Work and childcare costs wipe out parents’ wages
Thousands of parents are feeling forced out of the workplace because of the rising cost of childcare, Aviva has revealed.
A new study from the life insurer shows that nearly a quarter (23%) of families with dependent children have seen at least one parent give up work because work and childcare costs were wiping out their wages. A further 26% of families with working parents have reduced their working hours for the same reason.
According to new findings from the insurer, a full-time working mother with two children could be bringing home just £135 a month after she has paid out all the costs associated with working and day care. As a result, many two-parent families are left with the dilemma of whether it is worthwhile for both parents to work. In turn this could mean thousands are left in the potentially vulnerable position of relying on a single salary.
Many families will therefore welcome the government’s recent announcement that from autumn 2015 it will give up to £2,000 per child to ease the cost of childcare if both parents are working.
Significant childcare costs:
An analysis of childcare costs reveals the financial struggles that many working parents face, with typical full-time nursery care of a child under five costing £977 per month. When children start school, the costs often continue, with out of school care costing an average of £152 per month.
While 42% of families claim they don’t use childcare and 38% say their family / friends provide this for free, those parents who do pay can find it incredibly difficult to juggle their finances.
Cost of employment:
In addition to childcare and schooling costs, the average working family member spends £334 per month on expenses associated with employment such as transport, food and clothing.
Single income families leave themselves exposed:
With some parents finding their income eroded by the associated costs of working, it is unsurprising that many choose to stay at home to look after their families. However, while this can make financial sense, it can leave families in a vulnerable position if the main breadwinner is unable to work for any reason.
Should the average family lose one income, they say they would look to cut spending to a minimum (38%), turn to the Government for help (22%) or dip into their savings (31%). Although with average household savings at just £2,773 - typically less than two month’s income - this is unlikely to last long.
If they were faced with a permanent loss of an income, families’ immediate worries would be about meeting their bills (55%), maintaining their standard of living (41%) and being forced to move home (28%) - all stressful issues at a time of need.
Children are also a major concern in this scenario, with 24% of parents worried about how this might impact on their behaviour and 19% concerned about their performance at school.
Louise Colley, protection distribution director for Aviva and a mum to six-year-old twins says: “This study shows clearly that the dilemma of ‘to work or not to work’ is very real for thousands of UK families. With childcare fees and the cost of commuting steadily rising, it’s a real consideration for many two-parent families as to whether a second salary will actually mean the household is better off, particularly if there is more than one child requiring day care. The government proposal to provide up to £2,000 per child towards childcare if both parents are working is therefore sure to be a welcome one.
“Many families may decide that it makes financial sense for one person to look after the children while the other acts as the breadwinner. This is a practical solution but it can also leave families vulnerable should anything happen to that income earner, if they don’t have adequate protection in place. We'd strongly urge all families to consider the 'what ifs' and take steps to make sure they're covered. After all, we go out to work to provide for our families but without protection, they could be left financially exposed."