The estimated cost of raising a child in the UK rose from £150,753 in 20182 to £152,747 in 2020 during Covid3, an increase of 1.3%, and then jumped to £249,000 by 20244, a staggering 65% increase from 2018. Even after allowing for these figures being calculated by different organisations with possibly different inputs, that is a huge increase.
And that’s only the first 18 years. If your child goes to university, a typical three-year degree now costs £63,000 to £67,000, once you factor in tuition fees and living costs5.
If you choose private education, the numbers climb even faster. The average cost of day schooling from Reception to Year 13 is now £245,000 to £265,000, while full boarding often exceeds £490,000 to £520,0006. Plus, this is pre-VAT, so you need to add 20% to those figures!
Why everything feels more expensive
If you feel like every child-related cost has crept up, you’re absolutely right. Several categories have risen faster than general inflation over the last year:
- Clubs and extracurricular activities: up 30 to 35%
- Holidays: up 15 to 20%
- After-school and holiday childcare: up 12 to 16%
That last one lands hardest for clinical households; wraparound childcare isn’t a luxury when your shift pattern doesn’t bend; it’s what keeps the whole show on the road.
Food costs7 are another big one. Feeding a child aged 0 to 3 now costs more than £4,100 a year, and once they hit the teenage years, that number climbs quickly.
If you are anything like me, the fridge should have a revolving door, with active teenagers and young adults in it more than I could have imagined in years gone by.
It’s no wonder parents feel the pressure. But there are ways to make things more manageable.
Practical ways to ease the financial load
The good news is that there are several sensible ways to plan and make the financial side of parenting feel more manageable.
Short-term savings accounts and bonds
One upside of recent interest rate rises is that cash savings accounts are offering much better returns than they have for years. High street banks, building societies, and NS&I all have options worth considering, and many allow you to open accounts for children from birth.
- Basic rate taxpayers: £1,000 savings interest tax-free8
- Higher rate taxpayers: £500
- Additional rate taxpayers: £0
Worth flagging: many consultants, GP partners and practice-owning dentists sit in that additional-rate bracket, where this allowance disappears entirely, which is exactly why it pays to plan savings for children with your own tax position in mind, not just theirs.
Children can also earn interest tax-free up to their personal allowance. Just remember the £100 rule: if a parent gifts money and the interest exceeds £100 a year, it’s taxed as the parent’s income. This rule doesn’t apply to grandparents.
Junior ISAs
Junior ISAs remain one of the most popular ways to save for children. They’re simple, tax-free, and long-term.
Annual allowance for 2026/27: £9,0009
The child takes full control at age 18. Children with a Child Trust Fund can transfer it into a Junior ISA, but they can’t hold both.
Unit trusts and investment trusts
If you’re thinking longer term, collective investments can be a great way to build a pot for a child over time. They spread risk across lots of companies and markets, but they do come with tax considerations, so advice is helpful, particularly once your own allowances are already stretched thin, which is common among higher-earning clinicians.
Pensions for children
This one surprises a lot of people, but yes, you can set up a pension for a child.
Maximum annual contribution: £2,880, grossed up to £3,600 with tax relief
The child can’t access the money until at least age 55, rising to 57 in 2028; the link is that you can only access this ten years before state pension age.
Family trusts
Trusts can be useful if you want to protect money for a child or control how and when it’s used. They can provide income or hold assets until a child reaches a suitable age. They’re more complex, so legal and tax advice is essential – and for practice-owning families, this is often where that advice earns its keep.
Inheritance tax considerations for 2026/27
You can gift10 up to £3,000 per tax year free of inheritance tax. If you didn’t use last year’s allowance, you can carry it forward, giving you £6,000 as a gift this year.
Other exemptions include:
- Small gifts
- Wedding gifts
- Gifts out of normal expenditure
Gifts above these allowances may be subject to inheritance tax if you don’t survive seven years. The nil rate band remains £325,000, and the residence nil rate band can add £175,000 per person.
Inflation, and why it matters
Inflation has a huge impact on the future value of money. For example:
If inflation averaged 5% over 10 years, £10,000 today would have the buying power of around £6,139. If inflation averaged 3%, that same £10,000 would be worth £7,441 in real terms. ONS Inflation calculator
Inflation quietly erodes buying power unless your savings or investments grow at least as fast as the prevailing rate.
So what’s the best approach
There isn’t a single best way to fund the cost of raising children. The right choice depends on:
- Your budget
- Your time frame
- Your attitude to risk
- Whether you’re saving for short-term needs or long-term goals
For clinicians, it also depends on how your income actually arrives, whether that’s a salaried NHS role, private billing, locum work, or running your own practice, because that shapes which of these tools work hardest for you.
The key is balance. You want to support your children without compromising your own financial security.
There is light at the end of the tunnel. One day the little darlings will be financially independent…well, that’s the theory.
Although I know I will miss all the time spent and fun enjoyed with them, I won’t miss always stocking the fridge for what feels like 100 people and washing their sports kit too daily!
A financial adviser can help you work out what’s affordable, sustainable, and aligned with your goals for you and your children’s futures.
This is not personal advice; if you are unsure of the suitability of an investment for your circumstances, please seek advice.
References:
- Moneyfarm Cost of Raising a Child Report, 2024.
- CPAGreport2017
- CPAGreport
- Raising a child today costs £249,000 | Moneyfarm
- Student Money Survey 2024 – Results – Save the Student
- How much are private school fees?
- Raising a child today costs £249,000 | Moneyfarm
- Tax on savings interest: How much tax you pay – GOV.UK
- https://www.gov.uk/junior-individual-savings-accounts
- HMRC Inheritance Tax Exemptions, 2026/27