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 don't think cutting the mat-leave short would be an option. I got no sleep with my first and there's no way I could do my job if I also had to be up all night, every night. Plus, we'd need to find around £1k per month for the nursery fees, until the funding was to kick in.

Yes, my salary should go up in a few years' time and, potentially, quite significantly. We're fixed for 5 years on our current mortgage. We both work 4 days. If we absolutely had to (so as to avoid losing our house) we could work full-time but we were both really ill as a consequence of our jobs, previously, so that's a step we'd only take if we absolutely had to. In all honesty, the hours we do equate to more than a full-time job and when we were full-time we were doing a lot extra then.

As to future needs, you're absolutely on it, there. We both grew up doing sports and playing instruments, so it's something we'd really like for our little one. I think that'll be the point at which our personal allowance comes down to pay for things for them. We're putting away £100 per month with the intention it'll go a long way towards their tuition fees (if they go to university) or be a good chunk of a deposit for a house or help them set up a business... Ultimately, whatever they need when they're starting out as an adult.

We already do a lot at home with sports and music, and I'm encouraging a second language. We're doing our best to broaden horizons without spending the money but one day we absolutely will be paying for those things. Hopefully, by that point, I'll be earning more and the interest rates will be a bit more favourable!

Christ knows how we'll ever be able to afford driving lessons, though 🤣

We did have savings until we moved and we're basically just sitting on our hands for the next few years, assuming our financial position will change again in 4-5 years' time.

The pots that we put money into now are building up in some areas (for example, we've barely touched the "fun money" and the cars account was building up, then we had bills of over £1k so that went down). The idea is that while we don't have massive savings, we do have little pots here and there for specific things that might crop up. I have about £6k in my personal savings which I kept for emergencies. If things were absolutely dire, we also have the option to go full-time with work. So we're not at breaking point with no room - there are options, should we ever really need them.

I hope your children are doing ok, now, after needing medical intervention.

You could cut the £90 a month you spend on TV now. You could also cut things like Spotify and Netflix national trust etc none of that is essential. Or choose one or two you use the most and cut the rest. You need broadband obviously but the TV part can go.

Also perhaps you need to consider if a 2nd child is more important than having 12 months mat leave. Lots of people don't take 12 months. With my second I couldn't afford to. I got 6 months full pay, could afford 2 months of stat and then a month of leave and returned at 9 months. Your mortgage repayment is very very high so I presume you're either living in London or have a large house - you have to work around what you can afford if you want to retain this.

What about childcare costs?

You don't need £600 car seats and a budget for baby clothes. You can get very good safe car seats for 1/3 of that. You can buy second hand clothes for the kids from vinted etc.

Your lifestyle is quite expensive at the moment. If you really want a second you will have to rein it all in. Your fun money can stop now so you can save more whilst you TTC / are pregnant.

Can you sell items you don't use on vinted etc

What baby items do you really need? Presume you have a cot, pram etc and all the bit stuff so you need a car seat and perhaps some clothes but surely you can reuse a lot from your 1st?

That's incredible!

How much is your mortgage?! To be able to cover everything on £1,500 must be so tight.

Our first house was a little, ex-council, 2-bed mid-terrace and the mortgage was over £900 per month by the time we sold it. Chuck in £200 for council tax. £100 for gas and electric. £50 for water. That would have left us with £250 for buildings insurance, maintenance of the property, childcare costs, food, toiletries, cleaning items, clothes, shoes, internet, running a car/travel to work... How on earth is that manageable?!

We have done very basic living so we do know what it's like.

When we got married, I worked a full-time minimum wage job and then worked another three part-time jobs on top of that to try to make ends meet.

In our first home, the only furniture we had was what had been donated to us. We had a £200 monthly budget for food, toiletries, cleaning products, clothes and any incidentals. One night, we searched the house for every spare penny we could find (literally looking down the back of the settee) and came up with enough to buy us each one drink at our cheap local. We were delighted. On the way, we found a fiver and we were over the moon because it meant we could have two drinks each.

I'd be more than happy saving over 2-3 years but to wait that long means being in our 40s/50s which just seems too old. If we had more time, it wouldn't be an issue.

Also finding at nursery kicks in now at 9 months so it would not be 1k per month.
You would reach the threshold for 30hrs funding so if you strech that all year round rather than term time it would be 22hrs - 2 full days plus a few quid off the bill. You both work 4 days anyway so if you have different work free days to each other you can pretty much have a funded nursery place.

Reading your post it seems like you want a second child without having to either earn more or spend less which obviously is not going to happen.

You really now neee to consider what is more important. 2nd child or current lifestyle.

Your post says how can you save £15k so people have given you the advice but you don't really want to make any of the sacrifices.

You both earn a lot of money - about the same individually as me and I'm a single income household with 2 kids! I also work 4 days in a very high demand role So we are living on half of what you are as a household and my youngest didn't get nursery funding until he was 3. It absolutely can be done but not if you want to maintain a lifestyle like you are. I also work 4 days as also work in a very high demand job so I do get it but being home more means less money to go round so you have to cut back.

You're pretty much spot on, to be honest.

We've always budgeted really carefully and had to watch the pennies. We've recently completely changed things (sold investment properties, moved house, came up with a new financial plan) with the intention that we (largely) don't have to think about money and our needs are covered. Almost financial freedom. We've set budgets we know we can stick to.

The area with most flexibility is definitely the personal allowance. I wanted this to be smaller so we had more available jointly but it was something my husband was pretty much adamant about (after years of not being in a good financial position and he felt that was what he needed to be comfortable and not risk going into his overdraft). I save a good chunk of mine (I've always saved) and I can go without very easily. I find it a lot harder to do that, being married to a man who likes to spend.

It's why the £115 for the prescription thing hasn't just been hanging around - I have the money in my personal allowance but it's a "joint" spend. I honestly don't care where the money comes from to pay for things (I'm forever saying - I'll buy what we need from my money) but my husband gets upset about me using my personal money on joint things, rather than using joint money for joint things.

I appreciate it might sound very odd to the outside. Let's just say we've been on quite the journey, financially, and where we are now is a recent and drastic change to our way of life. If we'd been in this position for longer, we could have made some cut-backs earlier and saved over a longer period.

But we are where we are. I just wish we were a couple of years younger.

Yes, we are, and that may be something we do but only as a last resort and for the minimal amount.

I really love this response - practical and creative. Thank you so much for taking the time to respond.

Our house is absolutely big enough to rent a room out but I don't think I'd ever be able to get my husband on board with the idea. We considered an au pair, previously, and that was a "no" due to privacy issues.

We also absolutely need two cars otherwise one of us wouldn't be able to get to work!

I am so, so grateful you've taken the time to go through this in the way you have. I get the savings to £1,023 per month but that would still be £12k over a year. That's a huge amount!

I'd absolutely do it.

Whether I can get my husband on board is something else.

I manage our finances but the decisions are joint ones and so the current plan is a negotiated agreement. If left to me entirely, I could cut down massively on certain things because I'd absolutely slash the personal allowance and do away with the "fun money". Neither of us are tied to the subscriptions - they're things that have crept in over time. The one exception is probably Spotify because we have music on all of the time!

Thank you, again, so much for your input. I really needed an outside eye on this.

Unfortunately, we're tied in with the TV/broadband package. We got really unlucky that the prices had hiked when we took out the contract. The equivalent is about £60/£65 now for the same thing but also including Netflix. I can't remember how much the broadband package was, on its own, but the difference also wasn't all that much (we had a much cheaper mortgage then, too!). Internet in our area can be really dodgy and because I sometimes WFH, we need a good connection which only seems to come from Virgin, where we are, so our hands were kind of tied.

Cancelling the other subscriptions wouldn't be an issue (save, perhaps, for Spotify because we have music on all the time).

As much as it would pain me to take less than 12 months of maternity leave, I have considered it. The problem is, we'd need to find around £1k per month for the nursery fees (before the funding kicks in) and, if we had another non-sleeper, there's no way I'd be able to work after being up all night, every night.

We're not London but we're in a relatively expensive village and the house is big (but it didn't cost that much more to go big, than average - £40k difference).

Childcare costs are fine, so long as we have the 30 funded hours. Our top-ups are around £100 per month. Our first born would be in school by the time a second was off to nursery so there'd be no change, there.

The car seats are the safest and because they are ERF that are suitable for newborns, we only have to buy one when other people may be buying two or three seats, so they work out about the same, in the end.

I do buy off Vinted though I've been stung a few times. I'd obviously look to re-use as much as I could but our little one grows so slowly that quite a lot is worn out! I wouldn't be expecting us to have to buy tonnes of clothes but we'd definitely need more. We had very few for our first at the newborn stage and, as they were a reflux baby, we were getting through 5-10 outfits per day so everything got washed over and over and over. It was all from Matalan so not the best quality. We've kept everything but I would need to have a sort.

Totally agree on the lifestyle change. We did it last time around - I only got maternity allowance, before - and it was great fun. No issue with that, to be honest. Baby is enough entertainment! It's the saving beforehand that's the problem and being able to put away money quickly enough.

I think we've only spent £100 out of our "fun money" savings in 6 months so that is just sitting there and will hopefully continue to build up.

I don't think I have anything to sell on Vinted at the moment but it's certainly something I'd look to do once we've had our use out of things. I've also kept all the boxes for toys / baby items so that when we're done with them, they can be sold boxed. Most of the toys / baby items are in very good to immaculate condition so they should sell and, hopefully, someone will be able to have some really nice things for not a lot of money.

Yeah, we'd look to reuse as much as possible. We'd need two new car seats (one for each car and I'd want the same ones we already have - they're also the most compact and it's a squeeze behind the driver's seats), bedroom furniture (our first born is still using his and will do for many years!) and just a few clothes.

The funding doesn't kick in until the term after a child turns 9 months so, let's say a child turns 9 months in April, that funding wouldn't kick in until the September, by which time the child would be 14 months old.

We only need a term-time place. Our little one is in nursery for 31.5 hours per week (as we have different NWDs) so, yes, we are almost entirely covered by the funded hours - the top ups are around £100 per month (if spread over 12 months). It's been life-changing having the funding kick-in at 3 years old.

I am absolutely content to cut down on spending. I find it easy to do that when it's only me in the picture. My husband has a very different relationship with money. We've worked together over the years on our finances and where we're at now was the negotiated agreement. I'd have gone for a far smaller amount for the personal allowance and not bothered with the "fun money" (of which we've only actually spent £100 of it over 6 months).

There's also the consideration about what impact there might be on our first born to be able to have a second. It doesn't feel fair that he should miss out, though I appreciate that's simply the way it is!

I never had another one. I couldnt afford it.

You've jumped the gun on timings by going for the big property and expensive lifestyle before you've completed your family and putting the genie back in the bottle now is going to be hard.

You describe a lot of changes to finances and lifestyle in a short space of time, selling assets and going from a shoestring budget and 4 jobs to promotions and a v comfortable lifestyle with a large home.

What discussions about adding to your family did you have before purchase and who and what was driving the move and why couldn't it have waited until you'd had a second child before stretching as you aren't particularly old and it's not uncommon to scrape by for the nursery years. You keep saying your DH isn't willing to compromise his monthly spending, how invested is he in a second child?

You have a justification for every spend and resistance to suggestions for savings (child is musical so must have streaming on demand, a cheaper house wasn't as good an investment, charitable giving us part of your identity, bigger house as the hub for socialising with friends and family, expensive holidays, DH needs new suits, you previously had investment properties) It feels like signals of status and wealth are important. How much control do you have in your relationship and financial decisions?

I’m not seeing life insurance/critical illness on your list @MiniLob do you have any? If not you’ll need to get some.

it’s a detailed budget but I feel it could be more detailed as there’s a lot lumped into certain expenses. I set out mine like this.

Me 3100 (base)
DP 4100 (base)
CB 280
Total 7480

Housing
Mortgage: 1900.
Insurances(life, house): 150
Property tax: 50
Total Housing: 2100
Utilities
Electricity 150
Waste collection: 25
Broadband & TV: 70
Mobile phones x3: 60
Total Utilities: 305
Food & Groceries
Groceries & household food: 500
Dining out / takeaways: 200
Total Food: 700
Transportation
Fuel: 150
Car insurance & tax: 150
Maintenance & NCT: 100
Public transport / Parking: 20
Total Transport: 420
Education & Kids
School books, uniforms, fees: 50
Activities, sports, clubs: 55
Pocket money/treats: 60
Total Kids & Education: 165
Entertainment & Lifestyle
Family outings, hobbies, gifts: 200
Subscriptions: 30
Miscellaneous expenses (haircuts etc): 60
Personal spends:250x 2 = 500
Total Entertainment: 790
Savings & Miscellaneous
Emergency fund / Savings: 2,000
Holidays (monthly allocation): 500
Clothing: 200
Miscellaneous buffer: 300
Total Savings & Misc.: 3,000
TOTAL MONTHLY SPENDING: 7,480

do either of you have the option to do overtime and earn more and build up savings that way?

Surely it’s in the £500 each personal money that you can save? I think the problem is that you want a second child (or do you) without said child affecting your standard of living. Realistically that just doesn’t isn’t possible.

That’s your answer then isn’t it, it’s not that you can’t afford a second DC, you don’t want to compromise on lifestyle to be able to have another and that’s fine if that’s what you choose to prioritise. Plenty of families live on a lot less with with 2 or more DCs but don’t have the things you have like charity donations, subscriptions, amount of savings, amount of disposable income, £600 car seats etc. you’ve also chosen to work part time, want a years maternity leave and and chose to have an expensive house. All fine choices if they are your priorities. For comparison, we have a very similar income to you and we have 2 DCs. We have a less expensive house (mortgage £1200), choose cheaper items and still feel like we have a good quality of life.

I think given your updates I wouldn't. It is clear that you are not very financially savvy. As I said previously my mortgage is much much cheaper than yours. But actually my house value is similar. That suggests a lack of equity. You've said you don't want to wait and have a DC in your 40s so likely not much younger than me (I'm 34). I would be concerned that you will struggle as the DC you have grows as you clearly have a keeping up with the Jones' attitude. Other than nursery fees, little kids are very cheap. Soon there will be whole class parties, presents, extra curriculars, uniforms, lunch money, higher expectations for presents, kits etc.

This is what I was trying to say. Little kids are cheap but they become expensive surprisingly quickly. Our (state) school residential is nearly £400 this year. They want / need depending on your outlook, bikes and other sports equipment. Outings add up when everyone is paying entry fee.

I think the person above got it right - you did this in a difficult order. Typically people have their family and then prioritise the bigger house - so you aren’t spending on all things at the same time. Having the massive expensive house now means a huge chunk of your income goes to pay for and heat that but you’re still in the thick of it with nursery fees.

Am confused by why shortening your mat leave isn’t an option - appreciate nursery is more expensive (though doesn’t funding kick in from 9 months?) but you’d earn more than £1000 a month so you’re still winning financially even if you’ve paying.

It genuinely doesn’t sound like you particularly want to change - which is totally fine, you have clearly worked hard to get where you are and you enjoy it, but you can’t have it all. You keep saying xyz won’t make a difference - of course the window cleaner won’t make the entire difference, but it will make a bit of a difference and then you add in more and more of the same until you get where you need to be. You can cope with the free Spotify version, you can live with slightly dirty windows, you can stop spending £16 on a coffee… then suddenly you have an extra £100.

And just a warning that children keep getting more expensive. We had our kids in daycare 3x a week too - before the way it works now so a lot more than £100/month - and we spend much more on them now when they are 9 and 13 even without thinking about university fees and whatnot. The clothes are expensive, the hobbies are expensive, the socialising with friends is expensive. If you’re worried about nursery days I’m concerned about how you’ll manage in 5/10 years time.

Of course you can afford a second - millions of people have multiple children on a fraction of your income - but I think you’d be resentful at the lifestyle changes and it sounds like your husband is even less keen.

The only thing ive not seen mentioned is childcare for the oldest during the school holidays - looks like you'll need 3 days a week for several weeks of the year - even never having a day off together DH and I cant cover the whole school holidays.

I think you absolutely could do the second child - its whether you want to make the cuts (mainly to that 500 personal spends each). If you halved that NOW, and it takes 3 months to conceive, that would be 6k saved before you go on ML - half your shortfall.

OP I think you could afford it if you wanted to change your lifestyle. If you don’t want to then that’s absolutely fair enough!

You both have the luxury of working 4 days a week. Which I get - I really do - but it is a luxury! How much extra would your DH make if he went 5 days? Can he do it for your maternity leave year because you won’t need childcare or is that not practical?

£500 each in personal spends is a lot. What is your DH actually spending all that money on every month? I know he doesn’t want it cut (who would?!) but presumably he also has to make some financial sacrifices here if he wants another child. With 2 small children he’ll likely struggle to have the time or energy for hobbies anyway for a bit.

I think OP said her dh works in a school so maybe he is term time? I’m unsure though…

Hi OP, teachers can use SPL to 'return to work' in the holidays (ie get fully paid in the holidays). It's made a huge difference to my pay on mat leave and it may be possible to wangle it so your DH can help out more with the baby. I recommend checking out: https://www.teachersspl.co.uk/ they are super helpful and will be able to let you know whether it'll benefit you both

I'm sorry but that is an insane mortgage for a home to house 3-4 people. I must be really naive but can't actually believe people pay that on ordinary incomes!