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The cheapest childcare options

The cost of childcare is so high that many mums simply can’t afford to go back to work. But can you pay less and still find good childcare?


Raising a child from birth to their 21st birthday now costs just under £220,000, and childcare accounts for £62,099 of it. Yes, you read that right, more than 62 grand on childcare alone.

That’s according to the latest Cost of Raising a Child report from the Liverpool Victoria - and it doesn’t include private school fees, if you’re wondering. No wonder so many women find it hard to go back to work after their children are born – the cost can mean it’s simply not worth it.

And I know how hard it is; as a recent mother myself, I’ve had to make tough choices about the childcare I can afford.

So, armed with my nine-month old, I’ve been taking a look at the options – and how much they all cost. Is childcare really something I can, or should, pinch pennies on? Here’s what I’ve found…

[Related feature: You’re wasting money on your kids]


A nursery

The most obvious childcare solution is a nursery - somewhere staffed by qualified nursery nurses, where the youngsters can socialise and enjoy supervised play.

Depending on its Ofsted rating, the cost can vary enormously. For example, one nursery near me is rated “outstanding” and charges £210 for five days a week. Compare that to a popular nursery rated “good”, which charges £176 for five days.

Nurseries that perform less well in inspections charge less. But I’m not sure I can recommend parents pinch pennies this way, if a better option is possible. And I’m not sure this is the best option for me. I don’t need many days a week, so the price would be closer to £50 a day.

Of course, one way to keep the cost down is to use childcare vouchers supplied by your employer through salary sacrifice. These allow you to pay for childcare out of your pre-tax income and can save you hundreds of pounds a year. Ask if your employer takes part in this scheme, it could save you as much as £1,000 a year.

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[Related feature: How to get more out of your employer]


A childminder

Your baby could be cared for in someone else’s home; perhaps even another mother who’s retrained so she can work from home. You can use childcare vouchers with registered minders, so again you can save quite a bit of cash.

As with nurseries, though, the price varies considerably and popular childminders can have lengthy waiting lists. Minders close to me charge between £25 and £40 a day.

The childminders I spoke to said they were not as frequently inspected as nurseries as it is a random process (in fact, one has not been inspected in more than four years). However, the National Childminding Association states that inspections are carried out every three years, similar to the rules for nurseries.

Many parents prefer this option as it means that their child is being cared for in a home environment. For me, this is quite a tempting solution, as long as I found a minder I trusted. No one wants to pay £30 to have their baby parked in front of CBeebies all day long.


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A nanny

This is perhaps the gold standard of childcare – dedicated, one-to-one care provided by a fully trained professional. Like any premium service, it doesn’t come cheap. Again, the price varies depending on what you need, whether you provide a car, if the nanny lives in, that kind of thing.

Looking through candidates on various nanny websites, I can see that I’d expect to pay between £280 and £400 a week for a live-out nanny, depending on hours and their experience. Not only that, I’d need to arrange their NI contributions and tax. There are companies who sort the paperwork for you, but that’s an extra cost.

For me, and for many other mothers, that’s simply not worth it; there’s little point going back to work if most of your pay goes on childcare. You may as well enjoy the time with your baby yourself.
 
A friend

New mums meet so many other mothers, through coffee mornings, baby classes and toddler groups. If you’re planning to work part time then one option is to swap childcare with someone else who’s doing reduced hours.

This can be an informal, non-financial agreement, so you wouldn’t need to qualify as childminders. Ofsted makes this point clear, stating: “This [regulation] does not apply to arrangements made between friends to provide reciprocal childcare where no money changes hands or money payments are made for things like electricity or food.”

I like this option and do regularly swap childcare. However, I can’t find a mum who needs to work opposite hours to me, so this isn’t a permanent solution.

A family member

Granny and granddad are the obvious free or cheap babysitter. You and your baby trust them, and they got you safely through childhood, after all. 

One in four grandparents look after kids while their parents work, according to Age UK, so clearly some mums are benefiting. But it can be tiring for grandparents of young children, so don’t exploit them. There’s some good advice on the issues surrounding childcare on the Grandparents’ Association website.

Unfortunately, we don’t live anywhere near family, so this isn’t an option for me.

A student

There are many enthusiastic, sensible college students and undergraduates who want part-time, flexible hours and who would jump at the chance to look after children instead of stacking shelves or waiting tables.

I advertised on a few classifieds websites and received some quite frightening responses. One was from a 16-year-old boy, who had no childcare experience but explained that he “used to be one”. He wanted £2.50 an hour. It’s cheap, but I don’t think he’s quite what I’m looking for!

Then I contacted my local college, which passed my advert around its childcare students. The course tutor then recommended certain applicants, so drawing up a shortlist was easy.

Minimum wage is £4.98 for 18-20 year olds, and £6.08 for workers aged 21 and above. Of course, this isn’t much use if you need full-time care, and students are obviously not fully qualified. If your student earns less than £7,475 a year, and most do, there will be no tax to worry about.

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The outcome

The cheapest childcare option for you will always depend on your circumstances.

Because I work for myself from home, I’m confident hiring a student to look after my son. I am in the next room, so I’m on hand in case of emergencies. For me, that made it less important to find a qualified childminder or nursery nurse.

However, if I had to go to an office then this wouldn’t be an option, so my childcare would rise. That’s why I’d only want to work for an employer who offered childcare vouchers.

If you’re considering agreeing to sacrifice some of your salary in order to receive vouchers, you need to make sure this doesn’t drop your income to below the National Minimum Wage for your age group, or affect your tax credits. There’s an official calculator that can help you work out how much you could save.

[Related feature: Can mothers really have it all?]

This article has been updated to since it was originally published