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Pre-school childcare costs more than mortgage or rent: what parents can do

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Working parents with pre-school age children are paying more for childcare each month than to live in their own home, new research reveals.

Figures from insurer Royal London show the monthly cost of full-time nursery care for a child under two in England costs £1,065 or £1,040 for a two and three-year-old, while a typical mortgage costs £658 a month or £833 to rent.

The research suggests the total cost for childcare in pre-school years is £34,943 per child, assuming both parents return to full time work when the child is nine months and the child starts school at four and a half.

Becky O’Connor, personal finance specialist for Royal London, said: “The financial pressure on people with young families is immense and can last a decade.

Young couples rely on two full-time salaries to meet living costs before children come along.

“Once children arrive, childcare costs have to be paid and one parent often goes down to part-time hours, reducing household income.

“As a result of this ‘concertina’ effect of higher costs and reduced income, there is very little left at the end of a typical month for savings or emergency costs.

“Paying for childcare puts parents at real risk of financial hardship.”

To alleviate the financial burden of childcare costs, there are options for parents.

The government’s tax-free childcare scheme which gives you up to £2,000 a year per child to put towards childcare costs.

You open a designated account on the website and for every 80p you put in, the government will give you an extra 20p, and you can pay in up to £10,000 a year.

To be eligible, both parents must work and earn less than £100,000.

For more information, go to

Royal London is publishing a guide to help families with their financial planning. It will be available here from Tuesday 11 June.


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