How you can cut the cost of childcare
Everyone expects having children to involve financial compromises, but no one told me I would have to decide between childcare and grocery shopping. Yet when I discovered the cost of my first choice of nursery in west London, that’s precisely the choice I faced.
I needed a way to cut the £430-a-week bill by 50% or eat for free. So I began to do some in-depth research, with government departments, childcare professionals and the real experts - the mums at local parks and playgrounds - and discovered there’s an art to cutting the cost of childcare.
The costs of childcare are alarming, and growing far faster than inflation. According to the Daycare Trust, the typical cost of a full-time nursery place for a child under two is £159 a week in England - that’s over £8,000 a year - a rise of nearly 5% on last year. The most expensive in its survey was around the level of the nursery I had my eye on, at £436 a week (over £22,000 a year).
Before you start looking at cost-cutting measures, you need to decide broadly on the type of care you want: nursery care; a childminder with a handful of children; or one-to-one care with a nanny.
Childminders are typically the cheapest option for parents, at an average of £144 a week, while nannies are traditionally more expensive, at between £400 and £600 for a 50-hour week. If you’re keen on one-to-one care, there are a number of ways to find a nanny.
There are hundreds of nanny agencies, both local and nationwide. But be aware that if you use an agency, you’ll have to pay a ‘finders fee’ of anything up to £2,000. However, it may also deal with the employment and tax aspects for you, as well as undertake criminal record checks, take up references and verify any qualifications.
If you’re willing to take on the hassle, a cheaper way to hunt out a nanny is to bypass the agencies. There are a number of websites where nannies post their details and you can post your requirements, including netmums.com and gumtree.com. Alternatively, check the noticeboards in your local shops, church hall and doctor’s surgery.
You can trim the cost further if your nanny lives with you. The rates for live-in nannies are a little lower, at between £6 and £8 an hour, compared with between £8 and £12. As long as you have meals and socialise together, there are no tax implications for offering accommodation.
However, rates aren’t significantly lower - certainly not the equivalent of accommodation and food - so unless you have plenty of space, and like the idea of having an extra pair of hands around, it may not be worth the compromise of your personal space.
Alternatively, you can think about a nanny-share. This is where your nanny will look after two or more children from different families at a time, and you share the cost. This is the option I went for.
There are three mums in my group. One takes three days a week, one takes two, and the other takes five. We benefit because we pay less per hour than for sole care, while the nanny benefits because she is paid more per hour overall.
And I actually see having two kids around instead of just one as a benefit, because my son has a chance to mix with other children, learn from them and make friends.
But there is a drawback - with so many mums involved, people’s circumstances change, and then you’re left looking for a new mum again. So far, we’ve had one emigration and two maternity leaves mess up our arrangement, but for me, it’s worth the hassle to make the savings.
You can find a share through general nanny websites, local noticeboards, or through specialist nanny-share sites such as nannyshare.co.uk and thenannysharers.co.uk. These charge a small registration fee, but at around £20 it’s nothing compared to what you’d pay an agency.
If you’re set on sole care, consider first whether you require a proper nanny, or whether you would be happy with an unregistered nanny, an au pair or a mother’s help. These tend to be less qualified, less experienced individuals, who will work for a lower wage in return for the opportunity to gain experience.
They also won’t be registered with Ofsted. However, not every parent is happy with leaving their child in the care of anyone other than a trained professional.
Many parents would rather cut costs by opting for group care, through a nursery, instead. These of course have the disadvantage that your child will not receive one-to-one care. However, there are a number of advantages as well.
Rosie Barker a 33-year-old community learning officer from Birmingham, says: "I wanted a nursery rather than a childminder partly because I wanted my daughter Alice to mix with lots of other children, as I didn’t know anyone else with kids."
Susan Ainslie a 32-year-old commercial officer from Brighton, adds: "Overall, we feel that the nursery is better for us because, with both myself and my husband working full-time, we can’t take days off if Blake’s carer is ill, and it also doesn’t matter to the nursery if we’re a bit late or early, as we pay a flat rate for the week."
The cost of nurseries varies dramatically, so you’ll need to do the legwork and check out your local options. You may have a limited number in your area and be able to visit them all, but in areas with more nurseries your local council should produce a booklet with contact details, so you can ring around and find out the cost.
Once you’ve found a nursery you like, it’s also worth asking about further savings. Some will let you opt for care during term-time only, which suits teachers, for example, and parents with older children who have to care for them during the holidays anyway. Christine Hudson, a 35-year-old drama teacher from West Yorkshire, says: "We chose our nursery mainly because it was the only one to offer a term-time option, saving us some money."
You can also cut the expense of childcare by working a shorter day. This may be school hours (which tend to run from 10am to 3pm), mornings or afternoons, but this requires more flexibility from you or your partner. One of you may start late and the other finish late in order to fit around the hours. Or one of you may arrange to work a shorter working day, and make the hours up in the evening when the kids are in bed.
If you’re on a low income you may also be entitled to a place at a state nursery, but you’ll need to be assessed to see if you qualify. This is just one of many different forms of help available from the government. There’s a child tax credit for very low earners, and the childcare portion of the working tax credit.
The current average award through the childcare element of the working tax credit is £48.45 a week - however, middle earners are only entitled to a drop in the ocean. Although in theory some parents can claim up to 80% of the cost of childcare, in reality only 3% to 5% do.
More generous help is available for three and four-year-olds - they are entitled to five two-and-a-half-hour sessions a week for 38 weeks a year, which can cut the costs dramatically.
You may also be able to get help from your employer - through a subsidised crèche, for example. If this is the case, it’s likely to be one of your cheapest and most practical options as they’re set up to deal with people specifically in your situation. However, it pays to get your name down for this quickly as spaces usually go fast.
More usually, your employer will offer some form of voucher scheme. This allows parents to pay for some of their childcare out of pre-taxed income and can save you up to £1,172.60 a year. Susan gets her full allowance from her employer, as does her husband Jason. They currently use this to pay for nursery care for their son Blake. And when he was younger, and not yet ready for a nursery, Susan used a childminder who accepted the vouchers.
If a nursery is too expensive, it’s worth looking into childminders. They can be cheaper per hour, and can also be more flexible, which enables you to think about ways of cutting down the number of days you need.
Catherine Bell, a 26-year-old primary school teacher from Northumberland Heath, says: "We went for a childminder because my husband James has some Mondays and Tuesdays off and he wants to spend them with George. We didn’t want to pay for days we didn’t use, and we thought a childminder would be more flexible. Plus it was cheaper on a daily rate - £35 rather than £50."
If all these options are simply too expensive for you, you can consider mixing and matching, and adding in a day or two with other family members - if they are willing. This is an increasingly common option. Christine says: "We use a nursery, but Joseph also has one day a week at my mother-in-law’s, as she lives just half a mile away from us. He has a great relationship with her and his grandad, and treats their house as if it was his own."
If your family isn’t willing to step in, don’t panic - you haven’t hit an impasse. You may simply need to re-think your plans, and consider ways of cutting back the number of hours of childcare you need.
Rosie has worked out a balance of childcare with her children’s father. She says: "I cut my hours down when my eldest, Alice, was born, so I jobshare, doing three days a week. When my youngest, Oscar, was born, Steve also changed his hours. He does 10 hours each Monday and Tuesday, then gets in late the days I work so he can take Alice to school, and leaves early to collect her and Oscar. Military planning has nothing on what mothers do."
And if childcare is completely out of the question, there are plenty of mothers who squeeze work into evenings and weekends. Catherine says: "We’re planning to have another baby. After that, I simply won’t be able to afford two in childcare, so I will have to leave my steady, reliable job and enter the horrific world of supply teaching. Then I can work all the days that my husband James has off, so it will either be me or James at home with the children."
Of course, once you have two or more children, the costs skyrocket, and the whole issue becomes much more complicated. You can still use all these methods of cost-cutting, plus you can check with your nursery or childminder whether they offer a sibling discount. However, unfortunately, many people cannot afford to work at all with two kids in childcare.
Susan says: "If we had another child I think we might have to get a nanny, but I wouldn’t want to move Blake from nursery, so we’re just not thinking about it right now."
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
Child tax credit
A scheme started in 2003 that sought to replace a raft of other tax credits and benefits, the payout depends on the number of dependant children in a family, and its level of income. The amount of credit is reduced as income increases. It is payable to the main carer of a child, usually the mother, and is available whether or not the recipient is working.