What should the plan be? Childcare

[Thecostoflove]

My husband and I are thinking of trying to have a baby next year. We both work full time, I’ve finally found a job I like but I only earn £23,500, we live just outside London. My husband earns more than me but how would we afford to pay someone to look after the baby after maternity leave? So if I earn £23,500, childcare for full time hours will be even more than that. What does this mean? As I would technically be bringing no money home, just outlaying on travel and the added extra of nursery as it is very expensive. We will be no better off than if I went back to work or I stayed home and only my husband worked. Am I missing the point? Just feeling a bit negative, would like to work still, or even just part time. Just trying to understand if it would be better to wait longer and try to save as much money as possible, I’m 32 and my husband is 35.

First, you aren’t solely responsible for childcare. Reframe that immediately as ‘childcare will cost x% of our take home pay’.

it is hard. You need to do the sums and there’s no way round that - check an average of nursery fees, consider both of you making flexible working requests. Look up the funded hours which will kick in for 9mlnth olds in September (assuming there’s spaces near you) but do also factor in the top ups nurseries have to charge for that to work. You’re also eligible for tax free childcare.

it is also short term expensive - it’s a few years of pain but gets a bit easier after that

we’re v fortunate my mum does a day but we also ‘dropped’ a days work each (1 pt, 1 compressed hours) and made a choice to use a slightly cheaper nursery.

Also - if you do decide that you should be the one to stay at home and do the bulk of childcare then make sure you retain provision for pension, financial security and career progression and don’t sacrifice all of that as well.

From next September 2025, babies from 9 months old will be eligible for 30 hours of funded childcare per week, term time only. This is assuming your DH doesn't earn more than £100k.

The trade off is future career progression and earnings versus the short term hit. So whilst yes, you might be worse off working when DC is under 4 but will you be so much better off when DC starts school because you will still have your job and maybe some pay rises to boot.

Also tax free childcare, funded hours, one or both of you doing compressed hours, family help, childminder instead of nursery - all could potentially reduce the bill.

You make a decision to either

• spend 1 whole wage on childcare for a short time and use your time in work to progress and increase your salary as much as possible so that by the time childcare costs are over you are much better off

• spend 1 whole wage on childcare for a short time, you're happy with your salary and position as they are so maintain that for an improvement once childcare days are behind you

• become a SAHM, no childcare costs but ask no wage, go back to work in some capacity either part or full time once child is in school to improve your financial position.

There are ways to reduce childcare costs

• funded hours
• tax free childcare fund
• compressed hours over fewer days
• family help if you have it available

Assuming your DH doesn't earn absolutely loads more than you, it is highly likely you will be entitled to universal credit if you have a child. Run your circumstances through a benefits checker. That could pay most of the childcare costs if so.

Or you can look at it that you’ll bring home 100% of your wage and your husband will only bring in 50% of his?

You both made the child and will be bringing it up, therefore all costs relating to the baby should be shared. Do you share your money? If you are considering giving up work, then you need to consider how your are going to pay into your pension, if you are going to share money or if you’ll be expected to be given an allowance, what would happen if you were ever to break up, would you be able to support yourself, and how you would like to progress your career in the future.

Nursery is a short term cost with a big pay off as you’ll pay into your pension and hopefully progress your career and wages. You will get 15 free hours and contributions up to a certain about as long as you pay into the childcare account regularly. That won’t total your salary, probably barely half.

Not all nurseries are offering the funded hours. They don’t have to offer these hours if they can’t make the costs work.

Childcare is a joint expense, like the mortgage or council tax. Logically, it’s hard to break the view of taking the lower wage and working out if you’re any better off. Short term, often the lower earner isn’t necessarily contributing anything additional to the pot. Long term, you need to think about career progression, pension contributions both yours and the ones from your employer. Longer term you will be in a financially better position for continuing to work, it’s just the short term.

When you’re pregnant you will need to talk to some nurseries, see if they are offering funded hours and if so how they are offering them (the nurseries that do offer them, don’t necessarily offer the exact same way). What are the day and hourly rates. How far away from your work and your husband’s work is nursery? If you’re in a normal office job (not a teacher, nurse, vet etc.) you and your husband might be able to compress your hours or drop a day. If you have flexible working you might be able to start late and do drop off and work late and your husband starts early and finishes early to do pick up so you might only need 9-3 if you can find a cheaper school hours only nursery. You also look for a childminder and see if they have any availability, they are usually a bit cheaper. If you make friends while on maternity leave you might be able to do 1 non-working day and they might be able to do a different non-working day and you look after each others kids on those days.

Basically, get a spreadsheet and keep playing with scenarios until you can get to amount that you can afford.

Don’t forget that by working, you will be paying into your pension which is something a lot of people forget about when deciding to give up work to have kids.

Unless your partner earns more than £100k you’ll get tax free childcare and also 30 funded hours (term time but can be stretched). So it won’t be as much as your salary, you’ll get some money each month in your salary, pension contributions, and be in a good position when the nursery years end.

@WhereIsMyLight then people can choose a setting that does, including childminders. I know probably 30 childminders and they all offer funding.

The 'it's 50% of each salary' argument doesn't need to be so literal. If op goes back the amount of her salary will be childcare whether you split it 50/50 or not. The net result is the same.

The only argument is that it will be worth it for the pension? We have no family help at all unfortunately, I am band 2 NHS staff FYI so and also my department is small, there is no opportunity to get a pay rise, I would need a new job elsewhere for this. The way I look at it is, we take home my husband’s salary and I get to look after my child all the time. OR we take home my husband’s salary (or the equivalent after paying 50/50 for the childcare bill) and I won’t be in the house for 40 hours per week plus travel time. For the same amount of money either way you look at it?

My husband earns more than me and he is self employed, so he can’t just reduce hours, that would lose us more money, it’s better if I take the hit, after all we are married and it is one pot. I love having my own money, own independence but is it worth not seeing my child to bring home £0 until they go to school? I’ve checked nursery fees, they are actually more than what I earn. Nursery’s also do two sessions per day, so even if I only need nursery cover until 5pm, I will still have to pay until 6pm is this right? If I pay a nanny, she will be expecting more than £23,500.

I’m thinking that either way, we will lose all of my earnings in the pot, until our children go to school, because I don’t earn a high enough amount. This makes me feel so sad, and I wonder should I even be having a baby? We have a mortgage and have worked so hard to save money, all of that has gone on the house, and furniture etc. now it is time to look to having kids, after we’ve had a bit of time to settle in, I feel like there is no hope of having it both ways. It would have been nice to have a job so I could have independence and some money. I am interested in finding out more about the funding/free hours, how does this work once the child is 9 months? That might make it worth it, if I can claim some free funding. Otherwise I might as well stay at home, or just work like 2 days per week to keep my job experience going. We would still lose out but at least it won’t be full time.

As long as your DH earns less than £109k you’ll get the funding. By the time you would need nursery it will be 30 hours from 9months old, which actually means about 22 hours a week stretched for a whole year. You’ll also get tax free childcare, which is up to £2k a year off fees (20% of fees up to a £2k cap), you get this as well as the funded hours. If your DH earns less than £60k you’d also get full child benefit.

Have you looked into childminders? They are usually cheaper than nurseries. There's pluses and minuses - we used a nursery but have friends who are very happy with their childminders.

It also depends on what you think will make you happiest. For me, it was PT work, so I had some 1-1 time with DC but also had some time away with purely adult conversation. As a SAHM, personally I'd have been a worse mum and I'd have also felt resentful of DH. And you probably won't know how you will feel until after having the baby and experiencing being with them for maternity leave, so best to make arrangements for childcare which you can then cancel if not needed.

Also, even if nurseries don't take the funding for babies, they are more likely to for 2-year-olds and even more likely to for 3-4 year olds, so if you choose to take a whole year of maternity leave then it's not likely to be for much more than 2 years maximum. On the other hand, you could choose to take the 3 years out as a SAHM and then go back when they turn 3. Or wait until they start school.

@Thecostoflove
I live in Z2 London (just explaining location for nursery costs). My 2yr old now gets 15hrs free. You’ll have double that. You will get up to £2000 a year in tax free childcare. With the 15hrs free, nursery is now £1k a month (for 40hrs, you may have to add on a bit if you want an extra day as we do 4 days a week).

So with your tax free childcare, that will be around £10k a year (maybe £12k if you need the 5 days). That’s definitely worth going back to work for.

Honestly, if your husband is self employed and can’t take any leave, I think it’s vital you have an income. What if something happens? He’s not got a company or sick pay to fall back on.

It’s really important. Women’s earnings, financial independence and long term savings are massively under men’s in the UK and it starts with exactly this way of thinking , that childcare is HER salary. It ignores all the other benefits of working

With outstanding rated childminders in Hillingdon and the 30 hour funding full time care for a years between £5500 and £6500
Ring around your area and get costs.

it’s better if I take the hit, after all we are married and it is one pot.

I have seen so many women on here take that attitude, ‘take the hit and give up work for years and then are absolutely stuffed when the bloke gets ill and can’t work/leaves them. They’ve had years out of the job market so struggle to find anything other than minimal wage roles.

Also, the hit to the pension may sound like nothing now, but in time, it’ll start to sound more important.

Our childcare bill equalled the equivalent of my salary for over two years.
It maintained my skills, my sanity and the power balance in our marriage, and over 20 years on my pension looks great.
As woman who would highly likely be left with any DC in the event of a split, always plan for worse case scenario and always think long term.
Never ever a single regret.

To be fair to OP here though, she's already in a minimum wage role! So not much to 'lose' there, it's not like she'd never be able to get another minimum wage job in something after some time out of the workforce.

That’s exactly what I’ve been thinking

Very good points to be fair, feeling like I have a life of my own and am contributing will be a good thing.

Childcare is bloody expensive! Childminders can sometimes work out cheaper?

by the time you hopefully have a little one the funding will be in place, most nursery’s will balance it out over the year so it works out about 2 days a week are funded for you over the year. The rest you can claim the government tax free scheme so essentially they pay 20% of the bill for you.
We’ve just decided to start trying for our second knowing pretty much the same amount I earn will be going on nursery and wrap around scope fees. Grandparents helped with our first but due to ill health probably won’t be able to with number 2. I choose to work and will again choose to do so when number 2 hopefully comes along, some people love being a SAHP … it would drive me insane no matter how much I live my children xx

Childcare is expensive but with the tax free pots and new hours coming in, you're looking at more like £8-10k/yr, not £20k+.

A SAHM with a self employed dad is a very vulnerable position financially. For the whole family and also for each individual.