Is this enough money to have children

[Lainey1988]

Me and DP both would like children. I’m in my thirties and am thinking about our finances.

We both earn about 25k per year so take home is about 3k after taxes and pension. Is this enough? I want to ensure we can give the kid a good life.

You might want to consider whether you and your partner could each work 4 days per week. The top part of your income is taxed relatively highly (20% income tax + 12% national insurance and potentially 9% student loan). This means that losing the top part of your income by working 4 days sometimes leaves you no worse off than working for 5 days and paying for childcare.

In your case, if you make £25k, you would make £20k on 4 days per week. Of the £5k lost, you would have paid at least £1600 in tax anyway, leaving £3400 per year.

Childcare for that one day would cost around £3200 at my DS's (admittedly quite expensive) nursery or around £2500 at slightly cheaper nurseries. You effectively wouldn't get tax free childcare for it because that maxes out at the higher of 20% of childcare costs or £2k.

So you may only make an extra few hundred pounds per year by working that 5th day. And you both keep your careers going and have some time with your baby during the week. This sort of approach has worked well for us, though my DH condenses his hours rather than works part time. It would also work well once you get the 30 free hours as this could cover most of your childcare costs.

@Lainey1988

Thank you all for the advice! I was a bit nervous posting!

Our outgoings are roughly
450 mortgage + 200 overpayment (could be cut down but I worry about interest rate rises so am trying to get to a lower figure before our fix ends in 4 years)
400 bills (electric, gas, water, council tax) not sure there’s much room here
200 petrol and car maintenance (get to work and kept cars running)
200 insurances car and house, pet insurance etc
300 fun money for clothes/outings/hibbies (150 each per month)
250 food and pet food
200 savings (holidays, general financial buffer)
100 per month on Netflix, monthly takeaway, birthday gifts etc)

Considering you could, if you needed to, drop the £200 overpayment and £200 savings, plus easily trim the £100 Netflix/takeaway and £300 fun money, I would expect you could also reduce the insurances (we pay the equivalent of about £55pm for 1 car, 1 house and 1 life insurance based on annual payments) and petrol will reduce while you're not commuting on may leave, your outgoings are more like £1500-£1700pm.

We base our finances only on my partners wage as I'm self employed so income can vary and we mostly save what I earn for work we need do to the house and we support 4 of us with a big mortgage (£1100 like I said) on his wage which is just over £3,000 net pm. We can't splash the cash but it's more than do able. So personally I'd say you should be fine if you want a baby, go for it and just save what you can between now and then to be as comfortable as possible.

You just get used to not buying or doing things. Your insurance sounds a lot. Do you have pets insured? Could you manage with one car? Cut out the overpayment, fun money, Netflix and take aways. That’ll save loads. Child minder is cheaper than nursery often so that could be a saving too. Although they’re often less reliable.

Our fun money went down to £50 each a month when kids were in nursery (not sure it's ever gone back up to pre-kids levels, mind!) Plus we were both a bit part time with DC1 only at a childminder for 1.5 days to start off with, rising to three at most. I'm self employed, but I'm sure it's massively easier to get back to full time from part time than to find a new job altogether. Plus I was just so much more organised at work when I only had three days of nursery cover, and a child coming home from primary school at 3.20pm – got loads more done in the time than I ever did before. Excellent advice on the financials from Chessie678 above.

You could try living on one wage for the next year and saving the other (or at least a proportion of the other) to have a buffer between age 1 and 3. Spending is all relative - depending on where you live etc - but your mortgage seems very manageable and you're already overpaying it so that's a good start.

It is enough for my situation. We earn similar to you - although think I'm on 25k, DH on 28k. I'm possibly going to be a SAHM too (currently debating in my head whether to do this or go part-time). Baby is 2 months old. Our outgoings are most likely lower than yours however. After years of overpaying our mortgage it only costs us £278 a month..

I was talking to a friend about the whole lower earning partner (so often the woman) stepping back. And he made the point that if you decide to focus on the career of the higher earner the lower earner is going to find it much harder to develop her(?) career. So you bake in that split. And then the woman becomes default parent and hello 1950s.

@StrawberrySquash

I was talking to a friend about the whole lower earning partner (so often the woman) stepping back. And he made the point that if you decide to focus on the career of the higher earner the lower earner is going to find it much harder to develop her(?) career. So you bake in that split. And then the woman becomes default parent and hello 1950s.

This is so true. Happens almost by default, just because it makes financial sense. I would make some very different decisions if I could do it all again.

What if one lost their job.
Kids cost more as they get older, school uniform is bloody expensive

We had our first baby when we had nothing! We were young and starting out in jobs and I was at university. We made some pretty major lifestyle changes and it was fine, he has wanted for nothing. I appreciate that’s not really what you’re asking but I think it’s always doable, you just have to sacrifice some things.

Your outgoings seem very high . Your mortgage is only £450 per month , what is the rest on.

@yoyo1234 she has listed her outgoings

Your insurances look unusually high I would recommend rethink these

You can only go on today’s outgoing figures, no one has a crystal ball, 10 yrs down the line will see a humongous change. It’s like buying a house, that’s the easy part, running it is the the scary bit. You can never afford children,but it’s your choice, as is everything

@Lainey1988

Trying to answer all questions so;

Mat leave from my job is good. It’s not the first year I’m concerned about as we have some savings and could ‘do a year’ on my reduced earnings. It’s more about after that.

We own our house and have a small mortgage of 450 per month

How are your outgoings 2.3k ???

Considering your small mortgage your outgoings are very high. I would think you should have at least 1,5k available every months. What do you spend your money on?

Sounds like enough money to have a baby to me, unless you live somewhere very expensive, but I'd be less sure that it is enough to support a choice to be a sahm.

How much do you have in savings? I'd try and save up 6months worth of expenses in case one of you is made redundant or is signed off sick for a prolonged time. It will give you breathing space.

We have two children on similar income and with similar outgoings. It's hardest when they're tiny and you have childcare costs - for us, it coincided with remortgaging time. House prices had risen so our loan to value ratio had changed, meaning we remortgaged and were able to massively reduce our monthly payments with no penalties. You might not be able to do that, but if you're overpaying on your mortgage then I would suggest you save that cash towards childcare instead. The other killer is childcare through holidays - I suspect that might be something that really would cause us problems except for the fact that I work in a school so can look after our two in the hols.

You'll need to cut back but not dreadfully, and some of that will happen naturally eg fun money, You and your family will be fine, just not flush.

If you are already in your thirties, you need to get on with it, or it will be too late on the biological clock.