It’s an uncertain world out there at the moment. That’s been making it hard for many parents to plan ahead and figure out a lifestyle that’s going to be sustainable for both themselves and their families.

Although working parents have childcare choices, there’s a big squeeze on one option in particular that might once have seemed more affordable. Spiralling interest rates and high inflation are forcing many of us to reassess and tighten our belts.

If your finances are on the cusp of nanny affordability, this article is for you. We’ve carried out our own investigation into ways to make savings elsewhere that could turn your dream of hiring a nanny into reality. Read on for the results.

Understanding the Cost of a Nanny

Where you live, the number of hours you need your nanny to work and the current demand for nannies will all play into the price you pay. We’ve already done a breakdown of hourly rates that you can read more about here.

There’s no question that most people see hiring a nanny as the gold standard in childcare for busy families. Many parents have careers with salaries ringfenced for giving their kids the best possible opportunities.

Although alternatives such as daycare centres or hiring an au pair tend to work out cheaper, nothing beats a nanny for sheer convenience and one-on-one attention. Demand for nannies has been growing, pushing up hourly rates and putting yet more pressure on budgets that are already often at breaking point.

A Reputation for Being “Laid Back” Gets Challenged

It’s a grim read in parts. A recent workplace report conducted by Gallup found Australians and New Zealanders were the second most stressed-out workers in the world. That’s despite the sun, space and natural beauty of both countries.

Part of the reason could be workers taking on more than one job to cope. It’s also possible that added stress relates to other factors such as trying to make ends meet that technically fall outside the workplace but play into it.

The upside is that there’s plenty of work to go around so it’s a good time to be trying to find your dream job. And, when that happens, it’s a smart move to mitigate other stress triggers in your life.

Take Back Control

One of the biggest mistakes you can make when budgeting for a nanny is to do a quick, mental calculation of the hourly rate multiplied by the number of hours you need.

In the vast majority of cases, your nanny will be your employee and with that come workers' rights along with statutory payments and taxes to sort out. There are plenty of other associated costs to factor in from public holiday pay to mandatory types of insurance.

Nannies may be the ultimate in childcare and with that comes responsibility. They require the ultimate in careful administration when it comes to paying them and managing holidays, sick pay and overtime.

Navigating your way through the complexities of payslips and employee taxes is a step too far for many overworked parents. Outsourcing the admin to Pay The Nanny is literally a very small price to pay for the peace of mind that comes with it. You’ll have the satisfaction of knowing you’re compliant with all your responsibilities as an employer.

So, how do you make your hard-earned cash go as far as possible so that you can weather the current financial storm? It all begins with budgeting like a pro.

Track Your Spending to the Last Cent

Use a budgeting system that works for you. That could be a spreadsheet, online apps, a pen and paper or a combination of several available tools. Your goal should be to understand exactly how much cash you have at any given time. Make use of all available credit card and banking apps.

Take a look at the date you get paid. If you have the option, ask your employer to switch the date to the first of every month. Set up all regular payments such as direct debits so that they leave your bank account 2-3 days after your pay date.

This is going to let you see how much money you have available in an instant. Gather together all your bank and credit card statements from the last 4 months. Create an online or written spreadsheet of all these monthly variable and fixed expenses:

• Your mortgage or rental payments
• Insurance (Home, car, valuables etc.)
• Loans for cars or debt repayments
• All credit card payments (separate off drink/food from the supermarket)
• Wifi, phone charges and TV subscriptions
• The cost of your commute
• Utility bills (electricity, water etc.)
• Gym membership
• General savings and/or holiday fund
• Clothes and shoes
• Evenings out, theatre or cinema trips and any other entertainment
• Gifts for birthdays or other special occasions

Make Realistic Budgeting Targets

Take a good look at your monthly budget and figure out how you can trim it. You should view eating out, for example, as a high-end luxury.  It’s one of life’s most costly expenses for mid-range salary earners. Switch to drinks-only dates if you’re socialising. 

When looking forwards, you should also take likely rises in inflation into account. Factor in the latest inflation figures and use them to adapt your budgeting calculation. To get your budgeting under better control, you may need to do any of the following:

• Avoid buying new clothes and take a “make do and mend” approach
• If you haven’t worn a garment for a year, sell it online
• Use a less wasteful slow cooker to make meals ahead of time
• Microwave vs Regular Oven? Microwave every time for energy cost savings
• Reduce the temperature of your washing machine
• Only ever wash full loads in your washing machine
• If you belong to a gym, shower there
• Join a decent money-saving online forum to get the best and latest tips
• Never do your supermarket shopping when you’re hungry as you’ll buy more
• Use a basket instead of a trolley at the supermarket to resist over-spending
• Sell any smartphones you no longer need
• Refill water bottles rather than buying bottled water
• Make cycling or walking your preferred mode of transport
• Split dishwasher tablets in 2 and use them in halves
• Look for “freecycle” groups in your area for free furniture/white goods

Cut, Cut and Cut Again

Ask yourself if your TV subscriptions are giving you value for money. Cancel any that don’t cut it or see if you can share the costs with a mate. Get on the phone with your mobile and wifi providers. Haggle away and get reassurance from them that you’re on the cheapest possible plan.

Always look at bank and credit card statements no matter how unpleasant an experience it may be. Burying your head in the sand achieves nothing other than the chance of more debt further down the road.

If you’ve amassed a series of debts or loans with a variety of service providers, think about consolidating them into a single loan. It’s far easier to manage and you may get a more favourable interest rate and so ultimately pay less in the long run. 

Mark the renewal dates of any insurance products you have on your calendar. There are seldom rewards for loyalty nowadays. Avoid auto-renewals of any description. Use a price comparison website to check out new deals when any renewal dates approach.

Some banks are offering incentives when you switch accounts. When you’re in control of your finances, you should check around for deals as moving to a new provider may be worth it.

Build a Nanny Fund

If you’re planning a family in the future, set aside some money each month to offset your nanny expenses. If you have savings, invest them wisely to maximise your return.

Always take on a financial adviser and figure out what degree of risk you’d be comfortable taking.

As a rule of thumb, the lower the risk, the less you’ll earn on any savings. However, if the future of your kids is at stake, the safety of an account that earns you regular but relatively low rates of interest may be as far as you can stretch.

The longer you leave your cash in a savings fund the more chance there is for interest to accumulate and compound. For most of us, it’s best to start saving from as early an age as possible.

Check In With Pay the Nanny

We know from the many busy parents we speak to that inflation and interest rates are key drivers in raising stress levels. Pay the Nanny can play a part in your stress-busting strategy.

Working out how much to pay your nanny and ensuring you’re tax compliant is tricky and time-consuming. Rules and regulations are under constant review and change from time to time as well.

Let Pay the Nanny take the strain and get your nanny payroll sorted today. Get in touch with us today and find out how little it costs for total peace of mind.