Children. The light of your life and the hole in your wallet.
From birth until their 21st birthday, the average child now costs its parents £201,809, says insurance company LV. That’s £800 a month. Obviously, your children more than repay all that expense in joy, but still, shaving a few hundred pounds off that sum would be nice, wouldn’t it?
Cutting the cost of childcare
Soaring nursery fees mean that it now costs more to put a toddler in nursery than it does to send a child to a top private school. Childcare can cost up to £22,100 a year per child, compared to £19,626 for a private day school such as Westminster School – one of the best in the country, says Sarah Cassidy in The Independent. So what can you do to bring that cost down?
First of all, make the most of your child tax credits. You can get extra tax credits to help with the cost of childcare. This can cover up to 80% of childcare costs for children up to the age of 16. The maximum is £175 a week for one child, and £300 a week for two or more children.
To qualify for the credits, both parents need to work more than 16 hours a week, and you need to earn less than £58,175 a year between the two of you – £66,350 a year if the child is under one year old. You must also use a childcare provider who is registered with Ofsted. To find a list of registered childcare providers, visit PayingForChildcare.org.uk or Directgov.
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When working out how much you can claim, note that the amount you receive is fixed over a year, so budget for the additional childcare you need during school holidays. Work out the total amount you paid for childcare over the last year, then divide it by 52 to work out how much your average weekly costs are.
Another way you can reduce your babysitting costs is by using childcare vouchers. Unlike tax credits, these are available to all working parents regardless of income. The only proviso is that your employer has signed up to the scheme. You can use the vouchers as full or part payment for nursery, playgroup, a childminder, nannies, au pairs, pre-school, holiday play schemes and out-of-school clubs.
You can exchange up to £243 a month of your pre-tax salary for either electronic or paper vouchers – note that the paper ones expire after a year. If both parents can claim the vouchers, then basic-rate taxpayers can save up to £1,808 a year, and higher-rate taxpayers up to £2,392.
But be warned, if you are eligible for tax credits and claim the vouchers, it can affect how much tax credit you are entitled to. To find out whether you are better off claiming tax credits or vouchers, use the government’s calculator.
Get Mary Poppins on the cheap
If Mary Poppins were to be remade today, Julie Andrews might have a few more charges to look after. With nannies costing up to £32,216 a year, nanny sharing is growing in popularity. This is where families split the cost of a full-time or part-time nanny or childminder. If you don’t know someone who you could share with, check NannyShare. For £25 for six months, you can search for families in your local area looking to share a nanny. You can even check out a profile of the family online too.
Child Benefit
Finally, don’t forget to claim your Child Benefit. You get £20 a week for your eldest child, and an extra £13.20 for every additional child. Find out how here to claim Child Benefit.
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