How on earth do people afford childcare?

[vivodare]

Hello everyone

From a slightly concerned would-be parent. My wife is in the early stages of pregnancy and I've begun to look into financial forecasts for maternity leave and beyond.

I commute into London (at a very hefty monthly train/travel cost) but between my wife & I our earnings are classed as high (£45k+) but real net earnings significantly less due to the above.

I've checked the Gov.uk site and others but it seems we're not entitled to any form of benefits. Average weekly nursery costs seem to run at ~£250 (?), plus essentials for baby would push net earnings to a significant monthly loss, in both scenarios my wife going back to work plus being a full-time mother.

I am slightly concerned but also mystified as to how people afford having children?!

Is there something we are missing or is this standard for all parents? Do any tax breaks or benefits means test net earnings less commuting costs or similar?

Any input from people in similar situations or in the know would be hugely appreciated!

Thank you all
VD

It seems quite normal for one parent to work "for nothing" for the first 3 years. In effect it isn't for nothing as it keepspaying into pension, keeps the career going, keeps the job open etc.

We couldn't make it work and moved out of london and now have one SAHP.

One SAHP is very very very common here as childcare is so expensive, but it is at a cost to long term career....

Yep, i would say it is pretty standard.

It's a bit shit isn't it. You won't qualify for anything at 45k - I doubt you would qualify if your wife quit assuming you are earning half the 45k. You can get childcare vouchers if your employer offers a scheme where you save the tax on care costs.

Lots of people I know went back to work to make a loss for a couple of years to get through the full day car situation. It's almost as bad when they start school if you need wrap around care though.

45kay be higher than the national average but It doesn't go far in london. It's £80 a day for daycare here - I have twins. The only way I was able to go back was because we had family to help out.

At one point I considered taking a job at aloss for long term gain (as in paying more to go to work than childcare for 2 costs....) but decided against it in the end!

Childcare vouchers help, as do grandparents.

Have you looked into childcare vouchers? Both you and your wife could claim them if your employer uses the scheme

www.moneysavingexpert.com/family/childcare-vouchers

What did you think would happen?

OP will probably have to join the new tax free childcare system though. I think voucher schemes close to new applicant this Spring.

You can both get childcare vouchers. Worth a google

When I went back to work I chose two days as the grannies offered a day each. Although childcare was free we lost £1300 a month. When I had my second child the grannies stepped in to look after the youngest and my eldest does one and a half days at nursery a week. Now that he gets his 15 free hours as he's 3, fees have gone from £378 to £141 a month. As of August both children will do two full days a week costing approx £675 a month. All this year we've been stock piling childcare vouchers bought with pre tax salaries through our employers to spread the cost. I bring home £843 a month after deductions, which we need. It's tight but we need to look at the long game. I'm paying into pension, the children are experiencing nursery, I've kept my foot in the door at work and can up my days as the children start school.

Family/grandparents
Childcare vouchers
Each parent drop a days work to do childcare
Change jobs to work opposite/evening/weekend shifts
Someone stay at home til school age
Move to a cheaper area to reduce other bills.
Suffer the loss for a few years.

I stopped working, we lived off a very tight budget until I went back to work and I got a better paid job being self employed so I could work around the children.

Now dp does the salary sacrifice /childcare vouchers for wrap around care and fees.

It is very hard op, there's no disputing it, we also have gone without a car in the past to save money.

Thank you everyone.

Any experiences on whether (strictly financially speaking) it's better to not work + look after child vs. full-time vs. work + nursery vs. half + half?

It really totally depends on what vouchers or new tax scheme gets you and your individual outgoings. Also think about your p's re employability after time out.

Surely that would depend on what your dw earns and a what job she does and also what she wants to do ?

Some careers can't survive a 3 year break, others don't matter so much

Yes were still recovering from maternity leave here. Still have an oustanding overdraft and credit card bill due to being skint on mat leave. Îs taking a while to get back on our feet tbh. I think unless you're minted having kids means you suffer financially, irrespective of income.

It gets better as they get older though!

Are you able to adjust your hours? Drop to four days or condense full time into four longer days? 1 day less travel costs plus a day of not needing childcare. Your wife may be able to do the same meaning three nursery days needed.

Also price up Childminders (often cheaper).

Your commuting cost is prob a big part of the problem (financially speaking, I'm not suggesting you start cycling!) - we were fine with me going back p/t but we both work 5 miles away, with free parking, so there isn't any real cost of going to work.

Nurseries tend to give a discount for f/t places so on a daily basis it is slightly cheaper.

The best way is to work compressed hours - if you could do 3 x 12 hour days for example, you would earn f/t money but only pay for 3 days nursery.

You just pay it.

I have a salary sacrifice scheme at my work which takes the Nursery payments out before Tax and saves about £120 a month.

I can't afford to have two children though and DH and I are looking forward to having a bit more money when he goes to school but not looking forward to having to find wrap around childcare which will still cost a fair amount.

If your wife ants to continue to work then I personally think it's worth the sacrifice to be a bit broke for a while to keep your financial independence (As a woman).

You need to look at it as a cost that is split fairly between the two of you rather than 'my salary' or 'my wife's salary' - by that I mean not falling into the trap of saying 'the childcare costs are almost the whole of my wife's salary' when in reality the childcare costs are partly paid by yours and partly paid by hers.

It really depends on your circumstances OP. I suggest firstly finding out what family support is available/ what family are willing to provide if at all (mine werent able), secondly i would source all available childcare options and find out what both company childcare voucher schemes are offering. Either party giving up work would be the last option i would go for but it is an option and sometimes the best one, it just isnt the one i would choose first. I worked for a loss and eventually gave up but i was also in a job i hated. I really regret it. Im retraining now and it is hard getting back into employment with a 5 year gap! If i was to do it again i'd really try and stay in work.

Time to get your calculator out and do lots of sums.

In the meantime i would be stashing away as much money as possible before baby is born to make the transition to maternity pay as painless as possible and give you a bit of a cushion.

£45k is a low income in London. Unless you earn six figures or have a council house, London is not a good place to live in/near.

Move away. Take a big paycut and move somewhere that isn't so fucked up.

It's probably worth taking a full year off, because nurseries are more expensive for younger children (because of staff ratios). The big question is about your jobs, and your career paths. Are your jobs such that either of you could just quit and then be confident about finding a job after a break of a couple of years? If you're both earning about the same amount at the moment but only one of you has huge commuting costs then it makes financial sense for that person to be the one who gives up work (if that's you then your DW could take as much maternity leave as you can afford first). At the very least you could take 6 month Additional Paternity Leave for your DC's second 6 months, and have your DW go back to work then which would be very cost effective in saving your travel costs (obviously if that 45,000 is split 30,000 you and 15,000 DW then those sums may not add up.

Do not fall into the trap of assuming that everything will be easy peasy once they start school, so DW (or you) should stay at home for 4 years and then go back full time when DC enters reception as if nothing had happened. It gets cheaper when they start school, but it's a lot more complicated, and that's the time that it's really really useful to have a part time job, especially if there's a commute at each end of the day. Bear in mind that it's much easier to negotiate part time hours with an existing employer who knows, values and trusts you than it is to argue for a part time role with a new employer.

I think you're too late to sign up for the old childcare vouchers scheme, which is a pity, because with only one child and two working parents you'd possibly be one of the group who'd be better off. However, you will be eligible for the new scheme which is basically a rebate of 20% of your childcare costs, which should help quite a lot.

Have you remembered about Child Benefit? It's £20.50 per week, tax free, which will help your budget.

Why is everyone talking about the wife's salary?

Have you considered becoming a full time Dad?

Everyone isnt.