Doing the maths on returning to work

[dmuk]

We have started looking at the reality of returning to work and the maths don't look great.

Are there any other financial elements to consider when returning to work - salary (net/gross), child care costs?

Child care costs would more or less erode any potential employment income. This is because pretty much every after tax pound earned would need to be paid on nursery/nanny.

The full time and part time options are exactly the same - as we would still need full / part time cover.

One option that looks attractive is working from home. Child minding costs would be zero.

We know returning to work is not a pure financial decision but looking at the potential budget considerations of the transition back the workplace.

Have you checked whether you could claim any woring tax credit help towards childcare costs or does either or both of your employers participate in the childcare voucher scheme?

Yes, participation for both of you in the employer childcare vouchers scheme makes quite a difference because you get them on gross income not net. How much you get depends on whether you are a basic or higher rate taxpayer.

Have you considered your 'family income' as opposed to your salary having to cover all the childcare costs? I appreciate without childcare costs now, that seems like an obvious equation, but they should be treated like any other bill that has to be paid.

I know it can be depressing, but returning to paid employment isn't just about the now...but the investment in your future career and earning potential. It also gives independence & a pension etc.

Does your employer make contributions to your pension?

Do you have paid holiday with your employer (can be hard to arrange as a CM)

With an employer, you get paid sick leave.

What are the prospects for future pay rises?

Would it be damaging career wise to take a break > 1 yr?

I'm afraid to say that most employers wouldn't let you work from home unless they were sure you had childcare arranged. Being self-employed and working from home may be possible if what you do allows flexibility (i.e. if clients don't expect you to be available 9am - 5pm).

Have you considered that childcare costs will decrease (a bit, at least) with time? In nurseries, generally the cost goes down as the child gets older as the staff to child ratio required decreases. Also from age 3, the government provides 15 hours per week paid childcare (but only for school terms - not a full 52 weeks per year). If you step off the career ladder, it might be difficult to get back on at the same level in a few years time. Also, bear in mind the impact on your pension if you're in a company with a good employer contribution.

But, that said sometimes staying at home with your child is more important even when it makes sense to go back to work.

Have you looked into being childminding? It would allow you to earn a living while being at home with your child.

I had my first child at 36. I went back to work at 37. Ok, so there wasn't a lot of profit in years 1 and 2, but it got better every year after that (childcare vouchers, free nursery hours, lower fees at 3).

But I could expect 20- 25 or so years of time work at a good wage followed by a decent pension. I am not sure that would have been open to me if I had taken 5 years off to look after my kids.

You'll know what you want to do in your heart and of course you should do that - but don't kid yourself that staying at home is the best financial option. It is just not that easy to return to work and earn a decent wage.

most employers wouldn't let you work from home unless they were sure you had childcare arranged.

There shouldn't be any 'let' involved. It's illegal for them to ask about childcare (none of their business). The closest they can get is "Are the expected hours manageable for you?"

lljjkk I don't believe it is illegal, unless they only ask it of women, therefore it is discriminating.

At interview stage it isn't very wise to ask, but they can ask and may well do so of any potential working from home employees, or they might choose to ask something more general as you suggest.

I also think that an employer has the right to expect an employee who is a carer (of both children and other dependants) to have something in place which means they do not need to care for them whilst working at home. This ACAS guide suggests that it be included in the homeworking policy in the staff handbook.

www.acas.org.uk/media/pdf/o/3/Homeworking-a-guide-for-employers-and-employees.pdf

Working link: www.acas.org.uk/media/pdf/o/3/Homeworking-a-guide-for-employers-and-employees.pdf

Financial elements: look at the longer term, not just the next couple years.

If you say end up with 2 children 2-3 years apart, returning to work means you will be entitled to maternity leave when child 2 is due

Financial elements: look at the longer term, not just the next couple years.

If you say end up with 2 children 2-3 years apart, returning to work means you will be entitled to maternity leave when child 2 is due, you may still be entitled to childcare vouchers (I can't recall new details, but I'm benefitting from the scheme that was in operation when dc1 was born, even though it's closed to new entrants.).

You will get an extra year added to both state and company/employer pensions, and also be entitled to more if you get made redundant in the future (min a week's pay per year of service, but often a month's pay per year of service).

After age 2, even if not entitled to any free hours, costs go down slightly and then after age 3 go down by around 30% if full time. So it's only a few years of skint before having a decent chance of promotion etc.

You have to factor in the numbers for your longer term career, not just for the next 12 - 36 months.
What will it mean for your future earnings if you leave your job now?

What do you mean by 'work from home'? Do you mean do a few hours in the evenings or at weekends once your partner is there to care for your dc? Other than that, how are you expecting to get any work done with a baby / toddler ?

Others have given advice around childcare vouchers, and / or working tax credit. Don't forget either, with the personal allowance now so massive, that going PT means you bring home a lot more than the fraction of your salary you work the hours for - the maths isn't a direct correlation with the fraction of the week that you work.

I'm no expert, but this seems to say childcare Qs are illegal. I know when I did interviews 10 yrs ago we understood them to be illegal.

Most people I know in your position ended up working weekends and/or evenings so that their partner could look after the DC while they were at work.
Or they worked for effectively no net gain for a year or so.

Employers might not be able to ask you about childcare but any standard contract will state that you are available for work between x and y hours or for so many hours a week. If you are looking after a small child, there is no way you will be able to give 100% to your job. This might seem feasible now if you have a docile baby who sleeps a lot, but it won't be when you have a toddler who is into everything!