As Christmas approaches and our finances begin to take that annual hit, how about looking at where you could save? This week our guest blogger is Parental Choice, who provide an essential one-stop shop to help you make the right decisions on your childcare needs.
As any parent who has looked at childcare will know, it is expensive. Parents can spend up to 45% of their disposable income on childcare and after housing it is the second largest cost for a household. Naturally there are regional variations across the country, with the north being typically lowest in cost and London the highest, where full-time childcare can set you back over £1,300 per month for a full-time nursery or childminder. When you factor in other costs that parents need to spend in order to work, such as commuting, it’s no surprise that many decide it is not financially viable for both parents to continue working.
However, with some foresight and planning there are some ways to cut your childcare costs.
Grandparents and other family members
Talk to any group of parents and you will find many people turn to family members for at least some element of their childcare. From full-time carers, to part-time regular days to ad hoc care in the school holidays, family members provide the biggest benefit of being “free childcare”. If you choose to pay them they would then become employees which brings with it tax implications, but you can pay their expenses without being seen to employ them.
Get a little help from your friends
Building a network of local working parents will enable you to build a support network of people with whom you can share childcare responsibilities. By offering to look after each other’s children on days when you are not working you can save costs especially for example in school holidays. Being late home due to transport issues or being stuck at work can be expensive with late charges at nurseries, so having friends to call on to help you out in such situations can save you money, but don’t forget to return the favour! Providing no cash exchanges hands, you don’t need to register as a childminder, but if the arrangement is regular and more formal it would always be advisable to take out public liability insurance in case a child has an accident in your home.
Sharing the cost
Nannies are expensive, and it is quite common place now to share nannies, particularly in the early years when you have only one child. Whilst it’s not as easy as a 50/50 split in relation to costs, as each family must be registered separately as employers, there are definite savings on employer National Insurance together with the nanny’s salary.
As a nanny agency taking lots of requests daily from parents in their search for a new nanny, we always advise parents to be realistic in your needs. You may find paying a nanny who drives with her own car comes at a premium (simple laws of supply and demand!) but if you only need her to drive once a week to the swimming lesson, could you consider using transport or a taxi instead to cut your annual costs?
Another option to consider is to host a live-in au-pair, which are now very popular providing families with childcare and help with general household duties. At £100-£140 per week for 25-30 hours au pairs provide considerable savings for those employing nannies or juggling other forms of childcare.
Find out what benefits are available from your employer. Whilst company childcare vouchers are now closed to new entrants, those already in the scheme can continue to save up to £243 per month tax free to pay towards OFSTED registered childcare. In addition, companies may also offer discounts at childcare providers to help save you money in finding childcare or offer a back-up care provision.
Re-consider your working hours
Unfortunately, childcare is inherently inflexible and it might in fact be your working arrangements that can be flexible, so before searching for childcare evaluate if there are any options at work to alter your working arrangements. If you are considering working part-time, check with the nursery providers locally if they offer discounts on less popular days (some do!) before you confirm your work days. Employees have the statutory right to take reasonable time off to deal with an emergency involving a child and the right to up to 13 weeks unpaid parental leave prior to a child’s 5th birthday.
Employees are also entitled to make a formal application for flexible working hours once a year and many employees have arranged informal flexible working direct with their line manager. Are there options available to work from home to help take the pressure off commuting and being late to collect your child? Other flexible working includes compressed hours and term time only working. Co-ordinating a plan with your partner is essential to work out a weekly routine, perhaps where one is in early and the other later means potentially cutting down childcare needs and in turn costs.
Free hours and tax-free childcare
The Government offers several financial benefits for parents to help reduce costs. There are tax credits and a new style of childcare voucher replacing the employer scheme where parents can save up to £2,000 per child if they meet the eligibility criteria. In addition, every 3 and 4-year-old in England is entitled to 15 hours free childcare for 38 weeks per year, and if you meet the eligibility criteria you could be entitled to 30 hours free. Whilst most nurseries do offer these free hours, it is important to check which childcare providers do (especially the 30 hours free) and to calculate if there are any additional costs you must factor in.
To check if you are eligible for any tax-free childcare go to www.childcarechoices.gov.uk
Parental Choice can help you find nannies, au pairs, nurseries, childminders plus provides nanny payroll, pension and contract services for employers of nannies: