It’s the age old dilemma for many families – whether it is better for the kids for both parents to work and for the children to be in nursery, or whether it’s better for one parent to stay at home and look after the children. However, this will put their own career on hold until the children are older. There are no wrong and right answers and what one family decides is not necessarily the best decision for another family with different circumstances. However, apart from the emotional decisions involved there are some very real financial considerations around whether to continue working or not.
One of the main reasons for going back to work for many women is a fear that if they step off the career ladder and take time out to care for their children, they may never be able to get back on it again. Legislation has been in place for decades to protect the rights of women in the workplace but discrimination is still rife and many women feel they will never be able to get back to the level they expect, especially in careers where keeping up to date with developments is essential. For these reasons, even if the additional income generated by working barely covers the childcare, some mothers feel they have no option.
There is no getting away from the fact that childcare here in the UK is among the most expensive in Europe. In London, parents can expect to pay up to £151 a week for a full time nursery place and in the rest of the country the average cost is £113. It is easy to see that for families with two or more children under school age, the costs alone can be an incentive driving them to get back into work as soon as possible. Many employers offer childcare vouchers which can cut the cost of nursery provision and for lower earners the government’s tax credits scheme helps towards the cost too. However, it is still a large chunk out of any family’s income and part of the reason why friends and family often end up helping out as unpaid childminders to ease the burden.
Child Benefit and Tax Credits
The government’s austerity measures have reduced the amount that families automatically receive from the government when they have a child. Child Benefit, which used to be given to any family irrespective of income, is now restricted to those earning less than £50,000 per annum. The tax credit threshold has been similarly reduced and has also been capped to rise at a rate below inflation. Child benefit and tax credits were never going to be enough to pay for a full time nursery place or a nanny’s salary, but the reduction in the amount paid is making finances tighter for many families.
Long Term Finances
When one parent gives up work to look after children, the temptation is to make the money stretch further by cutting back on payments for things like pensions, savings and life insurance. It’s understandable why many people feel this is a good idea and in some cases they may have no choice. However, leaving your family with one or both parents uncovered by life insurance could be storing up problems for the family should the worst happen. If the costs of these covers seem prohibitively high, shop around for a better deal or speak to a broker specialising in life insurance policies to try to buy a better deal. Make it a rule to regularly review the family finances and see if there are any savings and better deals to be had elsewhere on household insurance, grocery shopping and credit cards too. All of these measures will ease the burden of having a child.
Stuart Edge is a writer who understands that having a baby can force you to consider cutting costs in certain areas. However, he believes that you should not cut paying for life insurance as policies are designed to help you should the worst happen.