It now costs £194,000 to raise a child from birth to the age of 21 - up 4% on last year, according to new research.

Childcare takes an average £53,818, up 6.5%, education £50,240 - with university £13,064 a year extra - food £17,205 a year and pocket money a total of £4,144.

As a result, parents are now being forced to sacrifice holidays and new clothes, with many buying second-hand items while selling their own spare possessions on eBay or at boot sales.

Meanwhile, 37% have had to stop saving, while 23% say they have cancelled or reviewed their life insurance and income-protection cover.

The survey by insurer LV=, now in its sixth year, confirms that outer London is the most expensive area, averaging £211,977, while the West Midlands is cheapest at £186,641.

Says group chief executive Mike Rogers: "Every parent knows how their hard-earned savings can dip thanks to eye-watering education and childcare costs.

"Although parents are feeling the pressure financially, it is important they try to look beyond the short to medium-term money worries."

Meanwhile a seperate survey revealed that saving money is no longer worthwhile according to nearly three-quarters of consumers.

Most adults are sceptical about saving, with 73% saying that the benefits of putting money aside have fallen during the past year, the Association of British Insurers (ABI) said.

Consumer confidence in savings has been rocked by plummeting returns, as interest rates dived to a record low in December.

Deposit accounts now pay average interest rates of less then 1% - the lowest since records began in 1995, according to recent figures from the Bank of England.

The ABI survey also found that 70% of adults believe that the economy will deteriorate further during 2009.

Only 7% of the 3,000 people questioned felt that the benefits of saving had risen over the past year, compared to 15% in the same survey in the third quarter of 2008.

Dr Rebecca Driver, the ABI's director of research and chief economist, said: "The current economic climate vividly highlights the dangers of too much debt - the country needs to develop a healthier approach to saving.

"Yet our research shows that consumers are becoming increasingly sceptical about the benefits of saving.

"Increasing ISA limits and bringing forward automatic enrolment into existing workplace pension schemes will help, and we urge the Government to take action on these issues."

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