The True Cost Of Bringing Up A Baby

Q: How long a break from work are my partner and I entitled to take?

A: Women are entitled by law to 14 weeks' paid maternity leave, during which their job must be held open should they wish to return. This applies to both full-time and part-time workers.

If you have been with your current employer for two years or more, you are entitled to 29 weeks' leave, but only 14 weeks of this has to be paid leave.

Men have no right to paternity leave at present, but the EU Parental Leave Directive is due to take effect in the United Kingdom on 15 December. This entitles fathers to unpaid paternity leave of up to 13 weeks, to be taken within five years of the birth.

Q: If we decide to employ a nanny, what sort of salary should we expect to pay?

A: The first decision to be made is whether or not you want the nanny to live in. Providing your nanny with accommodation and food will allow you to save on salary, but this is still the most costly option.

This is a seller's market and you may have to sweeten the pot with extras to get the nanny you want, such as offering use of the family car. Jill Goodman, managing director of the recruitment agency Just Nannies, says: "Live-in nannies are always scarce. It's a case of their being able to pick and choose."

For a full-time live-in nanny, expect to pay up to pounds 350 a week gross, or about pounds 18,200 a year. A part-time live-in nanny will want about pounds 5 an hour gross which, assuming 20 hours a week 48 weeks a year, adds up to pounds 4,800 a year.

If the nanny is providing her own accommodation, she will want a full- time gross salary of about pounds 450 a week (pounds 23,400 a year) or pounds 8 an hour (pounds 7,680 a year, on the same assumptions as above).

Q: How much would we need to save now to provide for the likely cost of private school fees when the time comes?

A: By the time you include both private school fees for 14 years to the age of 18 and the cost of a university education, some pretty terrifying figures emerge. Cliff Davies, of the Wiltshire-based independent financial advisers Beaumont Savage, calculates that the total sum you have to find could be as high as pounds 249,000. Davies' full figures are shown in the table printed here. To use the table, pick one of the three savings options then decide how much education you can afford. Funding school fees for a day pupil using the regular savings option, for example, would cost you pounds 577 a month. Mr Davies has based his calculations on conservative, mid-range growth assumptions, as any responsible financial adviser should.

"It is a good idea to err on the side of caution," he says. "At the end of the day, in the unlikely event that you find that there is too much in the pot. There's enough to go towards your daughter's wedding, or something."

Q: Must we buy life insurance for both of us, or should we restrict it to the main breadwinner?

A: When one partner gives up work to become a full-time parent, couples often forget to value that partner's work properly when they work out what life insurance they need.

But if the partner at home were to die suddenly, the main breadwinner would clearly be in trouble. They must either give up their own job or hire someone for child care and housework duties. As we have seen, this does not come cheap. Tom Baigrie, of the London term assurance brokers Life-Search, says replacing the work of the partner at home is likely to cost about pounds 400 a week. This includes pounds 300 a week for child care, pounds 50 a week for cleaning and general household duties and another pounds 50 for baby- sitting.

The total cost adds up to pounds 1,733 a month, or pounds 20,800 a year.

Providing for this sum with a 15-year term assurance policy for a 28-year-old woman could mean paying a monthly premium of as little as pounds 10.50 for a non-smoker, or pounds 14.25 for a smoker.

Given that the stay-at-home partner is almost always the woman, it costs little extra to add cover for her when arranging insurance for the family's breadwinner.

Baigrie says: "There are two provisions: the potential death of the breadwinner, which you need to spend money on, and the potential death of the non-breadwinner - which you also need to spend money on. Buying life insurance for female lives is extremely cheap - you can often provide the extra cover needed for pounds 10 or pounds 15 a month."