Is it Worth Going Back to Work?
You will have heard many working parents bemoan the fact that for what they pay out in childcare, they may as well not work. Effectively, they say, childcare costs cancel out any earnings that they make.
What’s more, a recent survey by Onepoll revealed that 20 per cent of the 4,000 mums who were questioned said that they didn’t go back to work after having children because of childcare costs.
Of course, some people don’t return to work purely for financial reasons. And at the same time many people choose to stay at home with their children when they would be financially better off returning to work because they enjoy full-time parenting and want to spend more time with their families. However, this article will consider the childcare vs. work decision in purely financial terms.
So, how can you decide whether going back to work will make financial sense for you? This article will look at some general figures and also outline how you can do the sums yourself to get a definitive answer.
The average female full-time worker in the UK brings home £296 per week after tax. Recent figures from the charity The Daycare Trust showed that the average full-time nursery place for a child under two now costs £152. Clearly, for one child this is already half of a mother’s earnings. Consider the fact that many families have more than one child and you can see the problem.
Those figures are sobering, but it’s important to weigh them against the childcare help that is available.
All children in the UK aged three or four are eligible for free part-time education. The only restriction is that the provider must be registered with a government regulatory body. You child will be eligible for five two and a half hour sessions per week, over a 38 week period. The Daycare Trust is campaigning for the government to expand free places to two- year-olds as well.
Childcare voucher schemes operate in some workplaces. Parents can be paid up to around £50 a week of their salary as childcare vouchers and they don’t have to pay tax or National Insurance on that money.
Working tax credit and child tax credit are both means tested and can provide help towards paying for children’s early years education and care.
Working out what’s best for you
To make a decision, you’ll need to sit down and work out what’s best for you and your family.
Firstly take your net income each month – that is the money you take home after tax.
Then add up all work-related expenses. Include what it costs you to get to work and back and what you spend on food, drinks and work clothing.
Next, tot up what childcare is costing or would cost you. Find out the prices of local nurseries and nannies etc.
Finally factor in any childcare help you would be entitled to (if any).
Add your work-related costs with childcare costs and take the figure away from your net income. Then factor any help back in, if you’re entitled to any, and see where that leaves you. If you find you’re effectively working for nothing it might be time to reconsider.