How to Afford a Second Child?

[MiniLob]

My husband (late 40s) and I (late 30s) have one child and have been discussing a second but I'm not sure how we might afford it. We earn roughly the same, bringing home c.£3,400 and c.£3,300 per month (so £6,700 in total).

Our outgoings are:
£2,800 - mortgage
£340 - council tax
£300 - gas and electric
£100 - water
£700 - housekeeping (food, toiletries, bank account fee, window cleaning, any items we need for the house)
£600 - cars (fuel, repairs, tax, MOT, insurance for two cars, train fares)
£100 - nursery
£15 - TV licence
£83 - Virgin broadband and TV
£18 - Spotify
£13 - Netflix
£13 - National Trust
£3.50 - Woodland Trust
£3 - insurance for TV
£50 - home insurance (we set this aside to pay annually but it doesn't actually cover the full amount)
£40 - football for little one
Total: £5,178.50

Then we put aside:
£200 - holiday
£100 - savings for little one
£100 - clothes (for all 3 of us - husband gets through at least one suit and one wear of work shoes per year which eats into the budget quite a lot)
£100 - presents and Christmas (we spend £30-£40 per family member on birthdays and £75-£100 per family household at Christmas, £15 on Mother's Day/Father's Day, up to £100 on little one's birthday, then a main Christmas present and a stocking for little one at Christmas (probably up to £300 in total) - the budget also covers any other birthdays we have to buy presents for, as well as the cost of Christmas dinner and hosting over Christmas)
£100 - "fun money" in case we're invited to do something with family / friends or go to visit / stay with family or friends
£500 - me (personal money - charity contributions, mobile phone, gym / sports, alcohol, birthday / Christmas/ Father's Day gifts for hubby, basically anything that doesn't come from one of the other budgets, savings - I tend to try to put £200 aside each month in savings, donate £50 to charity and spend £250)
£500 - husband (personal money, as above, though I think his charity contributions are more than mine)
Total: £1,600

Total outgoings: c.£6,778.50

If I was to take maternity leave, I would receive full pay for 3 months, half pay for 3 months, statutory pay for 3 months and nothing for 3 months.

First 3 months: no issue
Second 3 months: £4,950 short
Third 3 months (assuming 13 weeks): £7,466.66 short
Fourth 3 months: £9,990 short

Total shortfall: £22,316.66

I would be able to use my accrued annual leave to receive a month of pay, so that would bring the shortfall down to £19,016.66.

We could obviously cut the holiday savings for that year, bringing down the shortfall to £16,616.66.

We could also ditch the "fun money", bringing the shortfall down further to £15,416.66.

We could reduce our personal money by £150 each per month, so £300 less each month, a further reduction in the shortfall to £13,016.66.

I think we'd struggle to cut down by any more. It also doesn't account for having to buy baby things (for example new car seats - the current ones we have for the little one were £650 each and we have two of them, but he'll still be in them for a few years so we can't hand them down - furniture for the baby's bedroom, clothes).

We don't have any savings.

So, any suggestions on how we can go about finding £13k to be able to afford a second child? Obviously, time is of the essence, given our respective ages!

I think I put in 5% and my employer puts in 3% (it might be the other way around, I'm not sure) but it's 8% in total. My salary was significantly lower 4 years ago and, at the very beginning of my working life (after Uni and post-grad), I opted out of contributing to a pension because I was in a full-time minimum wage job (with three additional part-time jobs) paying off my post-graduate loan at over £400 per month and those few pennies made a huge difference! The plan was always investment properties but that all went to shit (long story).

How do you clean the exterior of the windows one or two floors up?! I don't have a ladder big enough and I don't think I could stomach it, if I did.

I also don't think £25 per month is the deal-breaker, here.

That is what I'm looking for us to do but I can't see where we can realistically make enough cut-backs to hit what we need. I wouldn't really want a second child arriving much beyond a year from now, given our ages.

You have £1000 in personal spending money between you. If you genuinely can’t find £115 for a prepayment certificate you have much bigger issues than how to afford a second child.

In your shoes I’d go back over the last year of bank statements and find out exactly what you’re spending your money on. Then look for cheaper options for everything from utilities to insurances - £10 a month of 5 bills start to add up over a year and the money is better in your pocket. I’d then look at subscriptions and memberships and what I actually use, as opposed to quite like having. Then what you’re spending the rest of your money on.

On one hand you’ve £1600 per month going to various projects, and on the other you have minimal savings and can’t afford clothes or prescription certificate.

It sounds like having lived on a shoestring, you’ve never got used to budgeting a bigger income but even with a 6 figure income, you need to budget not least because your money will go much further.

I think I do, to be honest. When I think about being years down the line and not having a second, it makes me really sad. It also makes me sad to think our first time around was our sole go at it.

I didn't have the best experience first time around and I think I'd be able to enjoy it much more, second time around. I guess I also feel like we're missing a piece. My husband and I both have siblings, and we're really close to our families. I would love our little one to have a sibling and for us to be able to do things as a four.

It's also worth saying that we haven't had this current lifestyle for long. We had many, many years of living on a shoe-string, and we both got really knocked around by our work so we've had to make decisions to ultimately preserve ourselves. The last few months have been amazing and we're so grateful for what we have (where we're at had been years in the making). It's wonderful but it's also only now that we can actually start thinking about a second child.

I imagine that was a very demanding time for you both.

I've worked four jobs simultaneously in the past (one full-time 40 hours and three part-time, another 25 hours) it was absolutely knackering but it felt like what I should be doing and I didn't have children to think about.

Unfortunately, neither of us would be able to take on an extra job in our current position because we both already work a lot of hours over the working day. I've had a few 4am starts, recently, and my husband frequently works a few hours at the weekend.

Saying that, I was still at my laptop at midnight the other day and wondered if there was something I could find to bring in a bit of extra cash!!!

Are you close enough with either of your parents to explain the situation and would they be able to offer financial assistance? You could perhaps remortgage and release some equity when your deal ends to repay them. If one of my children was in this predicament I’d be happy to help them.

I know. When we signed up the prices had rocketed. They've come down loads, now, but we're tied into the contract. I think, for the same thing as we have, if we signed up now, it would be about £60/£65 per month and include Netflix! Absolute bummer. But the internet provision is so good and a lot of people have issues in our area so we're kind of tied to Virgin.

We wouldn't mind cutting the subscriptions to be honest - whilst we have some, we're not fans of that way of living. Saying that, I wouldn't want to lose Spotify because we play music constantly!

I know, we're extremely fortunate on that front. We were paying around £1k per month before the funding kicked in. It's been an absolute godsend.

Yeah, if we could kick some of the savings down the line so we stay cutting back for some time after maternity leave, that would really help.

A job move isn't on the cards. I have the dream job now (after my previous one nearly destroyed me) and the flexibility it offers means we will ultimately save money. The maternity pay is decent at 3 months on full pay and 3 months on half pay. The best I've seen in my profession is 6 months full pay but you usually have to have been employed by that employer for 1-2 years to qualify, so it would kick things too far into the long grass. I'd also have to travel further for a role in that sort of place so our costs would hike and I wouldn't have the same flexibility that I currently do.

Yeah, they're high. We bought the "forever home" and got £110k off the original asking price so it was a steal for what it is. Thing is, there was another house just over the road from ours which was £40k less than what we paid for this but is about half the size and needed a full renovation, too. It just didn't make sense to spend almost the same amount of money on something that's so much less.

We wouldn't consider moving out of our village, either, because all of our family live here and it's in between our two places of work.

Council tax is expensive in the area and we're in a high band. Our roads are still shite though.

We do have a lot but so much of it genuinely seems to go on "needs" rather than wants - for my part it does, anyway. I don't really spend much (with the exception of taking us out to dinner once every few months, and taking my husband for a night away once a year as Christmas or birthday present). He, on the other hand, burns through it and I've no idea how!!!

It is also probably worth saying we haven't been in this position for very long at all - only a few months. We spent many years living on a shoe-string. We've both had a very tough time in our respective jobs and it feels like we're now reaping the rewards of years of planning and going without.

I just wish we had a bit more time on our side.

This is a new lifestyle for us after years of being sensible, planning, shoe-string living. If we were younger, we could save over two or three years but I feel like we're in a corner, now.

I also wouldn't be surprised if in 5-10 years our financial situation has taken another positive jump and that £13k would be easily affordable.

It makes me sad that we're so close but also possibly just out of reach.

The idea of taking on a loan terrifies me but it might also be a drop in the ocean some day. And for it to be the difference between having a child or not... Well...

I feel bad for the younger generations. How are they meant to save for a deposit on a house, maternity/paternity leave etc with the cost of living so high and student loans so expensive.

We have to have a car seat in each car as we share the nursery drop offs and pick ups (i.e. one will do drop-off and the other will do pick-up). We work about 35 miles away from each other and nursery is somewhere in the middle so it's just not feasible to move the seats around in between drop-off and pick-up.

I am absolutely content for (and expect) things to change. What I can't square is cutting back realistically and being able to hit that mark.

Can you rent out one room to a foreign female student or worker?
Can you take in ironing for the last six months?
Mind a friend's child alongside caring for your six month old?
Cut the food budget due to eating more beans and rice and seconds of fruit and vege?
Sell a car? Sell other things?

Charity begins at home for a year.
Cut out all donations to charity, and all other expenses that are not absolutely necessary. Bring back things into the budget once you are back at work.

With your current spends you'd need 19k if you take a month annual leave. That means if you wanted to welcome the baby in one year, you'd need to save 1,580 per month. However that shortfall is based on your current spends, which you could easily reduce by few hundred per month. So doing the below might work.

Though like others have said, if you've not seen able to figure out yourself what luxuries you could give up to make your finances work, then it sounds like you don't really want another baby that much. And that's fine!

Our outgoings are:
£2,800 - mortgage
£340 - council tax
£300 - gas and electric
£100 - water

£700 - housekeeping (food, toiletries, bank account fee, window cleaning, any items we need for the house)
*drop bank account fee and window cleaning, +£30
*reduce food spend, + £50

£600 - cars (fuel, repairs, tax, MOT, insurance for two cars, train fares)
£100 - nursery
£15 - TV licence
*drop, + £15
£83 - Virgin broadband and TV
*drop TV, + £40
£18 - Spotify
*drop, + £18
£13 - Netflix
£13 - National Trust
£3.50 - Woodland Trust
£3 - insurance for TV
£50 - home insurance (we set this aside to pay annually but it doesn't actually cover the full amount)
£40 - football for little one

Then we put aside:
£200 - holiday
*drop, + £200
£100 - savings for little one
*drop, + £100
£100 - clothes (for all 3 of us - husband gets through at least one suit and one wear of work shoes per year which eats into the budget quite a lot)
*cut in half, +£50
£100 - presents and Christmas
*cut in half. Let everyone know you're having a tight year + £50
£100 - "fun money" in case we're invited to do something with family / friends or go to visit / stay with family or friends
*cut dramatically, + £70
£500 - me
*cut dramatically, +£300
£500 - husband
*cut dramatically, +£300

Total outgoings: c.£6,778.50
*Total savings: £1,223

The house is big. We have a smart meter. When we had the heavy frost over Christmas, we did use the heating more and it was £15+ per day. And, despite that, it just didn't ever seem to get up to temperature.

On the other hand, when it's not freezing and we just want to lift the temperature by a couple of degrees, it does so quickly and then maintains the warmth long after the heating has gone off.

We don't have any electric heating. We have brand new gas boiler. We also have brand new double glazing throughout (the windows were 40 year-old, single-glazed wooden windows when we moved in).

Checking the loft insulation sounds like a good idea. I know we do have some but maybe it could be better 🤷🏼‍♀️ And there's no harm in checking the radiators though they were all bled when the new boiler was put in.

I hope you're right! This would be wonderful!

To clean the windows? How else does the exterior of windows on first / second floors get cleaned, otherwise?

If I go back to work after 6 months, we'll need to find c.£1k for nursery. The 30-hours of funding doesn't kick in until the term after baby turns 9 months so it's not as straightforward as just going back early.

Plus, there's no way I could have gone back to work after 6 months with my first - I was still up all night with him and getting no sleep. I wouldn't be able to do my job on no sleep.

Yes, the charity contributions would have to go. It's a sad necessity but I'd be ok with it. My husband would take some convincing - it's his personality (he's a much nicer person than I am 🤣). I didn't know about the scheme though - I'll definitely look into that.

Yeah, we got screwed over on the TV / broadband package - for some reason, the prices had hiked at the point we were entering into the contract. It's now about £60/£65 for the same thing but with Netflix included 🤦🏼‍♀️ We could, of course, cancel Spotify though we have music on constantly so we'd really, really miss it. My husband is musical and our little one seems to be following in his footsteps (he's constantly singing, drumming, "guitaring" - it's very cute and very noisy - there are constant requests for songs!).

Yeah, we need two cars - we work 35 miles away from each other, in opposite directions and nursery is in the middle of nowhere! I also have frequent hospital appointments 50 miles away!

You say keep the trusts - what do you mean?

I'm not sure going back early would help much because we'd then have to find around £1k per month for nursery fees before the funding kicks in. The little one is currently in 31.5 hours per week so there's very little top up and I expect a second child would follow the same pattern.

Sadly, I don't think extending the mortgage is an option - we're already on the longest term they'd offer us.

We live in a pricey village but our little one only does 31.5 hours of nursery so the top up is only £100. Before we had the funded hours, we were paying around £1,000 per month.

I don't think a mortgage break would be doable because we maxed out on the term (expecting pay-rises in future to be able to overpay and bring down the term as well as, hopefully, some more favourable interest rates!).

I try to put £200 of my personal allowance into savings, yes. My husband doesn't know what savings are 🤣 I keep that money in case of an emergency e.g. part of the roof needs replacing or something like that.

The house is big and quirky. With the heating on over Christmas when it was literally freezing, we were paying £15+ per day. We've had a new boiler and double glazing (the house had single-glazed, wooden windows when we moved in!). I'm hoping we'll see a big drop when the weather improves but we don't run the heating as much as I would like to.

Really appreciate your suggestions. I keep running the numbers though and I still can't see how we get down to where we need to be. If we had two or three years to save, it'd be fine.

It is interesting the things people have picked up on as essentials/luxuries!

I really love this response, thank you.

I'm an extremely practical person and (usually) a problem solver. Our current lifestyle is new - we have done years of shoe-string living, before this. We very much appreciate the life we have now and we know we are fortunate/in the minority.

I can absolutely and easily cut down on luxuries but I feel we're finally at a stage whereby a certain standard of living is something we should expect of ourselves - e.g. my husband's work shirts are fraying and discoloured - I feel we should be able to replace those (we haven't yet!), our towels are 10-15 years old, hard, discoloured and fraying - I feel we should be able to replace those (we haven't and probably won't). We're not living luxuriously in many ways (and ways that I was brought up as being part of good housekeeping standards, if you know what I mean?). My husband also finds it a lot harder than I do to cut back.

If we had more time to save, it would be ok. We've gone without for years, before, so we can do it again but I'm just not sure how we can save enough in time.

I'd like to think we would, somehow, just make it work but the idea of not having a plan scares me.

Cutting out Netflix for a year is a saving of £216. We're £13,000 short.

No, we don't. But I think I'd very much like one.

We could definitely bring our personal allowance down but not be done with it entirely. It's just not realistic that we could not spend anything for a whole year (for example, our phones are paid out of our personal allowance).

I'm with you that I'd like for us to be properly saving. That's what I've done for the past 20-odd years, and we've done that together for as long as we've been able.

Yeah, we need the £600 per month for our cars. We used to have really old cars and they cost us a fortune to maintain. We bought newer cars (they're both 10 years old) and the upkeep is much less, the tax is cheaper, but our fuel bill isn't low (predominantly because of my husband's mileage) and the tax, MOT, servicing, insurance (and constantly having to replace tyres / alloys because our roads are so bad) adds up so that we do get through that in a year. I can't see it coming down that much when I'm on mat leave, sadly, because I'll still have the running costs.

I don't pay for the gym, any more - my husband was but he has very recently cancelled it. I think being active is really important though and, unfortunately, sports are expensive. I usually pay an annual fee to play cricket and then we have a charge to play matches. It's the same with tennis, which I've not played for years but really want to. We're fortunate that the annual fees are low but they still have to be paid.