5 things that new parents forget to budget for

5 08 2013


Image via Flickr creative commons from Tax Credits

Becoming a parent isn’t cheap or easy. For the next 18 or more years of your life you are going to be paying through the nose for baby food, toys, childcare, trainers, driving lessons and education. The list is pretty much endless.

No matter how prepared you think you are to become a member of the fully-fledged adult group, there will always be something you have forgotten. It happens to everyone so you are not going to help anybody by worrying about it.

According to the latest estimates, the price of raising a child will smash through the £200,000 mark. So to help you on your way, here are some of the things people forget most often.

Don’t buy too much

Parents to be can get swept up in the excitement of an imminent new arrival and shell out loads of cash on baby clothes and accessories. You will always have more than you need. However much you may fear the baby will get bored – don’t. It’s a baby. Once it has managed to get up on its own two feet and totter about the place, it will find everything interesting. You will sit, exasperated, as little Johnny or Jenny finds the cushions on the sofa more interesting than the £150 stroller you splashed out on.

Childcare is expensive. Very expensive

Even is childcare costs is something you can plan to pay for well in advance, it can be a shock how expensive it is once you come to pay for it. In some cases it can cost upwards of £1,000 a month. Luckily, if you are in full time employment you can find help with this through voucher schemes. Have a chat with your employer about things such as Co-op Childcare Vouchers from Midcounties Co-operative Flexible Benefits.

There are Government-backed schemes in which you can get back up to £1,200 of the cost of childcare a year.

There is a lot you won’t be able to budget for

You may think that you have enough nappies. You do not have enough nappies. Your new addition to the family will like to go to the toilet a lot. It may be a good idea to look at getting your hands on some re-usable nappies. They are cheaper in the long run and are also much better for the environment.

There will also be many things that crop up along that way and keep you off guard such as an out of the blue school trip. It may be helpful, if you can afford it, to keep a little slush fund to the side ot cope with these emergencies.

Bigger bills

You may not think it, but your heating and electricity bills will go up. For one, you will be in the house a lot more than you used to be. What was once okay – for you to sit in an extra jumper – will no longer be okay. Your child will have to be warm

Cost to your free time

Raising a child is a full time job. On top of your own full time job. If you previously used your free time to earn a little extra money on the side, you can kiss it goodbye. But, it will be worth it. Honest.


Everything That A New Parent Needs To Know About Childcare Vouchers

31 07 2013


Image via Flickr creative commons from familymwr

The birth of your first child brings a whole range of new experiences and challenges. Whilst you’ll need time to share in these experiences with your new baby, there may come a point when you decide it’s time to return to work. This decision could be for a number of reasons, whether you’re in need of a little extra money or you simply love your job and don’t want to lose it. Returning to work however brings yet another challenge, namely, who is going to look after your new-born and how are you going to be able to afford to pay for childcare on top of rent, bills, food and general living expenses? Before you start to panic that you’re going to have to stay at home and look after the baby yourself, while your partner works double the hours to earn enough money to live on, stop. I may have just the solution for you – here is everything that a new parent needs to know about childcare vouchers.

What are childcare vouchers?

If you have never heard of childcare vouchers, it is a scheme set up by the government to help those parents who want to work with the cost of childcare. Some employers may offer you childcare vouchers at the expense of some of your salary. It is not a legal requirement for employers to assist you with childcare costs in return for you coming back to work so it’s worth asking your HR manager whether or not your company uses a scheme such as Co-operative Employee Benefits childcare vouchers.

There is however two other ways in which your employer can help you cover the costs of childcare that do not involve childcare vouchers. If your employer offers you directly contracted childcare or there is an on-site nursery at your place of work then you will not be eligible for childcare vouchers.

How does the scheme work?

If you have children up to 15 years old and require childcare whilst you work, childcare vouchers can save you roughly around £1000 each year. The way it works is by allowing you to pay for the childcare out of your gross salary (that’s before any tax or national insurance is deducted). This ‘salary sacrifice’ means that once you’ve paid for the childcare vouchers, you’re actually better off than if you’d received your usual salary and then spent a portion of it on childcare.

Here is an example:

You sacrifice £1000 of your gross salary which after tax and NI is only worth about £700. You then receive £1000 worth of childcare vouchers, which means that for every £1000 you sacrifice, you actually gain £300 – not bad is it?

Use a savings calculator to work out just how much you could save by using childcare vouchers

Benefits of childcare vouchers

So aside from the assistance with paying for demanding childcare costs, what are the other benefits of using childcare vouchers?

–          Benefits for parents

The childcare voucher scheme allows you to return to work safe in the knowledge that the cost of childcare for your youngster will be met each and every month. There’s no worrying about saving a portion of your incomings to spend on childcare as the cost is sorted before you even receive your net pay (after tax and national insurance). It also saves you some money each month which can add up to a significant saving over a year.

–          Benefits for employers

Your valued members of staff are more likely to return to work after having a baby which means you don’t have to spend time and money on employing someone new and training them each time someone falls pregnant.

–          Benefits for nurseries

Childcare vouchers can be an extra incentive for parents to keep using your services. There are no restrictions as to which provider of childcare vouchers you can accept so you won’t lose out on business either way.

Don’t Miss Out On Your Childcare Entitlements

3 05 2013


Image via Flickr creative commons from USACE Europe District

A series of entitlements and benefits are available to parents aimed at helping them throughout the time they spend bringing up children, from the ages of 0 to 18.

The best-known example – and during the period of its introduction and bedding-down, one of the most controversial, due to the fact that it replaced a variety of other benefits, and was seen as part of a government drive to get parents back to work – is the childcare tax credit.

Childcare tax credits are paid to single parents or couples who work at least 16 hours a week. Only one partner needs to work this minimum if the other partner is:

– ill or disabled

– in hospital, or

– in prison

Childcare tax credits are designed to pay directly for any childcare which is needed following the end of a period of either parent’s statutory leave.

As the cost of childcare is often seen as a disincentive which deters some parents from returning to work, the UK government has introduced an element of working tax credit, which is designed to meet some of the cost involved.

Parents who earn under a certain threshold can claim up to 70 per cent of the cost of their childcare, these figures being based on a maximum of £175 a week for one child, or £300 a week for two children or more.

The actual amount a single parent or couple receives is assessed on their individual or joint income, the number of hours they work, and the cost of the childcare needed.

Even though this benefit has only been available for a few years, it will be progressively replaced under the government’s plans to move all benefits over to what’s known as a Universal Credit, between 2013 and 2017.

The Universal Credit is designed to consolidate all benefits to which a claimant is entitled into a single monthly payment, comprising a standard allowance and top-ups for childcare.

The National Health Service provides a range of free treatment benefits for children until they reach their 17th birthday, but parents can again enhance the level of treatment received through a private healthcare plan.

A number of means of helping pay for the cost of childcare are also available through an employer, which include:

Co-op childcare vouchers, or similar schemes to which employers can contribute

– direct payment of childcare fees to the childcare provider, and

– a similar arrangement for payment of school fees

Payments are available in a range of other circumstances, which includes for parents who are in full-time higher education, and discretionary learner support which can be paid to parents aged 20 or over, who are studying in further education to help them meet childcare costs.

Young parents, aged under 20, can also apply for ‘Care to Learn’ payments which are paid directly to a childcare provider for the cost of their services.

Even if a parent

When it comes to finding out what help is available, one of the best ways is to simply ask. If the costs for which someone is claiming are legitimate, and the services provided by an accredited person or organisation, the chances are that some form of financial help is available.