High earner but nursery fees still more - am I missing something?

[Mushroo]

We’re due our second next year, and I’m planning out nursery etc.

Im a ‘high’ earner on paper, but I still think I’m better off dropping to 4 days a week, am I missing anything? (I currently work full time with one at nursery).

(we have grandparent help one day a week, so the decision is me at work full time, and 4 days at nursery, or me 4 days a week and 3 days at nursery

Cost of 4 days a week at nursery after funded hours and tax free childcare.

• £669, two kids = £1338

3 days:

• £376pcm, two kids = £752pcm

Difference in price = £586

My current take home is c. £3550, after student loans and pension contributions.

I had a look on the salary calculator, and keeping my pension contributions the same (so I don’t lost out there) the take home for 80% is £3100.

So I’d be down c.£400pcm dropping my hours, but the price difference in nursery fees is £586.

So I’d be almost £200pcm better off working less?! Is that right or am I missing something obvious….

If that’s right it’s mad that a ‘high’ earner can’t out earn nursery fees!

Better off in what sense.., financially? But presumably other factors as well!

Have you considered what happens longer term when the eldest starts school and childcare costs drop? Will you easily be able to go back to five days? Will working four days impact your chance of pay rise/promotion? I'd look longer term.

Have you checked with the grandparents that they're ok to have two children now? They may be expecting you to put the eldest in nursery on their day or maybe just don't want to look after two kids. Make sure you ask explicitly and don't just assume they're fine with it.

Why are you only taking your salary into account? Why isn't your children's father's salary on these calculations?

When does the eldest start school?

2 children in nursery is very expensive. It’s a numbers game. Your earning power remains the same no matter how many children you have, but nursery costs more than double (babies cost more). You can out-earn one child, but few can out-earn multiples.

Check if the nursery has a sibling discount, ours did!

@NuffSaidSam definjtely. We currently just use my mum, so we’d rope in the other set of grandparents to have one child each - 2 together is way too big an ask!! But will definitely double check that before committing.

Long term wise I want a different job anyway, and if I can’t see any issue with going back to full time (which I would want to do once they’re in school).

@TheNeighboursComplain one of us needs to be off to make it work, we can’t both take half a day a week, it would be a logistical nightmare, and frankly, I’d rather do it than DH. So his salary is just constant throughout.

@Egregiousabsolute eldest starts school in September 2028, and I’d be looking to drop to 4 days from March 2027.

So the length of time is quite short.

Have you looked at how much it would cost for 2 siblings at a childminders? When is baby due? How long will you be taking off for maternity and when does eldest go to school?

Sorry wrote that out at the same time you responded!

I would drop to 4 days!

It was financially better for me to work 4 days than it was to work full time when DD at nursery.

Full time tipped me in to 40% tax, 0.8FTE put me back at 20% and once childcare factored in it was a no brainer as I also had a BTL and that was then taxed at 20% instead of 40%.

I am just returning to full time now as DD has gone in to Y1. No regrets! It was better for me and DD to have that day together.

I think the difference between 3 and 4 days is due to "free" hours: assuming 10 hour day, you have to pay 8 hours for 3 days but 18 for 4 days, so it's double increase rather than 30%. And of course you only get 60% of salary on the last 20% of your working days so makes more sense to lose them. It's a bit crazy that government encourages people to work part time and pay less taxes but that is the setup.

I’ve worked four long days since I had my children because of childcare costs I was worse off working on Fridays, and because you had to pay nursery to 8am -6pm it made more sense to work 8:15am-5:45pm.

Thanks all, seems I’m not going mad and 4 days is the way to go!

I might even be able to condense my hours a bit and do 85% and still get a day off, which would be even better.

@Decembersunset that’s a good point and explains the jump. I’m also higher rate tax, so between that and student loan the increment I’m actually losing is quite small.

80% of £3550 is £2840, so these figures don't make sense, especially if you are keeping your pension contributions the same.

Why is your salary not reducing by at least 20% for a 20% reduction in hours? This is probably the crux of the matter, rather than anything to do with nursery fees.

@WilliamBell i think it’s because of tax and student loan - they go up at a faster rate the more you earn, it’s not a straight line scale.

There’s also the added benefit that I’ve not factored in that we’d keep more child benefit by me dropping down.

Agree. The figures don't add up.

Does your nursery do a sibling discount? Most do.

Nursery fees should be equally split by you and your DH.

If you’re high earners why is the household income only £3550 a month?

HER salary is £3550 a month

You’re not a high earner then. High earners do put earn nursery fees clearly.

A high earner in the UK is classed as over £50k – if that's her monthly take-home, then yes, she is.

I was the same. Did 4.5 days condensed into 4 while I had two in childcare and saved a fortune. There's a big difference in 3-4 days with childcare as you switch from mostly free hours to paying the full rate for the final day.

classes by who? I guess it’s into the higher rate tax, but they’d still get child benefit and reduced nursery fees.

Im a teacher and earn £65k (well I’m part time, but I would) I’d hardly call myself or my colleagues high earners.