By Max Clarke
The soaring cost of childcare is forcing parents to questioning whether they can both afford to work.
According to new research from Aviva, a working mother could be up to £98 a month worse off after all child and work costs are taken into account.
As a result, thousands of families could be left in the potentially vulnerable position of relying on a single salary. More worrying still, the Aviva study shows 95% of UK families don’t feel completely financially protected against the loss of an income.
In addition to childcare and schooling costs, the average working family member spends £120 per month (full-time) and £90 per month (part-time) on expenses associated with employment such as transport, food and clothing.
Therefore, when all costs are taken into account, the average woman with two children would be out of pocket by £98 per month if she worked part time, and better off by just £120 per month if she worked full time. While Government benefits could provide some support, many families have seen cuts in this area and may need to consider whether this kind of support is sustainable going forward.
"This report shows very clearly the challenge many families with young children face as they balance their income with the cost of childcare,” commented Louise Colley, head of protection for Aviva and mum to four-year-old twins. “As care costs rise, it's quite possible we will see more and more couples relying on one salary while the other person looks after the children - simply because they may actually be worse off if both people work. However, while this may make financial sense, it can also leave families vulnerable should anything happen to that income earner.”
Worryingly few families appear to be taking proactive steps to protect themselves: 60% are without life insurance, 85% are without critical illness cover and 90% are without income protection. Instead, should the average family lose one income they would look to cut spending to a minimum, turn to the Government for help or dip into their savings. Although with average savings at just £982 or under half a month’s income, this is unlikely to last long.
"Families today face an array of money worries, as this report shows. But the unintended consequences of not having protection in place can be huge - both financially and emotionally - should the unexpected happen. Sixty percent of families don't have even basic life insurance so 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 do the best for our families but if we don't have suitable protection, we could be leaving them financially exposed."
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