6 hacks to make childcare more affordable, as one in six working families face poverty

Expensive childcare and rising house prices are having a detrimental impact on working households.

teacher reading to children in nursery school

Forking out for nursery fees while parents go to work has always been a financial headache. But it’s getting even tougher. According to new research, one in six households face living in poverty due to rapid house price growth and a lack of affordable childcare.

“It does come as a shock to people when they have kids, just how much it costs,” says Sarah Coles, personal finance analyst at Hargreaves Lansdown “In many cases, it can be the same as your mortgage.”

While there’s not a lot parents can do about rising house prices, there are ways to make childcare more affordable. Here are six ideas to help you cut costs…

1. Compress your working hours

Businessman Wearing Suit Opening Door Leaving Home For Work

If one or both parents are able to compress their working hours into, for example, four days instead of five, you may be able to free up two days for looking after the kids.

While in the past, this kind of arrangement was unusual, the pandemic has made many companies realise that adapting to employees’ needs is beneficial for everyone. If your manager is reluctant, it might help to start by increasing how often you work from home, before requesting compressed hours.

“You’ve got the right to request flexible working while your children are under 18, but if [the company] has a good business reason, they can say no,” Coles says.

“Once you’ve got flexible working arrangements in place, particularly now that lots of people are working from home, suddenly it becomes a lot easier to be able to say, ‘Once the kids have gone to bed I’ll work a couple of hours’.”

2. Claim childcare benefits

children painting in a nursery school

“Don’t just assume you won’t get any help,” says Coles. “because the childcare bits of benefits are often more generous than other bits.”

In the UK, for example, parents can get help paying for childcare if it’s provided by a registered childminder, nanny, playscheme, nursery, school or club. Check Gov.uk for more details.

If you’re opting for a school or nursery, Coles says: “It’s really important to talk to the nursery about what they will actually charge for, because often although it’s technically free, there will be additional charges.”

3. Ask family or friends to help out

If you’re lucky enough to have grandparents, relatives or friends nearby who are willing to watch the kids, it’s worth taking advantage of their generosity.

“There are rules to do with how long you can look after somebody else’s child for, so you need to be careful that you’re not looking after them for too long, then the person will need to be registered childminder,” Coles says.

There is one other way to incentivise grandparents or other family members, with what’s called Specified Adult Childcare credits.

Coles explains: “You can’t pay them through the tax free childcare scheme, but they can claim national insurance credits towards their pension.”

4. Nanny share

“One of the things a lot of parents do is they’ll share care in some way,” Coles says. “You might have the nanny for three days and another family has them for two days – it’s sharing the nanny to make it a more affordable option.”

There are a variety of nanny sharing websites, so you can find parents who want to partner up in your area, and it may be cheaper than you think.

Coles continues: “People who can afford nannies sometimes are worried that their children aren’t socialising enough, so actually, it does them a favour to share the nanny, so they sometimes won’t charge you an arm and a leg.”

5. Negotiate fees

Don’t assume that childminder and nursery fees are fixed – there may be some leeway, especially with independent providers.

“If you’re doing wraparound care – after school clubs and breakfast clubs – they in particular will often do sibling discounts, they’ll give you 10% or 20% discount,” Coles says, so be sure to shop around.

“There was a nursery that I used that had a really interesting policy. I don’t think it’s enormously common, but you paid based on your household income. So it is worth looking around for those interesting quirks.”

6. Plan ahead (if possible)

If you’re a parent whose little ones haven’t yet reached the age where they need childcare, or you’re thinking about having children in future, it’s never too soon to start planning and saving up, to soften the financial blow later.

“It is worth thinking about these things in advance,” says Coles. “At the point at which you’re pregnant or you’re thinking about having children, you can cut your budget. You know you’re going to have to further down the line anyway, so you may as well do it early and get a bit of a cash buffer in the bank.”