Planning your child's financial future

We all know that rearing a child is an expensive business - but, of course, worth every penny. Research from 2007 put the total cost of raising a child, from birth to the age of 21, at £193,772. And it is predicted that this could rise above £265,500 by 2012, working out at over £12,500 a year. Fortunately, there are ways that you can make sure your child is well provided for while keeping outgoing costs down. Make sure you plan for all eventualities as your child grows up- and know your rights to benefits and tax relief available to families.

Make a start

Make a will - Before you have a child it is worth considering making a will specifying how much of your estate you want to go towards their upbringing and who you want them to live with should anything happen to you.

Get covered - Life insurance cover and critical illness cover can help to make sure children are provided for if the worst should happen. It’s a good time to plan with average premiums now cheaper than in recent years. If you already have a policy from before you had a child, it's sensible to seek advice about updating it to show that you are now responsible for them - be aware that your premium may well go up because of this.

Health benefits - Mothers are entitled to free prescriptions and dental care for the whole of their pregnancy and up to three months after the child is born. So if you are a mum-to-be, or are caring for a newborn, take advantage of the opportunity to get your teeth checked by a good dentist.

Child Trust Fund - All parents in the UK are encouraged to start saving for their child's future by setting up a Child Trust Fund, to which the Government will contribute the first £250. This can be a healthy start to a nest-egg which will grow as fast as your child does.

Growing pains

Early years - If you or your partner decides to give up work after maternity or paternity leave and stay at home to look after your child, make sure that you utilise tax breaks available to non-taxpayers (non-earners) on cash savings. If you both decide to go back to work, you can make use of the free part-time education available to every three- to four-year-old - twelve-and-a-half hours of free early years education a week, for 38 weeks a year. Many employers offer childcare vouchers – where you pay for childcare directly from your salary before it has been taxed – as part of their benefits package. Both of these supports for parents can add up to hundreds of pounds in savings on childcare.

Secondary school - Depending on your working situation, your child could be entitled to free school meals and clothing grants or vouchers from your local authority to help with the cost of school uniforms. If you live a certain distance from your nearest state school, you could also receive help towards transportation costs.

Higher education - If your child decides to stay in education after the age of 16, they could receive an Education Maintenance Allowance of up to £40 a week depending on your household income. It's when they decide to go to university that the costs can really mount up. With this in mind, it's a good idea to start saving as soon as possible. One way of doing this is to save the money you receive in child benefit in a Child Trust Fund. However, depending on your personal and financial circumstances, there are limited grants or bursaries available for university places.