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!

I know, we’re very lucky. But according to many on this thread I’m not a high earner 🤷‍♀️

@Mushroo retired HR here.

• 4 days is a good compromise because the element of gross pay you lose is the element that has the highest deductions. So your take home pay is reduced by less than 20%.
• Is it possible to work slightly longer days e.g. 8 hours instead of 7.5 as this means your gross pay reduces by less than 20%.
• Working 4 full days in my experience has less of a hit on your career than 3 days - it’s about presenteeism, sad but true for many people.
• try to make Monday your non-working day. Most BH fall on a Monday which means you get pro rata BH hours to take at a time of your choice. Nursery’s often still want paying on BH if you avoid Monday’s you maximise nursery hours.

4 days no question. The day together is priceless.

This free hours cutoff is nuts.
it just incentivised high earners to cut back hours and pay less tax 🤦‍♀️

Lord ,,

Are you using tax free childcare? I’m assuming you’re already getting some free hours.
I went down to part time hours too when I had two in childcare. My fifth day worked out at £12.50 net earnings for the day 🤦‍♀️

Our daughter is 14 now but I dropped days at work to save money this way.
There were no funded hours then or Tax free childcare, we weren't and aren't high earners but qualified for a small amount of the childcare element of Tax Credits.
I worked it all out multiple ways and no matter how I adjusted it i wasn't actually seeing any take home income for anything over 2 days (16 hours)
I didn't want that much of a hit to my pension though so I went back to work after mat leave 3 days a week and my partner dropped a day.
This way we both took a hit on pay but we only paid for 2 full days childcare a week and it means we'll both still hit our 40 years full time equivalent workplace pensions.
We still paid hundreds a month in childcare and only got £80 a month from tax credits.
It was a struggle until she started school tbh because even when the 15 hours nursery kicked in we could only use it in 5 3 hour sessions, morning or afternoon and we had to pay for wraparound either side 2 days a week.
Im glad we did it though! Our daughter had both of us around 2 days a week, dad another day and me another 2 then she was in a group setting 2 days a week. It was perfect for us and although money was very tight its nit forever.

Do you work offer a salary sacrifice scheme for nursery fees? Might be worth looking into. My partner uses one called Gogetta (might be spelt slightly differently!), but there are probably others.

Don’t be so quick to say you’d jump back to full time once both in school unless you have super duper reliable wraparound and holiday care. Even though it’s significantly cheaper it can actually be a logistical fucking nightmare especially if you’re used to 7-30/6pm every day of the year bar bank holidays nursery care

and as lovely as it is having GPs that can help you are better using them as emergency can’t go to nursery/school care rather than the normal because as soon as they go away or are sick or something happens that means they can’t have the kids that day you are stuck trying to cover them - an issue you don’t have with nurseries

Sorry OP, I earn similar to you but won't call myself high earner.

The other option is you both work 9 days in 10....
We both do full time and the kids are in full time too 8-6. However with a couple of WFH days per week it eases the evening routine.
Our school based wrap around has been fine so far but we run like a military operation in the morning and one of us has a v short commute.

When calculating what would leave you better off, have you taken into account employer's pension contributions?

Are you using tax free childcare?
I am not sure of what the funding is now but have you taken it all into account with free hours etc and if not available now when that will kick in for you. Like if in 12 months your fees will drop?
Remember that nursery feels like it is forever but those years soon and end if you are planning to stay in work then its better to continue on an upwards path as you will eventually move up in salary and the nursery fees will eventually end.

I was in a good upwards trajectory so decided to stay full time or that would have really stalled.
This has really helped us a few years on as DH had health complications and I have ended up being the main breadwinner.
We wouldnt have had that option if I had stalled my career. Quite honestly we would have been completely fucked.
You take a massive hit in losing out time with kids and paying nursery fees but it does really help as your kids get older and things change to be able to weather a storm with a good income behind you.

Let’s not be silly and sarcastically ask if it’s officially categorised. If you’re saying £100k (or whatever number you randomly pluck out the air) WHO says that’s high earning either?

It’s a social and statistical label that is shaped by a mix of data, policy and perception. It’s also not affected by whether you personally think £50k or £65k is labelled as high earning.

Since the median full time salary in the UK is £36k, then statistically at £50k you’re earning more than 75-80% of people – which makes you a high earner by data standards. Tax rules, such as entering the higher rate, also signal that institutionally you are regarded as higher income.

Let’s also not forget to not judge income by only London or south east standards. ‘High earner’ has a regional and cultural meaning – not just statistical.

It’s bizarre posters are bashing, OP, for using that label on herself anyway. It’s not even her questions – but of course Mumsnetters can’t bypass an opportunity to take someone down a peg.

A childminder would be much cheaper though I know they can be hard to get. Mine (in London) is £70 a day, £400ish per month for four days a week with the funded hours (was less when my daughter was 2 but very annoying the amount the government gives for funded hours for three year olds has been reduced, I guess to pay for the funded hours they’re now giving younger children).

And there’s a big discount on that £70 rate for the days in the school holidays that she takes my older child as well. Childminders tend to do bigger sibling discounts I think.

That’s a you problem.

Hey, is this just funded hours? As you can also possibly get tax free childcare as well?

You're on justmid 65k approx right to get that net?
Have you considered overpaying pension very marginally to bring that down for more tax relief and therefore just under the threshold of the higher earner?

Why is dads salary not in the mix, why is the burden solely on you?

Also look at child benefit - if your salary drops below £80,000 you can claim it. If your new salary is under £60k working 4 days a week it’s worth around £2k a year but tapers off the closer to 80k you get. It’s based on net adjusted wage so you can put more money into your pension to ensure you are below the thresholds.

But your husband’s salary also has to be under £80k.

I have three kids and student loans and worked out for every pound over 60k I earn I only take home around 30p…… (due to increased student loans, tax, repayment of child benefit), so i now keep it below £60k and add more to my pension.

Have you considered a childminder instead? They tend to be cheaper. DS nursery charged a flat day rate whereas my childminder charges per hour. We saved loads by swapping to a childminder and my DD got a much higher level of care there than DS did at nursery. Also if you can get one that collects from your child’s future school then long term they can both be in the same place for your evening pick up (which saves a lot of time and hassle!)

Better for your children to be four not five days.

I earn the same and I do consider myself a high earner, because I understand statistics and am humble enough to appreciate what I have. No faux naivety or “cool girl” attitude here.

Yeah well I earn 200k a year and consider myself to be on the breadline and living hand to mouth so there we go.

I'm not sure why you keep saying "high earner"?!

A salary of £65k means you'll get 30 free hours for both children and child benefit.

@BeeKee i earn £75k and i said ‘high’ earner as I generally am by most definitions!

Defo not missing anything, mine worked out the same. I saved money by dropping to 4 days a week as work and at nursery.