How can I reduce my childcare costs?

Choose the right childcare for you and your child

Choose the right childcare for you and your child

There are so many options out there when it comes to childcare.

Having recently been through the turmoil of entrusting the most precious thing in my life into the hands of relative strangers, I totally empathise with anyone having to do the same!

No matter what you choose, it’s important that you plan early. There may be waiting times if your area is oversubscribed so thinking ahead will help to ensure that you’re not forced into making a decision.

You’ll ultimately go with your gut instinct and what you feel is best for you and your little one, but here are some of the financial considerations to bear in mind.

Private nurseries

The first choice for most people is a private nursery as there are so many around. They look after and educate children from birth to age five. They’re easy to budget for as it’s a set amount each month, but they can be the most costly. Costs range from an average of £53 per day in London to around £30 per day in Northern Ireland (according to The Money Advice Service).

They’re better value for money if you work long days as a full day usually covers 7.30am until 6.30pm, but less so if you drop off late/pick up early. Be aware that if you’re on holiday or your child is ill you still pay for the days your child is absent. On the other hand they’re always open despite any staff illnesses and are much less likely to let you down at the last minute.

Most nurseries will charge you a registration fee, although I encountered one which tried to lure me in with the notion that they were ‘helping parents’ by not charging one. They did however charge for settling-in sessions (short sessions to help your baby settle), which most others offer for free. Thankfully I opted for one with free settling-in sessions as my boy took longer than most and it would’ve cost me a fortune!

You’ll have to factor costs for travel to and from the nursery but if you find one that’s local and on your route to work this shouldn’t add anything extra. The cost usually includes three meals and snacks so you don’t have to fork out extra for this either.

You can find a list of all the private daycare nurseries in your area by contacting your local Family Information Service (FIS). They’ll also include information about local preschools and playgroups that offer half-day educational play sessions for children aged two to five.


The cost of a nanny will vary depending on whether they live with you, the number of children you have and the average wages in your area. The average weekly wage for a daily nanny in London was £495 in 2012 and £389 in the rest of the UK according to

If you’re considering a nanny, you’ll need to think about the wage and the following:

  • You’ll have extra food and heating costs
  • You become an employer, so you’re responsible for paying tax and National Insurance and have to provide holiday entitlement. You’ll need to factor the extra cost and time it’ll take you to advertise the post, draw up a contract etc, or alternatively pay for an agency to do this for you
  • Not all nannies are registered on the VOCR (the Voluntary part of the Ofsted General Childcare Register) and this is vital if you’re entitled to receive help towards childcare costs

Although they’re more expensive, it could be cost effective for you if you need flexible childcare because of your working hours. As an extra you won’t need to take time off work or arrange alternative childcare if your child is ill – a nanny would be happy to look after an unwell child whereas nurseries can’t.


Childminders are self-employed so their fees can vary. The average cost for 25 hours is currently £98.15 per week. They’re paid hourly so can be more flexible and cheaper than a nursery if you don’t need care for the full 10 hours a day that nurseries offer. You may also be able to negotiate on price if you provide meals and snacks for your child, but this might not save you money overall.

All childminders must be registered so you can use childcare vouchers to help towards the costs. Depending on your agreement you might still have to pay the fees if you’re on holiday or your child is ill, but you might be able to discuss this if you give sufficient notice. Similarly, if your childminder is ill or on holiday you will have to find and pay for alternative childcare or take time off work.

Au pairs

This option isn’t for everybody but you might be surprised to learn that it’s a relatively low-cost option. Au pairs are usually young students who are taking a break from their studies to travel and learn English.

They’re not treated as employees so you give them ‘pocket money’ rather than a wage. It’s reasonable to pay £65 for 25 hours or £80 for 30 hours and the time can be spread across the week however you both decide.

Obviously there are costs involved with having an extra person living with you. Your food, heating and phone costs may go up and you’ll need a house big enough to accommodate them with their own room.

They may also agree to help with light housework and the hours might include the odd night babysitting which gives you a chance to have a crazy night out once in a while. Finances aside, let’s hope the cliché of your partner running away with the au pair doesn’t come true!

Cheaper alternatives to childcare

As the costs keep rising, parents are being forced to think of new ways of cutting the costs. Here are a few ideas that are becoming increasingly common:

  • Flexible working: can you and/or your partner change the way you work to reduce the hours you have to pay for?
  • Family and friends: Is someone you know free to help out on a regular basis? It’s usually the grandparents that help out for free but are there other people that might be willing to help out at a lower cost.
  • Split work and childcare with a colleague or friend: Can you do a job share or work different days so that you look after your friend’s child while they work and vice versa? If you’re thinking about doing this, there are some Ofsted rules you have to bear in mind. The rules would sound crazy to some people, but if ignored could cost you a hefty £5,000!
  • Community nurseries: These are not-for-profit organisations such as Sure Start Children’s Centres. They can work out cheaper and often offer other free services as well.
  • Nanny or au pair sharing: Share the services with another family to reduce the cost. Check out or
  • Develop a babysitting circle: If you have friends with young ones, offer to babysit for free and they can return the favour for you too.
  • Consider where you live: It might sound drastic but could you move closer to cheaper childcare or relatives that can help out for free? If you live in an area where childcare is oversubscribed and the costs are higher than the average it could be worth the move.

Ask yourself whether it’s cost effective to go back to work at all. Use this handy childcare cost calculator from the Money Advice Service to estimate how much it might cost you in your area and compare the various options.

Review your budget

If you’ve considered all of your options and decided on a childcare solution, remember that it should be included as a priority expense in your budget. Don’t forget that it could have an effect on other areas in your budget too.

For example your food allowance might reduce if the childcare option includes breakfast, lunch and/or dinner but travel costs may increase if you have to drive to drop them and pick them up. Most importantly, make sure that you’re claiming all the help you’re entitled to.

Once you’ve made your decision on the most suitable childcare option for you, review your budget as a whole. If you’re worried that it might push you towards having a debt problem try our 60 second debt check to get an immediate recommendation on what to do next.

Posted by in Budgeting