What Working Parents Need To Know

Are you a new parent struggling to make ends meet in credit crunch Britain? Read on to find out what your best financial options are.

The rising cost of living has forced over four million mothers back to work, according to the latest research from Scottish Widows. The study revealed that 62% of UK households with dependent children are now reliant on two salaries.

Of course, many mums actually want to get back on the career ladder after they've had their sprogs.

However, thousands of others feel forced to go back to work sooner than they'd like, simply to try and pay the bills. And to make things even more complicated, the cost of childcare itself can seem prohibitively expensive.

Here, we outline the options that might be right for you - and tell you how you can get the help you need.

What kind of childcare?

If you're a mum (or dad) who's made the decision to go back to work, you've got several main childcare options open to you:

A nanny: Often the most expensive form of childcare, a nanny is a trained childcare professional, capable of looking after babies and children of any age. He or she will usually work in a full-time capacity, within your home.

A real-life `Mary Poppins' can command a salary of £30,000 a year or even more. Find out more about nannies here.

An au pair: Much cheaper than a nanny, an au pair can provide general care for one or more children within your own home.

Au pairs are normally young women or men from abroad who come to improve their English in exchange for home and childcare help. They are generally paid pocket money, board and food in exchange for their services.

A childminder: A full-time childminder is often (but not always) a mum who has chosen to stay at home herself. Childminders will generally look after a small group of children under 12, in their own home.

Read this leaflet on choosing a childminder to find out more.

A day nursery: Nurseries are generally more expensive than childminders, particularly in big cities. They are designed to take children for whole days before they reach school age.

Unfortunately, affordable nurseries with good reputations are often hugely oversubscribed. For more information, have a look at the National Day Nurseries Association website, or visit the Daycare Trust.

Finally, read about other forms of childcare - including occasional crèches and after-school clubs - here.

How much will it cost?

The cost of childcare varies greatly depending on the sort you go for, where you live, how old your child is and what sort of benefits you're entitled to.

As a rough guide, however, have a look at this table showing typical weekly childcare costs in Britain:

Based on 50 hours a week in a nursery or with a childminder.

Abridged results of Daycare Trust childcare costs survey 2008

As you can see, it may seem that going back to work is more of a financial hindrance than a help. This is particularly the case if you're a parent on a low income, as you may end up paying almost as much out in childcare fees as you earn.

The yearly cost of a typical nursery place for a child under two is now £8,268 in England, £7,384 in Wales £7,332 in Scotland. Ouch!

What you're entitled to:

Fortunately, there are several benefits you may be eligible for as a working parent. Apply for all the help you're entitled to and you may find that going back to work is a sensible financial decision after all.

Here are the main two:

Child Tax Credits: If you work and pay for childcare at the same time, you may well be able to get tax credits to help with the costs.

You can get up to 80% of what you pay in childcare, to a maximum of £175 per week for one child and £300 per week for two or more children.

Child Tax Credits aren't only available to those on very low incomes. The amount you get does depend on your income, but it's estimated that nine out of ten families are entitled to claim - so it's well worth investigating.

To find out more about Child Tax Credits, have a look at this section of the Directgov website.

Childcare Vouchers: These are part of a government scheme which can save each working parent over £1,195 in childcare costs every year.

In a nutshell, the scheme allows parents to sacrifice some of their gross (pre-tax) salary in return for vouchers which can be put towards the cost of childcare. Vouchers needs to be offered via employers, so it's worth checking to see if yours has signed up yet.

The really good news is that both parents are allowed to get a maximum of £243 worth of vouchers every month. Just be aware that swapping salary for vouchers could affect your existing benefit entitlement.

Find out more about Childcare Vouchers here.

  Good luck!

More: Money Saving Tips For New Parents | Can You Afford To Have A Baby?