MoneyMagpie

Oct 11

Why the UK isn’t the cheapest place to raise a family

If you’ve ever wanted confirmation that the UK is the most expensive place to raise a family, here it is. According to recent research by Moneysupermarket.com, the cost of rent and utilities as well as lower average wages puts us behind other countries including Germany, the USA and New Zealand.

The price comparison site looked at a range of financial parameters including house prices, the cost of running a car and food shopping, and compared these to the average salary. What they found, for a family of four, was that we in the UK are spending as much as 103% of our salary on covering the cost of just living. That compares to countries like Sweden where only 43% of your salary is likely to be spent on things like rent and the all-important gas and electric bill.

 

What’s the True Cost of Raising a Kid in the UK?

With the average UK salary at around £25,000 it actually pays to be single according to the Moneysupermarket.com research. A person living alone can expect to spend around £12,000, just under half of what you are likely to earn in a year. Once you start adding family members, however, that living cost figure rises dramatically. You could be paying out in excess of £44,000 for a family of four and just under £80,000 for a family of six.

 

The Rising Cost of Living

Over the last decade or so, the cost of living has certainly risen while wages in the UK have largely stagnated. Take into account the increasing price of owning your home and it can certainly be difficult to make ends meet if you are raising a family. Here are just some of the eye-watering stats:

  • A four person family looking to buy a house may well have to find a mortgage for £335,000 and renting isn’t that much cheaper at £1,318 a month. If you’re comfortably looking to house 6 people, in many places you can expect to spend half a million.
  • While a single person can survive on spending just over £18 per week on groceries, once you have a couple of kids to look after that can rise quickly to £48 per week.
  • Getting around in a car is also expensive. The average 4 person vehicle is going to set you back around £15,000 while switching up to an SUV for a bigger family can just about double the cost.
  • If you want to send your kids to an independent school it’s going to add a bigger cost burden. For day school for one child, it will be around £13,000 a year; £30,000 if you want full board.
  • We all know that the cost of energy has gone up and up in recent years. The average 4 person family is likely to spend close to £1,500 on utilities, including water, each year. Between 2001 and 2017, prices have gone up by a worrying 13% across the UK.

Even if you get some support in the UK it generally doesn’t cover the rising cost of living for a family. Child benefit amounts to just £61.80 for 4 children and that reduces if someone is earning over £50,000.

There’s no doubt that learning how to make the most of their money is something that many UK families have had to come to terms with in the last couple of decades. Moneysupermarket.com suggests making sure you switch utility suppliers for a better deal and budget carefully if you don’t want to spend all your wages on simply getting by.

 

Where Are the Cheapest Places to Raise a Family?

A lot depends on what you earn for a living. In the USA, for example, the outlay for a family of four is more than in the UK but this is compensated for by higher salaries. That means, on average, Americans spend 90% of their wages on the cost of living. Almost as bad as the UK is Ireland where families spend 101% of their wages.

European countries like France and Spain offer a reasonable standard of living but by far the best are Germany (52%) and Sweden (43%). Further afield like New Zealand and Australia are pretty good options if you want to get more bang for your bucks.

Much of the difference in standard of living in these other countries is driven by much lower rents. While you could be paying close to £2,000 in the UK, you can expect to fork out less than half that in Spain, Canada and Germany. And, if you’re looking for extra low energy bills, you might like to take a trip out to Sweden to make your money go further.

The research by Moneysupermarket.com took into account a wide variety of financial factors which were used to produce an average cost for each family size. There’s no doubt that in places like the UK you are going to end up spending a lot more as your family starts to grow.

You can see the full research on the Moneysupermarket.com site here.

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