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!

Could you easily increase hours again if you drop them? I can't do my job PT so plugged away with both doing 5 days until first started school in September (25 month gap).

To make it better financially, I didn't go back to work until second (May 23) qualified for the 15 hours in the September. To do this I saved all annual leave from finding out I was pregnant, tagged that and bank hols onto the end of mat leave and took a month unpaid. I know it's different now, but DS1 was 3 in April but still not getting the 30 hours until September as he missed the cut off by 7 days 🙃.

The other thing we did was alternate the same day as annual leave for 7 months so we could have them at nursery for 4 days during that period as the 4th and 5th days are proportionally more expensive with the funded hours.

I will say now DS1 is at school and second still at nursery, I'm absolutely shattered. I'm only working FT for the income multiple so we can move, and hope so drop a day or two after. It's not for the weak, and I feel like I'm constantly behind and overwhelmed. That said, we have no help either, so it's literally just us two.

I think the question should be why are you honing in on something so irrelevant? It’s just a bit of wider context, on MN if you don’t qualify that you understand you’re earning more you get an avalanche of “read the room, if you earn that much you can work it out yourself”. Do you have anything to add to the discussion other than the chip on your shoulder?

@Mushroo If you are (both) on £75k I would suggest you both use pension contributions to bring down gross (taxable) earnings to below £60k, to keep entire child benefit, and potentially to £50k to reduce the 40% tax, as that is £100 in your pension rather than £60 take home!! Your retirement pot is fundamental and so many women ignore this priority, there is a massive gender gap in pensions and retirement. And tbh who wants to work until 68!

I am in a similar situation and work condensed hours rather than losing the pay, and put more in pension. If you can do 85/90% over 4 days that is perfect. Spend time with your children now it is invaluable and you will never get it back.

Can hubby do the same or even 9 day fortnight each? I encouraged my OH to do this since first went to nursery and it has absolutely made his bond with kids stronger having the 1-2-1 time doing activities like gymnastics or just outdoor walks. Parenting is a 2 player game.

The income cap for higher earner is based on your taxable income. You can overpay into your pension to reduce your taxable income to below 100k meaning you would be eligible for free nursery hours. As well as childcare costs this has the before of avoiding the 60% effective tax rate on income over 100k (because your pension will be tax free) plus accruing extra in interest over the years. So it can still make financial sense to work full time, but only you will know of it is worth it for you and your family

Presumably because it is whether or not the OP works 4 or 5 days?
If she is the one dropping the days then they don't lose the husband's wages 🤪🙃

Defo drop to less days, more time for you and your family and less cost. Have you been able to get the free funded hours yet? Xx

you cant put a price on time althoigh being part time will still mean a ful time workload. I took the time. If you remain in same job i should think you will easily be sble to up the ladder if you feel ready too at a later date. I never managed it but the 2 years full time with young adults was too much gor me it gets harder less energy to look after kids amd house in your 50s, i acually wish i kept to 3 days as that was uptopia and had less. I cant get 3 days a week back no employer wants it,

What about a childminder? Surely a woman at home wouldn’t charge that much?

Haven’t read all the responses so apologies if it’s already been suggested, but would condensing your hours be an option at all? I do full time hours over 4 days, so I get a day off with my son, and one less day of childcare fees, but with no drop in salary. I know it’s not possible in all jobs but definitely an option worth considering if it could work for your job.

Only????

Yes you are better off.

If you can move to 4 days on same job etc…just do it. In not too long, it might be the norm anyway so…

congrats Op on your second! I earn more than that and I don’t consider myself a high earner. Not sure about the funded hours. I think you can get for both - did you add this into your equation. I didn’t qualify for the child care benefit but was told if I did choose to take it I would have to pay a higher child benefit tax back. Bear this is mind too re: your expenses. Is your calculation per term per child? Or month per child?

Op yes you are correct. For me (I'm only on £40k ISH) but it definitely worked out as better financially to work 4 days instead of 5 and have the children in nursery less. It's due to using less unfunded hours at nursery (as they are only in for 3 days) and that you save on tax by dropping your income a bit.

But also the huge benefit of having a extra day with your children when they are young and also a day to take care of housework and shopping etc.

Do it!!

Thanks everyone. I think I’m fairly decided to do it, but probably won’t raise it with work yet!
Last mat leave I used my accrued holiday to do 4 days a week for 6 months, so I might do the same this time before I ‘officially’ drop.

I’m going to ask for 85% over 4 days. I’m comfortable with my pension, between me and my employer 22% a month goes in so I’m happy with that, and I might up my percentage too so I don’t lose out too much,

The nursery fees I’ve quoted are after funded hours and tax free childcare.

I think the child benefit situation will stay about the same due to DH but he also does large pension contributions so we don’t pay back too much.

I actually had a random day off today and it was so nice, it’s really made my decision to move to 4 days.

(and the other thing I’ve learnt from this thread is that I am both a high earner and not a high earner 🤷‍♀️)

Oh do bore off with your passive-aggressive judgement. Working parents love their kids just as much as non-working parents.

I would do it! In fact I did!
We don’t have grandparents help.
I dropped to three days. It was the best decision, even with my eldest in school that is when I do all her activities, after school which I couldn’t do if I was at work.
The only spanner I would put in is that you often end up working harder part time. You have the same deadlines and expectations (just less time to do them!) I often miss out on important information too. My job would be easier full time, my life would not though!

Definitely drop. I dropped to 4 days when I had my youngest and I didn’t regret it. Not for financial reasons, but I wanted one day with her and be able to collect my son from school directly once a week.

Bollox there wasn't any mention of wanting to spend time with her kids it was all about saving money. It's a sad world.

um that’s just a given? I wasn’t canvassing opinions on whether I’d like to spend time with my kids, I was just asking that I’d not missed anything obvious with my calculations as I was surprised it was also financially better to do my preferred option of more time with the kids.