manage your money alongside family life, so make it part of your routine to set aside some time each month to review your finances, pay any bills and create your budget. Do it on a day where you know you won’t get interrupted and can give it your full attention.
It is also helpful to have a yearly overview of your finances, he adds. “You can easily review a whole year’s worth of bank statements to check, or use an app to secure a good overview of your spending so you can see where your biggest outlays are. You want to get a sense of when in the year you spend more (e.g. Christmas) or have a higher income (e.g. due a tax rebate). This will help you plan your budget accordingly and not have any unpleasant surprises.”
2. Check your bills quarterly to make sure you are truly getting the best deal
Broadband, electricity and gas are some of the most common bills that people forget to switch and compare, Lakhani says. “It’s estimated that consumers are losing up to £291 per year by not switching.
“It’s advised that you review your energy provider as a matter of habit every 12-18 months, prepare for when your broadband contract ends and make sure you’re comparing deals well in advance so you’re ready to switch when the contract does come to an end.
3. Save money with pre-loved items
“If you have children you’ll know how fast they grow and how quickly their interests change year to year, this is why it’s better to embrace pre-loved clothing, books, and toys,” Lakhani advises. Try charity shops, eBay, Vinted and Facebook Marketplace. YoungPlanet, Rascal Babies and Mum2Mum Market are great places to find good quality, pre-loved items for very young children and babies.
4. Take advantage of special family deals and vouchers for days out
Loyalty cards and railcards will often have family days out offers on their website or app for cardholders, he points out. “For example, with a railcard you can occasionally get 2for1 deals on ‘days out’ to the zoo and the aquarium, as well as discounted cinema and theatre tickets. And when it comes to the travel itself, railcards often quickly pay back your initial costs.
“Some supermarket point schemes offer discounts on meals out, streaming services, holidays and more.
“And remember – one of the biggest costs of a day out are meals and refreshments. Avoid high prices by taking food and drink with you, as long as this is permitted.
Check with your local council for free events too, many of these have no fees, he says. “Events will often be at the local library, such as reading challenges and toddler groups, where you can often take advantage of free broadband while the kids immerse themselves in books.”
5. Teach older children about budgeting
When you go on holiday, consider giving your teens a small allowance to spend, suggests Lakhani. “This will help them to make their own decisions, take responsibility for money and learn how to stay within a budget.
Even if they splurge it on just a couple of items quickly, it’s an opportunity for them to learn so don’t reprimand them. Just make sure to stay strong-willed and not give them any extra, otherwise you’re reinforcing the wrong behaviours.”
6. Check for uniform grants worth £150
Fiona Peake, personal finance expert at Ocean Finance, says: “Many councils offer uniform grants, especially for families on low incomes, benefits, or with multiple children starting school. These are usually one-off payments made in summer and can help with essentials like branded jumpers, school shoes or PE kit. But the support is rarely advertised, and some parents are missing out on over £150 per child. Check your council’s website or speak to your child’s school directly.”
Also check with your school to see if they offer a recycled uniform scheme.
7. Take advantage of childcare savings
Outside of your mortgage or rental costs, your childcare spending will be among your highest outlays, Lakhani points out – and UK costs are among the highest in Europe. But there are various tax breaks available which could take a big difference.
The government offers tax-free childcare to parents with annual salaries up to £100,000.
“If you’re paying for things like breakfast clubs, after-school care or holiday clubs, you could get a 25 per cent top-up from the government,” says Peake. “For every £8 you pay in, they add £2 – up to £500 every three months, or £1,000 if your child is disabled. It’s open to parents working at least 16 hours per week, with children under 12 (or under 16 if they have a disability). Around 800,000 eligible families aren’t claiming it, so it’s worth checking at GOV.UK.”
“Working parents on Universal Credit can claim back up to 85% of childcare costs, even during school holidays. This often works out better than Tax-Free Childcare, especially for larger families,” she adds. It works out to a maximum of £1,032 for one child and £1,769 for two or more children – for children up to the age of 16.”
You can get up to 30 funded hours of childcare a week if you have a three or four-year old (or from nine months old in England).
Parents could work together to share childcare too, says Lakhani. If you know someone with a schedule that fits in with your childcare needs – and vice versa – you could think about looking after each other’s children, if you trust them.
#Expert #tips #save #money #children
