How do you manage budgets?

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  1. Hi all, I'm a new mum to a 6 month old baby boy. I'm back to work soon and the nursery fee makes me nearly collapse. Although I have quite a well paid job and so does my husband, we wouldn't have anything left to save after child care. So I'm wondering how does everybody manage? Do you get rid of all expenses possible? How are you still enjoying your life?
     
  2. #2 Feb 7, 2014
    Last edited: Feb 7, 2014
    Congratulations on your new baby boy!

    We considered the cost of childcare before having a child, and planned accordingly. We both enjoy our work and careers and wanted to return to them once our child was old enough and we secured an excellent care option. We pay quite a bit, but in return, we get what we pay for, and are lucky to have an excellent caregiver who has become like family whom we trust tremendously with the care and assistance raising our child. We anticipate child care expenses to remain steady until school age, then drop when it care is needed only after school hours during the weekdays.

    We both contribute to a joint account earmarked for child care expenses. So it becomes a household budget line item, just like groceries and mortgage.

    Child care is expensive and rightly so, IMO. This is not directed at you, OP, just an observation I've had for a few years. It always surprises me upon hearing parents bemoan the cost of child care. Um, what did they expect? This isn't a dog-walker who walks and cares for a pet for 30 minutes twice a day, but instead someone who is trusted with the responsibility of caring for/raising a child for 7-8 hours/day, multiple days a week. This includes naps, feeding, playing/entertaining, and as the child ages, may also be instilling values as they relate to playing with/respecting others, teaching positive behaviors (manners, etc) , as well as potty training, etc.

    Caring for a child is a HUGE responsibility - whether by a parent, grandparent/other relative or a caregiver in an individual or group setting. Thus, caregivers - in my mind - should be compensated for the tasks and expectations accordingly.
     
  3. In the same position. Unexpectedly expecting second child and full-time childcare for two will all but wipe out what I earn as a primary school teacher. So am taking around 2 years out and will do some supply work as I can have my parents have the children for 3 days a month and earn more doing supply then I would full-time teaching minus childcare costs. I'll go back once the eldest is in school. Sometimes you have to make sacrifices for your family.

    Anyway, to answer your question 4 years ago I had a salary that was around triple what I make as a teacher but I career changed after DS1 and spent 2+ years without a salary (extended maternity leave, second post-graduate course). Now the question we ask ourselves is what on earth did we do with 2 such salaries?

    You will be surprised at the cutbacks you will make and be willing to do so for the sake of your son. Nothing has changed in terms of our mortgage/bills/cars/pets etc but all the frivilous spending ceased and we save a smaller amount each month although we do put money into a savings account for DS every month and will do so for #2. And, honestly, we enjoy life just fine. We go out somewhere with DS most weekends (UK weather permitting) and he wants for nothing.

    Look into childcare vouchers with which to pay some of your nursery bills with. We get £124 of vouchers every month but only costs us about £65 due to the tax/NI savings that offset the cost. Depending on your salary levels, you may receive more value in vouchers than that. Have you claimed child benefit?

    I will say we are older parents (I am 41) so we are financially stable. Mortgage will be gone before the eldest is a teenager and we both have excellent pensions etc. I don't know if this makes a difference in how we look at things.

    Hope that helps anyway.
     

  4. We just sent out the form to claim child benefit but we won't get much because my husband is on higher rate tax. I guess I'm just use to with putting money aside every month to save. Now I can't do that I'm worried about the future. I always put myself last. All the saving goes toward house and family. I just feel secure that way. Now that childcare is taking nearly all of it makes me worry.
     
  5. You will get the full amount unless husband earns more than £50k per annum and then it decreases in bands; higher rate tax kicks in at £32,011 so there's quite a cushion. You will also get it backdated. Not that it is a lot granted: £81.20 every 4 weeks if you receive the full amount. But it all helps towards childcare etc.

    I think you just have to get out of the mindset of what you USED to do - I think that's where your problem lies. You can't keep level salaries, pay £750 a month for full-time childcare as a "new" expense and still expect to save what you used to save. Your DH is a higher rate tax payer and you also earn - remember there are many more families out there raising children on much, much less and they manage.

    If childcare is wiping out all your salary then is it worthwhile going back to work? Is that a question you have considered? Perhaps you would be better off working part-time (you save on tax/NI). Unfortunately, only questions you can answer based on your financial picture, employment options, whether you want to spend time at home etc etc.
     
  6. I tried working for 8 months and before I knew it my whole check was paying for childcare and gas to get to work. I ended up quitting work, I was not only saving child care expenses, but gas expense, business clothes, lunches out with coworkers, etc. It worked for us, but it doesn't work for everyone.

    Dave Ramsey is a fantastic financial guy here in the US, check out his website. He has a wonderful budget plan.

    The first couple of months of not working were hard, but after that I realized how much I spent on things I didn't need, Starbucks, lunching out, going out after work with coworkers, etc.
     
  7. I suggest looking into Dave Ramsey I heard his system is wonderful and he has been a life saver for many people! Good luck
     
  8. For those of you familar with this gentleman's work, how relevant do you think his advice would be for people who live in the UK (like the OP and myself)?
     
  9. We have one, and luckily the childcare doesn't wipe out a complete salary. It isn't cheap, but the rate is reasonable. There are many reasons we only have one child, but I would say financial reasons did play an impact on whether to have another....that would have wiped out a salary for sure.

    I want to add the point that to work or not work shouldn't rely only on if you make enough money to make it worth it--I think a big part of it is your reasons for working and the part it plays in your life. You need to consider if work is important to you, what your prospects will be later on if you leave the job market, etc. For me, I like that both my husband and I work, and I am thankful for the opportunity to have a job I enjoy. I also know that a lot of people have a hard time getting back into where they want to be in the job market after a few years off (not everyone, but it can be an issue for many), so that was a factor for me too.
     
  10. Oh my, we're trying to figure out how to make do with all these new expenses & life changes, too. My DH and I have made a decent living as single/ childless people, but now that we've bought a new house (almost depleting savings!) and have all these medical bills, I just don't know what we're going to do without my paycheck. Our mortgage is almost double what our rent used to be. Sigh.. I need to check this guy's website.

    To top it off, my husband is a freelancer, so there is never a guarantee that he will have consistent work, although we've been pretty lucky so far. I've never been so stressed about money.
     
  11. I just found out from my coworker that I am entitled to 12 weeks family leave benefits through disability. I had absolutely no idea that maternity leave could be related to disability insurance that I've paid into for so long..
     
  12. LR - I have no idea how the US system works but do you not get maternity pay from your employer or through the government?

    Here we're entitled to a year off and to return to our job (or equivalent) and 9 months of that is paid leave.
     
  13. The US is far behind in this area. A lot of employers here offer maternity leave (although nowhere near a year!) but it is not guaranteed. Usually larger corporations and gov't jobs offer mat leave. I am fortunate to live in CA, which is one of only a handful of states, that requires employers to pay into a state run disability insurance program (which also covers "PFL".. Paid Family Leave.) I didn't know any of this before this morning. I assumed because my employer doesn't offer maternity pay, that I didn't have any other options. Apparently this insurance programs pays 60% of your normal wage for up to 3 months. That's a lot, considering I wasn't expecting to get anything at all during my time "off".
     
  14. One thing to be aware of--many companies allow you to use short term disability for a certain amount of weeks, and then there is also FMLA (Family Medical Leave Act). But be aware that only disability pays (typically 60-70% of salary), and in many US companies you can only be paid for 6-8 weeks post delivery. 6 weeks for regular birth, and 8 for cesearean. The FMLA is an unpaid leave that allows you to keep your job, so to speak, and I think it allows up to 3 months.

    I just wanted to make sure that your coworker wasn't confused. Your company might offer more than 6-8 weeks disability pay, but just in case she was confusing FMLA with the disability (you use them both at the same time, but only one actually pays).
     
  15. Just to tack on to what LR and Alexa have said, in the US, if you use FMLA (which in many cases pertains to both the mother and father) and you want to get paid during your time off, most (if not all) companies require you to use annual and/or sick leave during your maternity leave period. As LR said, unfortunately the US is far behind in that there is no guaranteed maternity pay from the goverment or employeer.

    I sat down with a co-worker yesterday (she's due in 2 weeks with her second) and started discussing the best way to plan for maternity leave in terms of paid vs. unpaid time off, and also the cost of child care in this area. I knew it was going to be expensive, but it was still a shock to hear the actual amount she pays for one child! All I can say atm is that I'm glad we live outside of D.C., the cost would be astronomical if we'd opted to live in the city!