Planning

Guide to your child's life expenses

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It's never too early to start putting money aside

The sooner you start saving, the more of a difference you can make to your child's financial future. Even when the day they leave home is just around the corner, it's never too late to help them out.

There are a variety of major expenses you may want to save for, including:

  • Private education
  • University education
  • A gap year
  • A deposit for their first home

Here's a guide to how much these might cost:

  • Private education. According to the Independent Schools Commission Annual Census 2012 the average fees at a private school were £4,596 a term (£13,788 a year excluding nursery fees) for day pupils and £8,780 a term (£26,340 a year) for boarders. School fees, excluding nurseries, increased by an average of 4.5% in 2011 [1].
  • University education. From 2012, universities will be able to charge up to £9,000 a year in tuition fees as the government plans to transfer much of the costs from the state to the students.
  • Gap year. The NUS says the estimated average cost of a gap year for some young people between the ages of 18 and 25 is £3,000-£4,000.
  • Deposit for a first home. According to the recent article in Mail online, a young person wishing to buy their first home will need to find a deposit of £60,000 by the end of the decade[2].This will be a significant increase since 2007, when it averaged around £13,000 [3].

You might also want to think about investing in a pension plan for your child, to help them in later life.

Saving options

There are numerous ways in which you can invest your money. Savings accounts and investments are just a couple of the options. It's also a good idea to think about other potential sources of money, such as financial contributions from grandparents or other relatives.

Sources

[1] http://www.isc.co.uk/research/Publications/annual-census/isc-annual-census-2012
[2] http://www.dailymail.co.uk/news/article-2267981/Housing-market-First-time-buyers-need-60-000-deposit-end-decade.html#axzz2K7ei66ew
[3] http://www.cml.org.uk/cml/publications/newsandviews/104/390

The value of investments (and any income received from them) can fall as well as rise and you may not get back what you invested. For some investments this can also happen as a result of exchange rate fluctuations as shares and funds may have an exposure to overseas markets. You should aim to invest for at least five years. Contributions to pensions cannot normally be accessed until you take your benefits.

The value of the tax benefits will depend on your individual circumstances and tax laws may change in the future.

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We take a look at the options available for parents

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Everyone's circumstances are different and what applies to one person may not be right for someone else. The suggestions above are based on a general assumption of each planning event and they are not intended to provide advice or recommendation on your individual financial needs.

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