If you’re trying to get back to work after having a little one, you’ll be all too aware of the cost of childcare. The average cost of nursery for children under the age of two is now £4.26 per hour, but that rises to £5.33 for those living in London, according to the Childcare Costs Survey 2013.
The report also found that while average earnings are at similar levels to those in 2002/03 (in real terms), childcare is 77% more expensive, meaning that people are seeing less and less money for other expenses.
Whilst it seems that giving up work to look after the children is the most obvious move for parents facing this dilemma, rising debts often means it’s not a viable option. However, all is not lost as there are some ways to keep the costs down.
Working Tax Credits
If you’re already receiving Working Tax Credit, you are also eligible for additional financial support to help with childcare. Parents are able to claim up to 70% of their childcare costs (up to a maximum of £175 per week for one child, or £300 for two).
It’s worth seeking advice to find out whether you’re eligible as the rules are quite complex, but the basic criteria require you to work more than 16 hours per week and have an annual household income of less than £40,000.
To save for your financial future, you can compare savings accounts with Propertywide.
Free early education
The cost of paying for a nursery place changes as children grow up. The first two years are the most expensive, but once your little one turns three, they’ll be able to receive 15 hours’ free early education per week.
Depending on when your child’s 3rd birthday is, you’ll be able to claim free early education from 1st September, 1st January and 1st April. However, from September 2013, some 2 year olds will also be able to take advantage if you are receiving certain benefits. The allocated time can be used at nurseries, children’s centres, playgroups and pre-school, Sure Start children’s centres and childminders.
Most employers offer their staff a voucher scheme, where money (up to £243 per month) is taken directly from income before tax and National Insurance.
Whilst you are still responsible for paying for childcare, it can drastically reduce costs. Even basic-rate tax payers can save up to £930 per year. The rules have tightened recently, making it fairer for those on lower incomes. Higher and additional-rate tax payers can now only take £124 or £97 from their income each month, reducing annual gains to £620 or £600.
Once you’ve got the vouchers, they can be used to pay for childcare, but they must be registered with Ofsted to qualify. If your employer doesn’t offer a voucher scheme, suggest it to them as they may be willing to help.
Help each other out
If you know other mums and dads with young children that are struggling to pay for childcare, you could always offer to watch each other’s kids. If both sets of parents are working 9-5 it won’t work, but with more people taking up part-time and shift work, you might be able to provide each other with the necessary cover.
Where you don’t have friends to ask, you could always call on the family. Retired grandparents are often more than willing to babysit every now and again, with some even happy to do it regularly. You won’t be able to use vouchers to put towards any costs, but mixing and matching it with traditional childcare could save you a small fortune.
Type of childcare
When on the hunt for independent childcare, you’ll likely come across a wide range of options and job titles. Childminders are usually the cheapest option, with 25 hours costing an average of £98.15 for a child under 2 years old, but slightly less at £96.67 for three and four year olds.
Another option that might be available to you is ‘nanny-sharing’. The idea is that a group of friends or family members hire a single childminder to care for all their children – splitting the cost between them. Even just a small group of 2 or 3 children could cut costs by at least half. Make sure you do all the usual checks, just as you would when ordinarily hiring a childminder.
After-school/ holiday clubs
Although there is a heavy focus on childcare for the under 5s, it’s important to remember that many parents still need childcare for their kids before and after school. The average cost of an after-school club is just below £50 a week (£49.67) in the UK, giving parents a £4,000 annual bill. However, don’t forget that childcare tax credits and vouchers can both be used to pay for registered holiday clubs.
Many schools and local councils offer discounted or even free activity clubs that are worth checking out. They might not provide cover for your entire working week, but even just a few hours a week could save you money.