Cost of parenting crisis: people with children under 18 feeling the financial pressure

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• 30% of parents with children under the age of 18 find their financial situation difficult, compared to 22% of people without children
• Over two thirds (69%) of parents with children under the age of 18 worry that they’re not saving enough now for when they’re older
• 65% of parents with under 18’s worry about spending too much now in case they run out of money in the future
• Try not to lose sight of your own financial goals amongst the mayhem of parenting

According to new research¹ from Standard Life’s Retirement Voice report, almost one third of parents (30%) with children under 18 are finding their financial situation difficult, which compares to 22% of people without children.

This comes during a second full year of high inflation, with the cost of essentials like food and household bills still outpacing income rises for many. For parents this is combined with increasing expenses related to childcare, schooling, kids’ activities and rising housing costs related to sharp interest rate rises – all contributing to the financial strain that families are likely to face.

Standard Life’s research, conducted among more than 6,000 people, also found that for those who are parents of children under the age of 18:

• 69% worry that they’re not saving enough now for when they’re older
• 65% worry about spending too much now in case they run out of money in the future

Naturally, as families grow, so do the demands on household budgets. This can lead to increasing financial pressure on parents as they grapple with the reality that providing a stable and nurturing environment for their children requires careful financial planning and strategic decision-making. Of course, parents are likely to prioritise their finances to focus on their children’s needs but should seek to make sure that they maximise the opportunity they have to save for their own futures.

Dean Butler, Managing Director for Retail Direct at Standard Life, part of Phoenix Group commented: “Try not to lose sight of your own financial goals amongst the mayhem of parenting as even the smallest of saving will help the family’s long-term financial wellbeing. Many of us can relate to the pressures that parents face juggling immediate financial priorities with trying to save for the future, be that for a particular goal or into a pension. It’s important however that parents don’t sacrifice their own saving and retirement goals entirely to focus solely on the here and now.

“Retirement may seem a long way down the road but thanks to the power of compound investment growth, the earlier you start saving the more you will have when you get there. Even contributing small amounts to your pension all adds up over time – our calculations found that contributing just 1% more than the minimum required under automatic enrolment could lead to £58,000 more in retirement*. In some good news for parents with very young children, there could soon be some respite from the monthly squeeze after the Chancellor announced an expansion of free childcare for one and two-year olds in the Budget – hopefully, this will give parents the opportunity to take a breath and start to build a plan for their financial futures.”

Standard Life offers tips for parents saving towards retirement:

1. Take a look at your finances as a whole – Parenting can be all-consuming and it’s sometimes only possible to live in the moment. However, taking a look at your finances in the round can boost your financial confidence and give you an indication of whether you’re in a position to save for the future, and alert you to any non-essential spending you could cut out. Using an open finance tool, like Standard Life’s Money Mindset , can help you gather everything in one place.
2. If you leave work for a few years to raise children – you’re still entitled to basic rate tax relief on pension contributions, even as a non-taxpayer. That means for every £80 you are to pay into your pension, you’ll end up with £100 in your pension pot. The maximum you can pay in as a non-taxpayer is £2,880 a year, equivalent to £3,600 once tax relief is added.
3. Make sure you’re claiming Child Benefit – if you have a child under 12 and are claiming Child Benefit, you’ll get National Insurance Credits towards your State Pension even if you’re not in paid work. That means that when it comes to claiming your State Pension in the future, you’re still treated as having contributed.
4. Understand your maternity leave and pension rights - If you’ve had a baby and are planning to take maternity leave rather than stopping work, then your employer must continue making contributions into your pension for the duration of your maternity leave. If you are able to do so consider continuing paying into your pension while you’re off work. The Money Advice Service is a great place to look, with more information available on protecting your workplace pension after having a baby.

ENDS

Notes to Editors

¹ Boxclever conducted research among 6,350 UK adults. Fieldwork was conducted 26th July – 9th August 2023. Data was weighted post-fieldwork to ensure the data remained nationally representative on key demographics.

* assuming £25,000 starting salary, 3.50% salary growth per year, and 5% a year investment growth. Figures are not reduced to take effect of inflation. Annual Management Charge of 0.75% assumed. The figures are an illustration and are not guaranteed. Earning limits not applied.

About Standard Life

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