Ahead of this September, many parents will be starting to consider how to deal with the cost of childcare. British parents shoulder some of the highest childcare costs in the world, forcing some to make the difficult choice between going back to work or taking time off to look after children themselves. This can still often fall predominantly on women’s shoulders. Indeed, according to ONS estimates 65% of mothers are in work, compared to 93% of fathers. 
And the costs involved with having children don’t necessarily stop once a child starts school. Parents may want or need to support their children financially into adulthood.
Emma-Lou Montgomery, Associate Director at Fidelity International gives her tips on how parents and future parents can prepare for some of the costs of raising children
1: Make the most of the tools available to you
The cost of childcare when your child is in their early years can be steep. Indeed, for many households it can often outweigh the monthly mortgage bill. But there are some helpful tools at your disposal that could help:
- Tax-free childcare
This is available to working parents each earning at least the national minimum wage for a minimum of 16 hours a week and with a combined household income of less than £100,000. This could be worth up to £2,000 per child. However, BBC analysis found that the take up of this new policy has been limited and 324,000 families could be missing out.
- Partner contributions to your pension
One of the main financial penalties women can face when taking time off to look after children is that their workplace pension contributions stop. This means that when they get to retirement women who took time off will have less saved in their pension pot than men. However, your partner can contribute to your pension while you are off work, helping to keep your savings growing.
- Encourage grandparents to apply for National Insurance Credit
To allow more parents to go back to work, many grandparents will help out with childcare. Now a grandparent can claim a national insurance credit if they do so, giving a £230 boost to their state pension each year.
2: Teach your child about money
It’s been suggested that our habits when it comes to money are formed by the time we reach seven years old, and so teaching your children good behaviours early can be mutually beneficial later on in life. According to research by Fidelity as part of the Financial Power of Women report, women are actually more comfortable talking to their children about money. Some 28% of women said they were happy to speak to their kids about money management.
A weekly allowance when they are young can be an effective way to do this, teaching children the value of money and how to budget. As they get older, encouraging them to have a part time job will not only teach them about responsibility but also give them the means to fund themselves when they leave for university or go travelling.
3: Invest early and enjoy the power of compounding
For future parents or current parents who are planning ahead so they can help their children out financially later on in life, maybe by helping with university fees even helping them buy their first home or, investing early will help you build up a more substantial pot.
For example, if as a parent you invested £5,000 a year from the age of 30, and kept doing so for ten years, then with an average return of 5% per annum you could have a pot of £84,278 to spend on your child’s future.
4: Open a JISA
Parents could also consider opening a Junior Isa for their child. Fidelity’s research found that if you were to save as little as £70 each month into a JISA from the birth of your child, you could build a savings pot worth £21,535 by the time they reach 18 years old. Alternatively, upping contributions to £90 a month during the same period would give them a pot of £27,766- enough to cover the cost of university tuition fees. 
5: Use the bank of Grandma and Grandad
If grandparents are in good financial health then getting some help from them can be very effective. Not only do most grandparents want to help their grandchildren but it can also help them to reduce their inheritance tax bill.
In order for these cash gifts to be considered outside of the grandparent’s estate for IHT purposes they need to live for another seven years after making the gift. Grandparents can also gift away up to £3,000 each tax year, exempt from IHT. There is no seven-year limit on these gifts, and if you don’t use the allowance one year it can be carried forward to the next year.
- Fidelity International, August 2018
- Fidelity International, March 2018
 Fidelity International, August 2018
 Fidelity International, March 2018