The cost of childcare

Every new Mum and Dad, will have found out that the cost of childcare for their new little bundle can cause major concern to their financial situation. It is the very wise future parents that plan their options very carefully when setting out on the “family” route.

Firstly, there are benefits from the government that can help out with childcare expenses. Child Tax Credit is a payment to low income families, (under £50,000 a year). This can range from £545 to £2440 a year, depending on your income and whether you receive working tax credits, there is also child benefit that all parents are able to claim.

Working Tax credits is available to working parents and covers up to 80% of childcare costs, up to £140 a week for one child or £240 for two. The full allowance is payable to families earning less than £5220, as income increases, payments decrease.

Childcare Vouchers of £55 a week free of national insurance and tax may be available from your employer. This is done on “salary sacrifice” which means that you give up £50 of your salary for the voucher, but because you don’t pay tax or national insurance on this then you could save as much as £1172 a year. These vouchers can be used for any registered childcare.

This is all well and good to get this help, but you still have to weigh up whether it is worth going back to work if you have to spend a lot of the hard earned wage in childcare. Some people do not have the choice as they need to keep up to date with their career, to continue in the future, or they just want to go back to work. However many people do not take in to account that there is a cost to going to work. Travel costs, fuel, car costs or bus and train travel all add up. You also have to buy “work clothes” and have your lunch (packed lunches are better!). The quality of life may be worth some sacrifice, if you are there for your children in the early years, these are the years they need you about the most, without being grumpy and stressed about the days work you have just had.

If you do decide to return to work, then there are some cost-saving routes that you can research. You must decide what sort of care you want for your child. Do you want them to be with other children, or are you fine with a one to one environment?

The obvious choice of having mixed groups of children is to send them to a nursery. There are some excellent options available, which should be researched extremely thoroughly, but these can be very expensive. A cheaper option of having your child cared for in a group environment is to nanny share. This is where a group of you agree to employ a nanny or child minder and share the expense between the families. This can fall down a bit if circumstances change with one of the involved families, but the savings can be substantial and there are now websites to help you source families that want to do this for quite a low fee.

You could employ unregistered help at a lower cost, but must be aware of the fact that they will not be registered with ofsted and whether you are prepared to take that risk with your precious child.

If you do go with the nursery option, it is wise to research the fees, as these vary. Some charge per day, some per hour, and some per week. This means that you need to get this right for your personal circumstances. It may also be wise to research the option of your partner and you staggering work hours to reduce the number of childcare hours, or even considering working more from home.

Other family members are also an option for some people, but this again has to be carefully considered as this can cause family difficulties, if grand parents feel they are being taken advantage of. This may also be a problem if the grand parents are taken ill and can’t care for the children any more if they want to have their own holidays.

Children are a joy, but the stress of sorting out their care is one of those things that you MUST get right!

Jane Price, NASHELM MORTGAGE SOLUTIONS

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