- Average UK adult wants to earn over £5k more than the national average income before starting a family.
- UK adults now expect to become first-time mothers at 32, and first-time fathers at 36.
- Londoners anticipate needing the highest “parent payslip”, looking to earn over £56k before having their first child.
As today is Father’s Day, research shows that nearly four in ten (37%) people consider becoming a parent as one of the most important milestones in life. However, it is clear that, while you can’t put a price on the joys of parenthood, many prospective parents are well aware it comes with a financial cost.
On average, UK adults anticipate needing to earn £37,159 before having their first child, according to new research by financial advice and wealth management group Evelyn Partners, formerly known as Tilney Smith & Williamson. 1 This compares with the UK’s annual average salary of £31,772.2
While just over one in three (36%) of UK Millennials (aged between 27 and 41) have had their first child, the anticipated costs involved seem to be causing many adults to postpone parenthood. Some 62% of men and 59% of women surveyed stated that money has influenced their decision over whether to start a family.
On average, UK adults now expect to become a mother for the first-time at 32, and 36 for first-time fathers. This varies considerably from the age individuals in the UK thought they would have become parents when growing up. At the age of 18, UK adults on average thought they would have had their first child by the age of 27.
Rising inflation could be set to delay this goal even further, with 30% of Millennials stating that the current inflationary environment could further prevent them from achieving life’s key milestones.
Londoners top the list with the highest “parent payslip”
Evelyn Partners’ research of 2,000 UK adults found significant regional differences across the UK in terms of what adults would like to be earning before starting a family.
London comes out the highest, with Londoners looking to earn £56,327 before entering parenthood. This compares with an average salary in the capital of £39,884,3 meaning the average Londoner would need to be earn an additional £16,443 if they were to meet their preferred income before starting a family, equivalent to a 41% pay rise and the highest shortfall within the UK.
This compares with Yorkshire and The Humber, where prospective parents anticipate needing £28,111, the lowest figure in the UK and 50% lower than prospective parents in the capital. However, while the lowest figure within the UK, it is in fact 4% higher than the actual average earnings in the region (£29,328), indicating the cost of starting a family is far more attainable and affordable in Yorkshire when compared with other parts of the country.
Emma Sterland, Head of Financial Planning at Evelyn Partners, commented: “Some parents will attest to the fact that there’s never a perfect time to start a family, however with the impact of inflation being felt by many households up and down the UK, it is understandable that prospective parents are putting their financial position at the centre of their decision over whether to have children.
“While children can bring life’s greatest joy, this joy does not come for free. With childcare, food, clothing and a host of other necessities to factor into monthly bills – raising a child can place a significant squeeze on a family’s income. Looking to the future, these pressures don’t relent when children reach school and university age.
“However, families shouldn’t be disheartened or discouraged, as with some smart planning, careful budgeting and some advice from loved ones who know you best then there are ways you can manage the expense of starting a family while ensuring it doesn’t come at the cost of your financial stability.”
Evelyn Partners has shared the below guidance for prospective parents on how to manage the financial impact of starting a family:
- Build up a dedicated savings pot – We save for many of life’s biggest moments, such as weddings, holidays, or a new home. But very few of us think about building up a savings pot before we enter parenthood. If you’re thinking of starting a family, then it could be worth establishing a dedicated savings or investment account where you deposit any spare savings each month. With regular contributions this small pot could grow into a healthy nest egg in time, to help you contend with some of the expenses that come with raising a child. If you’re still a few years away from starting a family, then investing this money now could enable these savings to grow even more meaningfully.
- Consider optimising maternity / paternity arrangements: While women can take up to 52 weeks’ maternity leave from their job, with the first 39 weeks eligible for Statutory Maternity Pay, men are entitled to up to two weeks of paid paternity leave (with many employers improving on these limits). But if the mother is the main breadwinner in the household, it might make sense to share her leave allowance with her husband to speed up her return to work and a full salary. Parents can share up to 50 weeks of leave between them and up to 37 weeks of pay – though this needs to happen in the first year after a child is born or adopted by the couple. By taking advantage of this, a high-earning woman can return to work sooner, with the comfort that her child is being cared for at home by the child’s father.
- Speak to your family about a “living inheritance”: Many of us will be fortunate to receive an inheritance from an older family member at some point in our lives. However, often this inheritance arrives once we’re more financially established. If your family members are well provisioned for in retirement and are already ringfencing money to pass onto you in their will, it’s worth having a conversation to see if they would be comfortable passing this onto you while they’re still alive. Not only does this mean you receive financial help at the time you need it most, but it can also prevent the money from being liable for inheritance tax.
- The power of good advice when it comes to must need items: With the excitement of a new family member and a nine-month countdown, it’s tempting to get over-excited with the shopping. Asking your friends and family for their advice on the most helpful or unnecessary purchases can ensure you don’t get carried away with the spending in the lead up to the new arrival.
- Start saving early to cover university fees: Thanks to the power of compound returns even fairly modest savings into a Junior ISA from the time of birth, or even before, can grow into a big pot of cash by the time the child is 18. Particularly if the deposits are put into investments that will work harder over the long term.
- Life cover, critical illness and income protection: New parents should ensure that they at least have life cover and/or income protection cover in place to ensure that the family will be protected on the event of death and/or inability to work.