Can we afford a child?

[TheMD]

DP and I have been together for a couple of years and would love to have a baby at some point in a not too distant future. I'm worried about whether we can afford it without compromising the quality of our life too much, although I do realise that things will have to change.

We have a combined income of £50k at the moment although I would only get the legally required maternity pay from my employer. There are things we could easily cut from the budget (like the £80 per month gym membership and not strictly necessary designer make up) but I'm worried our lives will become an endless struggle to pay for childcare/find the cheapest possible holidays etc.

I do realise that the emotions and joys of being parents can't be measured in monetary terms but at the same time...We will still be the same people who like being financially ok. Not brilliant but ok.

Can we afford to have a child?

Do try it MD, it will make it all more realistic and you can see whether you'd be happy cutting back where you need to. It's self-imposed so if you do decide you want to have a last pre-baby splurge holiday or whatever you can (but don't keep giving yourself treats beyond his salary or it won't work). It's also important to see how your joint attitude to money works out too, are you both fully committed to the choices you are making and happy to pool all the costs even if one ends up contributing more financially?

Say you bring home c£1500 a month (which I guess it must be roughly if you earn a bit less than him) then try and save that for 6 months. We did that and were lucky to conceive quickly, we carried on saving in my pg so by the end we had 15 months of salary saved up. So £1500*15 would work out at £22,500 saved which would help towards options e.g. putting more down for a bigger house or overpaying on your mortgage to reduce payments for a while (we did this).

BTW, not wanting to be negative, if he is your DP not your DH, I would look carefully at making sure you are financially protected before giving up work to be a SAHP.

It's not the financial impact that will alter your quality of life, it's the sleepless nights and clingy Velcro person that will have the biggest impact!

Babies come pretty cheap, it costs more when they grow up tbh. The financial impact of kids is a long-term one, you'll be spending money on them for the next 20 or so years, so I'm not sure that your financial position now is as relevant as where you'll be when they want to go to Uni or buy a house.

Your life will change dramatically with a baby, but probably not in the ways you think.

If you wait until you think you're well-off you'll probably never have a baby, as there is always more you want to do and more you'd like to buy.

If you're not sure then you're probably not ready, as most people desperately want children or have them accidentally! To make a rational decision when you're not sure in your heart that it's a good time seems wrong.

The biggest cost I have found is childcare. When we had 2 at nursery, our bill was nearly £1000/month, for 3 days a week.

We don't really have holidays because of this, and can't add to savings.

If you can work around child care costs, other costs are incidental in comparison.

Just go for it!!
There is never a right time to have a baby but you will definitely regret it when you're 50 if you look back & realise you never tried to be a Mummy because you thought 50k was not enough money.....

Do you think babies are pretty cheap Lynda? Maybe the clothes etc are but surely childcare/loss of salary is huge. At our nursery a 1 yr old and a 3 year old (taking the govt funding) full time would come in at over £2K a month. That's the going rate round here, it's not a flash place. So if you want to have two kids then you either pay something like that or give up one salary or do a bit of both. OK that's only for the pre-school years but that is still quite a chunk of time and after that you either continue to lose a salary or have to pay after school clubs and holiday clubs (unless you have local relatives who will do loads of care for free and are guaranteed to stay healthy). Perfectly reasonable to think how you're going to fund that I think esp if you are thinking of buying a house and want to know how much you can afford.

On 50k it's not really affordability, but the life you want. Do you want fancy holidays, meals out, designer handbags, weekends away, or are you willing to give up some of that for children?

Also work out if you can break even on childcare once you go back to work, and are willing to pay out for 5yrs of that, then after school clubs/holiday clubs etc...

You decide/prioritise the life you want and budget to that life.

Ha... Yes OP.

You can easily afford it on £50K. Just make sure he's the right man for the job.

Tess- absolutely, I've read enough mn threads to know this :D But he has known for a while now that there will be no buns in this oven without a ring on this finger! (not tempting fate, of course) I'm oversimplifying but yeah, he knows that I need to be protected financially and every other way. Although I have no worries - he has made me a half-owner of his house (well, ours now) and is an exceptionally hard working and responsible man.

If course you can afford it,

Our mortgage is the same as yours, we have four kids and half the income.

But it has meant lots of sacrifices, but I know full well when I look back on my life that I will never regret the children over some material stuff.

But having kids is tough, amazing but tough.

PS we only have a three bed, not convinced you need a four bed with one child if you want to keep the holidays maybe give up a bedroom?

When we had 2 at nursery, our bill was nearly £1000/month, for 3 days a week. This is what gives me heart palpitations...HOW? That is half of DPs take home pay. Although I suppose if I work as well than that offset somewhat.

*then it offsets somewhat (I can spell, I promise!)

1 child @ £50 per day (that's cheaper end of the scale) is £250 a week = £1000 per month, x2 children = £2000 per month.

It's shocking really.

I think you can afford it. But if you are going to the step of having a child together, which is a huge commitment, I suggest you also look into marriage, or securing yourself and baby financially in case something should happen to your dp.

You dont want to become a stay at home mum, give up your career, let him pay the mortgage and all your expenditure, for him to pass away and his family stake a claim on your home. Leaving you homeless and with no access to family money or savings. Or, he buggers off with another woman, or ask you to leave because it is "his" house. Unmarried, you are very vulnerable. Especially if you plan to give up work..... I dont want to be the voice of doom, but it is worth planning for financial security for all of you. Like both of you being on the deeds and on the mortgage, next of kin, just to have the legalities in order in case you dont want marriage.

Thank you, Quinteszilla - some of this has already been done (my name on the deeds) and well, he knows I'm not having children unmarried.

There are ways to save on childcare though, voucher schemes, tax credits if your combined income is eligible etc.

I've always thought that maternity pay and help with childcare made the early years with one baby reasonably affordable.

Obviously once you start paying for 2 or 3 DCs then it has a bigger impact, but even so, the baby the self doesn't cost a huge amount, otherwise who would ever be able to afford to have one? Most families accept that a big chunk of family income goes on childcare to enable them to both earn or one parent stays home. I live perfectly well on half the op's family income with 3 DCs, so I realise that my version of affordable is probably quite different, but even so...

If the op's biggest worry is not being able to buy designer make-up and expensive gym membership then it's not exactly make or break stuff, so a bit of a dip in income until the DCs are all at school that shouldn't be the end of the world for someone who really wants DCs.

Childcare is not an expense of having children, but can be an expense of working when you have children.
My childcare expenses are constantly zero.

morethan - unless you were not going to work anyway, regardless of whether you have children, then giving up work is a huge 'expense' of having children. I have had chunks of SAHP and of working and the SAHP has 'cost' me more than the working because my usual take home pay was greater than the cost of childcare. That's fine but it means that when you're planning then you have to take into account the expense of loss of income or child care or a mix.

Tess

Yes, I see this I was just pointing out that everybody doesn't have childcare costs to factor in.
I'm aware of loss of income, but there again that might not be an issue in some situations.

Just to add, before we had DD we didn't think we had a particularly extravagant lifestyle but we did tend to eat out once a week and go to the pub at the weekend. £30 on each of these a week adds up really quickly, and obviously isn't really possible anymore!

Well yes if you don't work then childcare expenses are zero but the actual cost of not working is whatever your annual salary was that you have given up, normally higher than childcare would cost.
Op don't underestimate how hard people find it to get back into the job market after they have been a sham, thee are lots of threads on that

Lynda, I'm surprised that you think it's a 'bit of a dip in income' when the children are small. You mention all the saving schemes but they don't make much of a dent in the cost of care. I'm not sure about tax credit amounts but it doesn't sound like the OP would qualify. At the moment you can only get childcare vouchers if you employer does them, and the vast majority don't. Even if they do you only get tax back on a small amount and even if you claim the maximum and are in the most beneficial category it only saves you £77 a month. Even when the new scheme comes in it is only £2K max saving a year and that is if you spend £10K plus on child care. Statutory maternity pay is only about £130 a week.

Put all that together, if they both work full time (and giving up work will cost more):

1. if she takes a year maternity pay and gets the statutory minimum she'll average losing about £1K+ a month (less for the first 6 weeks but complete loss of income at the end). year 1 - c12K cost a year

1. When the child is under 3 if she were in our area then even if both parents were eligible for vouchers and were using the maximum possible it would still be over £1K a month for nursery full time. - year 2 and 3 - c£12K cost a year

1. When the child is over 3, using full nursery grant of 15 hours and full childcare vouchers - £750 a month for nursery - year 4 until school - c£9K cost a year.

Put all that together and even if you use the maximum help on offer then round here it still comes to at least £45K in the first 4 years (and that's assuming the child starts school the day he/she is 4, it'll be £54K for a Sep birthday child). Much more if you give up work. Much more again if you have a second.

Of course if you have grandparents etc who will help, live in a cheap area or were never going to work anyway regardless of children then maybe it doesn't cost that but it's enough to require significant planning for most people.

I agree, loss of salary and childcare costs are much more than a bit of a dip

I believe they are changing the voucher scheme for new applicants though, so that more people are eligible. It should help more people to get back into work after having a baby, especially if they only have one to pay for.

Sorry Tess, just saw that you mentioned the new scheme in your post.