Family Growing? Prepare Your Budget For These Expenses
When do people finally decide to become homeowners? There is no clear timing. However, in the UK, the majority of young people who become homeowners for the first time have something in common: They are frequently starting a family. Whether they’re just married, expecting their first baby, or already welcome their own bundle of joy into the world, most first-time homeowners have family on their minds.
However, who says family, says budget changes. Indeed, considering the most suitable average mortgage payment for your capital is only the beginning. There is so much more families need to think about. First of all, it is fair to say that depending on your location in the UK, the type of property, the value of the deposit, and the interest rate on your mortgage loan, you can expect significant variations in value. To give you a brief idea, the average mortgage monthly cost in Northern Ireland is almost £1,000 less than in Greater London. Similarly, it makes sense that a 30 years mortgage loan with a 25% deposit and 1.29% interest rate will have lower monthly repayment terms than a 30 years loan with a 5% deposit and 2.97% interest rates. In other words, if you can afford to consider different options, you could save your family a lot of money in the long term.
Yet, if you are only at the beginning of your family adventure, be warned. Buying a home is only one of the new expenses you will need to prepare for! Below, we’ve listed the most commonly overlooked family expenses for new parents:
#1. Education costs: Finding a tutor
Do all children need a tutor? The answer is no. However, not every teacher can afford to spend time explaining complex concepts. In a busy classroom, teachers sometimes lack the time and support to help every child. Therefore, if you suspect that your child is struggling in school, reaching out to a tutor could be a game-changing experience.
The right tutor can help children gain more confidence in maths or literary subjects. Additionally, choosing a certified teacher to support your child outside of school means you can be sure that the lessons will meet the curriculum requirements. A tutor could be the person who helps your child go through difficult lessons and fulfil their academic potential. Yet, at an average of £15 to £75 per hour, it can rapidly add up at the end of the month.
#2. Education costs: Electronic equipment
The pandemic has taught parents an important lesson; namely, children are never too young to have access to a laptop or a tablet. Indeed, Zoom classes were held online for the best part of 2020 and 2021. We may not be at the peak of the pandemic anymore, yet, a laptop remains an essential investment for many school kids.
Indeed, your child can use the laptop to reach out to their tutor online. Additionally, some school work may require a computer, such as essays and research. While young children can share a device, older students will need their own laptops. Considerations such as digital safety and tech training are important too. As a parent, you need to make sure your child can use their device safely and confidently. This might also require additional costs, such as investing in a safety software solution for your family.
#3. Extracurricular activities
From horse riding to taking music lessons, every child has unique interests and passions. According to a recent report by the Social Mobility Commission in the UK, children who participate in extracurricular activities are more likely to gain confidence and build valuable social skills. Unfortunately, participation in those activities depends on a variety of factors, including the household’s budget. It makes sense for parents to try and support their children as much as possible. But paying for music or sports lessons also comes at a non-negligible cost.
Developing essential soft skills at a young age can make our children more appealing to employers in the long term.
#4. Holiday budget
How much does the average British family spend on their vacations? According to financial data, the average UK family of four is likely to plan a 2-week break during the summer, spending on average £4792 on accommodation and travel costs. Additionally, during the holiday, families spend an additional £227 per person each week.
It is fair to say that not every vacation will fit the forecast budget. But, even if you try to keep the costs down, the truth is that going on holiday with your family is not cheap. Families often consider options to spread the costs, such as saving ahead or booking everything against their credit card for later repayment. The choice of accommodation and location can also make a big difference. But even if you can cut down your holiday costs, you can’t eliminate them completely.
#5. Toys and leisure equipment
How many toys did you have as a child? A study of 3,000 parents revealed that the average child has 238 toys; however, they only play with their 12 favourites on a daily basis. In other words, children make use of about 5% of their toys. For parents, the conclusion is obvious: Families waste hundreds of pounds on toys that are never or barely touched. To put it into perspective, the average 10-year-old child has toys worth almost £7,000 but rarely play with more than £330.
While parents are not the only persons buying toys for children, as other relatives and friends are likely to spend money on gifts for birthdays and Christmas, it doesn’t change the fact that approximately 95% of the toy budget is wasted. If you are trying to keep toy costs low, you can consider different options to expose your child to different items without breaking the bank. First of all, hand-me-down toys can prolong the life of some toys between siblings, cousins, or even friends. Additionally, you can find cheaper toys on platforms such as eBay when other families choose to sell unused toys.
#6. Car costs
Most parents may not realise how expensive family cars can be. Not every family will need to invest in a new vehicle. However, when you have young children who need a car seat, you will soon notice that your preferred city vehicle may not be sufficient. Children’s car seats are space-demanding, and British families prefer family hatchbacks such as the VW Golf and the Ford Focus. However, these vehicles are not suitable depending on the size of your family! In other words, when the family grows, the car expenses increase proportionally too!
Options such as second-hand vehicles and leasing contracts can make your family car more affordable.
#7. Grocery costs
Here’s a word nobody wants to read: Inflation. Unfortunately, when you handle the family budget, you can’t afford to ignore it. The cost of goods has been increasing steadily during 2021, and retailers have warned that 2022 will continue in the same direction.
For instance, as a family of four, you will need to plan your grocery shopping carefully to make costs more manageable. By the end of the year, experts estimate consumers will be spending £180 more for their groceries. The rising costs are inevitable and reflect the current economic situation in the UK. Brexit and the long-lasting consequences of the pandemic are impacting the food supply. It is likely that it will take several years for the UK to recover, which means that families can expect to face long-term cost increases.
In conclusion, starting your own family is an exciting journey. However, to face this emotional roller-coaster with a levelled head, you need to make sure you are prepared to face the costs inherent to a growing family.
