Childcare costs: how to prepare for the pinch years of parenting

As the cost of living bites, nurseries and childminders are pushing up their fees too. Many working families with young children are now paying more than their mortgage just to meet childcare costs so they can stay in work.

So, how does it all add up?

Family finance expert Charlotte Burns, author of On the Money: Take control of your finances and build a life you love, shares her tips in how to prepare for the pinch years of parenting.

High childcare costs have hit household finances hard. What advice do you give to new parents about how to manage this huge outlay?

“It's never too early, or too late, to reassess your finances and get yourself into a better position financially. It sounds really boring but sitting down and properly doing a budget at least once a year is the most important thing you can do.

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“In an ideal world, you'll want to be thinking about childcare costs while pregnant — or even before you start trying to conceive.”

That early! So how should I prepare?

“Make sure that you start making savings well before you actually need to have childcare in place.

“This means you’ll be putting money away while you’re still earning, rather than scrabbling around to find enough when your income drops during maternity leave.

“If you're feeling flush while thinking about or trying to conceive, that's the time to save as much as you can. When you're pregnant — keep saving while you're working, but you need to start looking into what benefits you're entitled to and what you're going to do when your maternity leave ends.

“If you really want a baby, I wouldn't necessarily wait for the 'perfect time', though I would start saving straight away for childcare. Holding off can come with its own big costs if conceiving becomes difficult.

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“If you’ve already had your baby and you’re just starting to plan now, you need to do some careful budgeting to make sure you’ve got everything covered.”

OK, so what kind of costs can I save on now?

“Before having a baby, I remember thinking that all our money was going to go on nappies and clothes etc, but I've discovered that the big cost is childcare — everything else is peanuts compared to it.

“There's no need to spend money on a fancy nursery or new clothes. Little babies don't need a lot, just your constant attention.

“I'm due my new baby in November and have spent the last few months buying second-hand items and collecting freebies that are all in great condition. I've hardly spent money on anything for that first year.

“That said, you will probably be earning less while the cost of everything is going up. I'm a big believer you should be revisiting your budget every six months to a year to be able to plan accordingly.”

What should I look for when finding a childcare provider?

“As soon as possible, start looking into childcare settings.

“We started visiting nurseries when my daughter was three months old for her to start just after her first birthday. Don't assume that the most expensive ones are the best. Get on local forums and ask parents for recommendations. You don't want to leave it to the last minute and have little choice over what you pay, and what the quality is.

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“And make sure you're asking the right questions, so you really know what you're getting — or not getting — for your money. The most expensive one in my area, a Montessori nursery, didn't provide any food — so on top of the care costs, I'd have had to pay for three meals a day and snacks.

“What is the policy on sickness? Will they refund you, or try and move the day the child goes in, or do you lose your money? Do you get your money back if the setting closes on a bank holiday?”

What else should I do to help manage the cost once my child is already in nursery?

“Make sure you're getting all the financial help you're entitled to.

“For example, there’s child-free tax care, where for every £8 you pay in, the government will pay in £2 to use to pay your childcare provider. It’s amazing how many parents don't know about that.

“There are also free childcare hours — up to 30 a week — but the amount you qualify for depends on the child's age, if they have a disability and where you live in the country.”

Should I be prepared for prices to rise every year?

“If you speak to any parent or carer with a child in a nursery setting, they'll tell you about the pain of receiving that yearly letter telling them that the price is going up — sometimes the price is hiked more than once a year.

“I'm afraid I don't see things changing any time soon with cost of living rises, which impacts on the nurseries as much as the parents. Many are struggling to stay open.

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“It's something you should consider budgeting for, expecting an 8-10% rise. If that becomes unaffordable for you, it's worth thinking about what your options are in advance, which is horrible but means you can be proactive rather than reactive.”

How can I find affordable childcare after the age of three?

“For pre-school children, wrap-around care for school-based nurseries can be a nightmare to get. Most schools will have different two-hour slots which you don't have a say in, so there's no organising or securing wrap-around care until you know what hours your child will be in the school setting. When you do find out, parents and carers will be scrambling for the best and most convenient care available and there aren't enough spaces.

“My advice is to get friendly with the receptionist so you get the information you need as quickly as possible, go into the school and meet the teachers so you know exactly what the ideal would be, and pounce when you can.”

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