It’s thought that families are having to shell out around £1,000 a month for childcare costs, according to our latest research. And it seems that costs are continuing to rise, with two thirds of parents we spoke to saying their childcare provider had increased their rates over the last year.1
These rising costs are putting even more pressure on working parents, with one in three having to rely on credit whilst their young children need childcare, racking up on average £9,220 of debt before their children reach primary school age.2 And this is having a huge impact on families’ finances, with many needing years to get back on track financially once their children are at school.
Being prepared for the costs children bring
Our research has highlighted that the costs of childcare are coming as a surprise to many parents, with more than half of the parents (52%) saying that they weren’t prepared for them.1 After all, pregnancy and preparing to welcome a new baby can feel like a whirlwind time and when you’re having to think about everything the baby will need, it’s not surprising that getting fully up to speed on childcare costs can get forgotten.
To try and cope with expenses, parents are also having to make huge sacrifices. The overwhelming majority of parents we talked to (73%) said that they cut back on things like holidays and leisure activities in order to have more money to put towards childcare costs.3
Want to reduce your childcare costs?
Here are our top tips for ways you could reduce what you pay on childcare:
Claim what you’re entitled to
It can be quite complicated to fully get to grips with what you’re entitled to when it comes to free or discounted childcare. However, by taking the time to suss things out properly, you may find that you don’t have to be paying out as much. All countries in the UK offer free childcare to parents when children are between the ages of 3 and 4 years old and more information can be found here.
Save save save
As childcare costs continue to rise, savings are going to be even more crucial for parents and parents-to-be. If you’re expecting a baby or planning for it in the near future, then it’s a good idea to sit down with your partner and work out what you can both afford to put to one side each month. 25% of parents we spoke to said they were using savings to finance childcare.1 And by being prepared, it could help reduce the likelihood of having to rely on credit and having to pay interest on any money borrowed. If you’re already a parent to young children and are struggling to put money to one side, then try take a step back and consider if there’s anything you could cut back on. By being pretty strict in the early years, you could be saving yourselves from getting into debt and needing years to recover once your children are at school.
Keep it in the family
If you’re able to get childcare help from close and extended family, this can really help you cut costs of childcare. And perhaps rather than relying on one member of the family, if there are more people willing to help, you could pull together a rota so that things are shared out. Even if it’s just for a few hours a week, over the course of a year this will still add up and will help you save money overall.
For many parents, credit does play a part when you have young children needing childcare – whether that’s to directly pay for the childcare or to pay for other expenses that you can’t cover after paying for childcare. If you’re due to have a baby soon or looking to start a family in the near future, it’s a good idea to prepare for the possibility of needing to access credit. Take a look at your credit report and score to see what information lenders will use to assess any applications and if possible look to make any improvements you can. By working on your credit score now, it could mean you get access to better rates should you need to apply for credit while your children are young. Find out more about improving your credit score here.