Jill KerbyA headline that caught my attention a few weeks back was a press release from Laya Life (this is the life assurance arm of Laya Healthcare) which stated: “Parents expect their children to be financially independent from the age of 24.”
This is the age when my own child will finish his college course (he spent a year in Canada after his Leaving Cert) and his father and I are already beginning to have doubts about whether he’ll be out on his own by then.
We’re hoping that the primary science degree he’s working towards will open the right doors and help him a job and decent income so he can move out and start a life of his own.
“But won’t he have to do a Master’s degree?” people ask. “Or a PhD?”
I hope not. But I’m guessing that graduate school probably means another large outlay of (our) money if he doesn’t win a scholarship, gets offered a fellowship (or whatever they’re called), marries an heiress or wins the Lotto.
Laya Life commissioned this research from economists Joseph Durkan and Moore McDowell of 1,000 parents to find out about how much it costs to raise a child from cradle to third level education.
They estimate it’s about €105,000 over the space of about 21 years with the average spend per household of children being about €11,000 a year, including food and clothing, sports and entertainment and holidays to the higher costs of childcare, education and even rent support (to age 24).
The majority of parents said they were “just about keeping their heads above water” but nearly 60% admitted they don’t have enough money to put aside for savings.
The later teenage years, they said, are the most expensive with monthly household child costs peaking at €1,068.
That 77% of Irish parents admit they put too much pressure on themselves “to give their kids everything” won’t come as a surprise to guilt laden Mums and Dads who work long hours pay their taxes, debts and bills with incomes that may not have budged for seven or eight years and in many cases have even been reduced or levied.
Almost half (45%) of the parents said that they’ve even been forced to cancel insurance contracts in an attempt to cut back on costs.
More than one in four said they’ve cancelled their pension for the same reason, while 48% have put off saving for their retirement in order to have more money to spend on their kids. Only 29% said they had a savings plan in place to cover future costs.
Perhaps the most worrying response was that 42% of the parents said they had no life insurance in place, a stubbornly high, but consistent statistic.
Whatever about having no savings – the risk is that you’ll keep falling into degrees of debt if an appliance needs replacing, or more seriously, you lose your job, even temporarily.
But not having any life insurance means your family could end up impoverished and may even lose their home if a parent-cum-breadwinner dies prematurely.
It struck me that this interesting piece of research is a little microcosm of Irish family life – of parental love and guilt; of our high cost consumer society and our children’s’ expectations…and our skewed priorities.
Life insurance isn’t a luxury; buying your children nearly €600 worth of gadgets, games and other electronics in a year. Spending €455 on hobbies and toys or €900 on extra curricular classes and grinds is.
Neglecting their financial protection – and I refer to the under 18s – in order to meet a €4,000 euro bills to send one older child to college is also a false economy if a parent dies without any life insurance.
Life insurance has to be one of the best value insurance contracts any parent can buy, even if it is the one that you absolutely never want to have collected during their childhood.
I may complain today about the high cost of supporting my Viking man-child (he’s tall, blonde, red-bearded!) and if needs would find a way to pay his own fees if we insisted. But we never skinted on life insurance or other protection policies when he was a young child (and our mortgage and other bills were very large.)
Laya sells €150,000 worth of life cover for 20 years for about a tenner a month (depending on your age).
Buy some. Be a really loving parent. You also deserve the peace of mind.
If you have a personal finance question for Jill, please email jill@jillkerby.ie or write to
her at Jill Kerby, The Munster Express, 37, The Quay, Waterford X91 DC83.