High net worth (HNW) parents are turning to inheritance to fund child care due to a lack of planning, new research from Charles Stanley has shown.
The findings showed nearly a quarter (24%) of HNW parents admitted they did not account for the cost of having children, prompting one in 10 (9%) to turn to early inheritance to help cover childcare expenses.
The wealth manager said the research also highlights differences in financial preparedness between men and women, with 25% of women failing to consider the financial implications of having children, compared to 20% of men.
For those who did plan ahead, the average consideration of financial implication was two and a half years before starting a family.
According to the Child Poverty Action Group, raising a child to age 18 costs £166,000 for couples and £220,000 for lone parents. These figures do not account for the lifestyle expectations of HNW children or private education.
In addition to childcare, Charles Stanley said parents overlooked several other costs, including the cost of conceiving such as IVF treatments (51%), education expenses (27%), the child’s future financial needs such as a junior ISA (25%) and routine expenses including toys and clothing (21%).
The research found only two thirds (67%) of parents created a budget to account for the cost of raising children, with men more likely to prepare financially than women. While 31% of parents created a detailed budget, 36% relied on a rough estimate and 33% had no budget at all.
At the same time, raising a family often requires career sacrifices. A fifth (19%) of parents changed jobs to secure higher salaries to cover costs, while 14% limited their progression in order to maintain financial stability. Just under one in six (13%) said they delayed having children to prioritise career goals and 12% remained in roles solely for parental leave benefits.
Mia Kahrimanovic, financial planner at Charles Stanley, said: “The research emphasises the importance of early and comprehensive financial planning for prospective parents. It’s vital that families consider the broad spectrum of costs and sacrifices involved in raising children over time to avoid reliance on unnecessary measures like early inheritance. Not only is this important for covering the costs of raising a child, but also for each individual’s long-term financial security.
“By taking proactive steps to budget, save, and plan, parents can navigate the financial realities of parenthood with greater confidence and stability. This is particularly pertinent in today’s high-cost environment. Seeking expert financial advice can help parents planning to raise children throughout their financial journey.”
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