AIBU to ask how you managed financially with the reductions associated with maternity/ nursery fees?

[Isla2021]

Myself and DP are planning for our future and would like to TTC next year.

I am a planner at heart and I can't help but worry about financial impact of having children, particularly up until they start school, starting with a reduction in pay during maternity and then followed by extortionate nursery costs. All being well, we are both fully employed and I know we will manage but I would like to set some money aside as a monthly booster should this be required each month. I may also consider reducing my hours during the early years from 5 days a week to 4, my employer is very flexible so this is a possibility and my DParents have expressed a keen eye to look after our future DC for one day a week (they are very much looking forward to being grandparents although unaware we would TTC next year - I am mindful that this is not a guarantee and as this year has shown us, things can change).

Its made me want to reach out to ask how everyone else coped, is it really a noticeable drop in income? How did you manage?

I also need to look at Child Benefit, I believe we are both currently within the threshold for this however; I am not sure how much this would be!

Do you have any tips/ advice having been through it yourself? Would it have been helpful if you had saved a pot of money, i.e enough to transfer £100 a month for the first few years?

For those who wish to disclose (absolutely understandable if not) please can you outline the estimated drop in income that you had and how you found it? I need to work out what my reduction will be during maternity, I work for a local authority so if anyone has any information, please let me know! (time to search through the staff portal to find out more!)

Thank you in advance!

Your drop in income will depend completely upon your company’s maternity policy and whether they offer/you accept an enhanced maternity package and what that is.

Usually childminders are cheaper than nurseries and a good childminder is wonderful for many children but there are too many mediocre or bad ones out there. Pros and cons with all the different childcare (childminders, preschool, nursery, nanny, family etc).

Is there anything to currently spend money on that you wouldn’t whilst pregnant with a newborn or toddler? We used to go on four holidays abroad each year and eat several times a week. Stopping that meant we were better off with me on maternity leave.

It’s very difficult to give you accurate information as it’s all so individual. I received the legal minimum for maternity pay so ended up receiving about £400-500 a month. Your contract will detail what maternity pay you are entitled too - you can use the government calculator if you will receive the legal minimum.

It’s easy enough to find out nursery costs. Normally at least one nursery locally will publish rates on the website. Normally £40-60 a day. Reducing once you receive 30 hours free.

Child benefit details are all widely available on government websites - it’s around £60 I think (I have two children now so receive £140 every 4 weeks).

However you may find your job doesn’t suit once you have children. One of you may be made redundant. Grandparents may not actually want to look after their grandchild every week. Etc etc! The main economic hit is almost always due to career sacrifice from one parent or any other.

Personally we managed fine. I now work weekends and a couple of days in the week to reduce childcare costs. If you want children you will make sacrifices and make it work :)

We saved and changed out goings as much as possible. There are often savings when mum isn't at work - travel, work clothes, lunches out etc. While pregnant, if you are a drinker you often save money on alcohol and possibly less nights out. Same when you have a young baby.

I was lucky enough to be able to go part time and also have in laws who took the children for 1 day a week. I worked out my hours as best I could to maximise all the tax/ni free pay.

We also had our two close together so I went back pregnant and used holidays to work a 4 day week until I was ready do go on mat leave. Therefore I had two lots of full time mat pay which was useful.

After that you just have to tighten your belts until free childcare hours kick in, till they start school then finally when they both go up to secondary school and you finally stop paying childcare 😀

I calculated my basic outgoings for a year + some extra for baby classes/lunches out etc. And worked out I wanted an 'income' of £1200 a month whilst I was on leave. I then deducted what my mat pay would be, then saved the shortfall - I think that was approx £7-£8k from memory.

I also saved extra for pram, cot & baby essentials (an extra £1.2k) but things can be bought more cheaply than this!

We also did an affordability test for nursery & childminder, and I now work 4 dpw.

My husband and I continually reassess our outgoings and ensure we are paying an equal proportion of our wages to outgoings. Neither of us have an issue with pooling everything, we just never got round to it.

I had full pay for my maternity leave so that was fine.

Nursery wise, we only send her 5 mornings a week, and to the nursery attached to my work which is subsidised, so no extortionate nursery fees. We pay about £400 a month, then an extra 20%off that using TFC. So less than £200 a month each for me and my DP to find.

For a time I worked only to pay childcare and it was worth it, it paid off a few years later.

Nurseries and childminders have to earn a living and that isn’t anyone’s fault that they need to earn to live. That’s how I learned to think of it so as to not resent paying fees for having my child looked after well so I could advance my business.

Maternity pay will depend on your works policy. I work for a very small company who do not give maternity pay, just straight to the stat government pay, in which I had 8 months off & I saved approx enough to cover the extra I would miss from my usual salary.
Child benefit is £84 a month, entitled to anyone earning under 50k I believe.
With childcare costs, the government do a scheme in which they pay 20% of your fees, up to £2000 a year. Once the child is 3
They will receive 30 hours free (term time)
Yes it can be very tough financially & I know of a lot of people who do not return to work, as it's not worth the childcare costs vs their salary. However I personally think you sacrifice a lot more by not returning to work. Childcare costs are now forever & this way you can keep your career & pension contributions.
You will be surprised at how you can manage. Me & my partner earn less than £40k between us & my son goes to nursery 2 days a week, 2 days at grandparents & I dropped my hours to work 4 days a week.

It depends on how much money you have over now as to how you will manage.
Child benefit is £20 a week.
SMP is about £150 a week
Nursery is £400 per month for 2 days a week
I work 2 days a week, was on full pay for 6 months and SMP for 3 months then back to work at 9 months. Managed enough hours during naps and evenings until recently so only started nursery at 15 months. Did a bit of freelance stuff whilst off so the pay reduction wasn't really noticeable. Nursery cost is a third of my pay so that is significant. But we were living well within our means, and have saved a lot too through not being able to do much during pregnancy, maternity and then covid!

We had offers of grandparent help which might have been nice, but they are all elderly and don't live that close and with covid it wouldn't really have been possible in the end. To be honest I am happy with the nursery, it's a much better quality of care, toddler really likes it, and means we don't rely on anyone else. Grandparents are saved as a nice treat which suits us much better.

I just got statutory maternity pay so you do have to budget but now is a good time to save on certain things- no meals out, no holidays etc. It’s great to have family help even one day a week

Saving as much as possible before maternity is my only piece of advice - especially if you plan to have more than one as saving might be harder after the first child when taking into account a potential drop in work hours and childcare costs.
As others have said, work out what you need each month whilst on Mat leave, then take off Mat pay and go from there.
Nursery for us is £950 a month full time (hopefully temporary as I've started a new job with the view to going to 4 days soon - no grandparents to help) and we make it work. We set our expenses before TTC so it was manageable and we had choices, we've been lucky in many ways, especially as I lost my part time job thanks to COVID but found another quickly with the compromise on hours.
For our nursery the free hours at 3 work out 22 a week if spread over the year rather than term time, but there is a charge of £1.50 per 'free' hour as it doesn't cover food etc. Still a significant saving and we're counting down the days!
Child benefit is £84 every 4 weeks and you can claim it up to earnings of £50k each - always found this a bit odd that one of you could earn £51k and then you wouldn't be entitled to it all but both if you could earn £49k and still claim it!

We saved as much as we could before hand, then I took 6 months off and then staggered my return around XH work days (he worked Saturdays and dropped an extra week day so he had 2 days off each week) and using KIT days to begin with and then returned gradually using up accrued annual leave to top up my salary too. Managed childcare by condensing my hours so I worked 5 days over 4, XH didn't work 2 days per week (worked very long days and Sat though) so we only had to pay for 2 days/week.

We made sure we had a lot of savings before ttc.

Can your dp also go pt? so you both have a day with dc, then inlaws, then that’s just two to find childcare.

A colleague of mine was pg at same time as me with our first. She had twins. Her monthly childcare bill was £1200 part time .

We (well I) saved massively for a baby. My employer only offered statutory maternity pay so I wanted to be able to pay myself a wage whilst off work. I took six months off and returned 4 days a week. My partner also returned 4 days a week meaning we only needed nursery 3 days. It is still extortionate

Having a baby doesn't have to cost the Earth. Don't be fooled into thinking you have to buy loads of stuff. Get second hand as you will be surprised how quickly baby grows out of things like Moses basket, clothes, pram etc

Once pregnant and having a baby, you'll spend less on social life so it will balance out a bit

After mat leave I went down to 4 days a week and DS went to nursery 4 days a week.

We’re fortunate in that we didn’t really notice the drop in income; DH earns very well and I earn an above average salary even on a 4 day week.

We’re able to save a few hundred pounds a month on top of paying DS’s nursery bill BUT I don’t think we’d have another child while DS is still below the free hours threshold, but we won’t be ready for another one yet for a year or two anyway.

If you earn good salaries you’ll be fine. If you don’t, you’ll just need to prune your saving in other areas. Saving a pot of money before mat leave is a good idea anyway.

Do u have the ability the work overtime? I worked an average of 50 hours overtime (by using annual leave) in my maternity calculation months and actually ended up recieving more maternity pay than my normal monthly salary. I spread my payments equally over 9 months and tagged 6 weeks annual leave on the end. I work shifts though so it was easy to work extra days in a week than I would if i did a 9-5 job

If your 3 days at nursery will cost you around £600 a month why don’t you start trying to save that now? It will show you how to manage your budget with nursery fees and be a nice tidy sum in savings, potentially to cover some extra unpaid may leave if you wanted it.

Look into tax free childcare this can help towards childcare fees as soon as you start using it- for £8 you put in the government adds £2 so that can reduce your childcare bill.

www.gov.uk/tax-free-childcare

If you are looking ahead to the 30 hours that currently is available from age 3 be aware that these are only 'term time' so cover only 38 weeks (I think) a year and also that some nurseries have add on fees (for food, consumables etc) and can also restrict sessions it is used for so it might not reduce your childcare fee as as much as you might think.

We knew we wanted to children. So we calculated the shortfall while I was on maternity leave x2, worked out an amount we'd need to kit ourselves out with all the gear, and factored in the additional shortfall from being on maternity leave 2 and having DS1 in nursery at the same time (ouch), then saved a lump sum to cover the lot before we even started TTC. There were so many spreadsheets.

Children are very expensive as you’ve worked out. I took 6 months unpaid leave with my son, unplanned. So with my daughter I saved the shortfall of income (only 3 months unpaid that time) when planning to TTC and pregnant, then transferred it over each month.

We paid out thousands and thousands in nursery fee’s due to no family nearby. I did drop to 4 days with my 2nd, but we spent in excess of 50k. Then there was more years of Afterschool and breakfast club, from 4-11. They are 16 and 13 now and for the last 2yrs haven’t cost anything in childcare. Now I have a dog I send to doggy daycare

My drop in income was big because my work's maternity pay is barely more than statutory. I lost about £1500 per month. Now nursery fees have wiped out my salary pretty much.

We are using savings and simply accept that we will be at a net loss until our child(ren) are at school. We hope not to have to get into debt but we accept it's a possibility. We won't consider a second until it will coincide with our first turning 3 so there are some free nursery hours.

It sucks but it's short term as once school age we'll be back on an even keel.

I was actually better off once ds was born, I qualified for both Child benefit, working & Child tax credits which meant I only went back to work for 18 hours a week.

Having a baby when you aren't married makes you vulnerable.

You will have a reduction in income.

Has he stated clearly that he will look after you completely when you are on mat leave.

Has he stated that nursery costs would be shared.

Do you own your home.

Having children makes women vulnerable financially.

It is not something to be rushed.

Again, do you wish to be married or is he one of those men that will have a child, will promise marriage and then go off the idea...

Bought a lot of kit (eg toys, sling, cot) off Facebook market place to save some money (bought new mattress and car seat).
I worked in town before the baby and spent a lot of money on travel / shopping at lunchtime/ takeaway food / nights out so my expenditure massively dropped
Breastfeeding is free but you will need to factor in cost of bottle feeding if it doesnt go to plan
Maternity allowance is based on the 3 months salary before 25 weeks I think (at my company) and although I didn't do this, i have heard of people doing things like overtime or selling work shares etc to get their salary up at this point so they get better maternity pay. Not sure if companies are wise to this now.
I am also not sure if the childcare voucher scheme is still going and if it would be the best thing for your financial circumstances compared to the new scheme, but with vouchers it was possible to purchase them before you had a child so we started building them up as soon as we were expecting and that helped pay for the first year of childcare. If you take a year maternity there is only 2 years of childcare at full payment before 30 free hours.
When you look at nursery, consider how the 30 free hours is done when they are 3. Some nurseries like ours just take 3 days off your bill, and work out the average over the year and charge per month, but others make you take a half day every day and if you don't use it you lose it...which doesn't work great if you work say 3 days for childcare reasons
I'd also consider your husbands paternity leave policy and splitting the leave, some companies do enhanced leave so he might be eligible for some even if you weren't in the later months, and even if this wasnt the case you would be better off losing your wage if you were the higher earner

I found my spending money etc didnt change too much in mat leave due to drop in petrol, lunches, going out on general and clothes - i had like 3 maternity outfits i rotsted 🙈 my nursery cost is 490 after the tax break for 3 days a week. I work fulltime. Rest of days grandparents and husband due.to his shift balance. We have seperate.accounts but he covers morgage and his bills, savings house bills.and food. I pay all nursery and my bills - car, phone etc and extras for.household etc. I try and transfer to DH 50 quid a month to cover food/baby stuff. I wasnt saving as much - maybe dropped to half but this has gone back up due to me moving up pay band at work. So far it.works but GP care is a bit tricky as the can be difficult sometimes so im always prepared to pay full time nursery so i never get too spendy. We could easily stretch to 4 days and 5 at a push if i dropped savings again but trying to hold.off. once the 30s free kicks in 2 years it.will be alot easier.

I ended up being a sahp, so our drop in income was my salary for ten years. But that's before the cost of the kids. You can of course spend completely different amounts on kids from just basic food and shelter to private school and Mauritius on holiday, and everything in between. ours cost us about £2000 per month. So, with my salary, that's,crikey, £60k per year. I've never worked that out before, that's shocking.