Can you afford the costs of children?

Republican vice-presidential candidate JD Vance has called those without children “miserable”. Evidence for misery, however, is arguably more prevalent among parents grappling with childcare costs and careers where parenthood is not supported.
The increased cost of raising children is one of the main reasons why people are having fewer of them, says the World Economic Forum.
The US was the only Organisation for Economic Cooperation and Development (OECCD) country that did not offer paid maternity and paternity leave around childbirth at the national level, according to OECD data in April 2022. Paid maternity leave ranges from 43 weeks in Greece to none in most US states. It is one of the least supportive countries for parents in the developed world.
It takes two incomes to purchase many homes these days, so whether parents leave paid work to look after children or pay for childcare, this can seriously impact household finances. A lack of affordable childcare can affect parents’ career progression, earning potential, their mortgage repayment capacity, their standard of living, pension contributions and more. Women take a disproportionate financial hit.
Thinking about paid childcare options and alternating between employment and caring can inform would-be parents’ decisions about children, and how to budget for them.
Too few couples talk about how they plan to care for children, divorce lawyers will tell you. Assumptions around responsibility for childcare, maintaining careers and standards of living can be challenged when children arrive.
Childcare is most expensive in the early years. The National Childcare Scheme (NCS) provides some financial support for children from 24 weeks to 15 years, but it’s not enough. A non-means-tested universal subsidy will provide €2.14 per hour from September this year for a maximum of 45 hours of childcare per week.
For families with an annual reckonable income of up to €60,000 net, including social welfare payments, there is also a means-tested subsidy. Rates will depend on your income, your child’s age and the number of children.
Parents should expect to budget an average of €800 a month for a full-time childcare place, according to the latest figures from Pobal, which are from 2020-2021. That’s if they can get one. In many areas, parents must book a childcare place before their child is even born.
The highest fees are for babies up to one year with weekly fees coming to €192.06 for full-day and €117.97 for part-time care, according to Pobal. Childcare facilities often prioritise those seeking a full-time place, so you may have to take that to get a spot.
The cost varies greatly, depending on where you live. The highest fees for all childcare are in Dún Laoghaire-Rathdown, where the average weekly full-time fees in 2020-2021 were €244.08 for a full day. This was 60 per cent higher than the average fees recorded for Carlow (€152.08).
You’ll likely have to consider all of this, and maybe even book a place, before you or your partner go on maternity leave.
For the first 26 weeks after a child’s birth, maternity benefit is paid. Many employers will top this up to your full pay, otherwise the State pays €274 a week directly to you.
You can take another 16 weeks of maternity leave immediately after that, but it’s unpaid. You are entitled to a credited social insurance contribution for these 16 weeks, which will count towards your State pension entitlement.
When it comes to paternity benefit, the State pays €274 a week for two weeks off work in the first six months of the baby’s life. Spain leads OECD countries by offering 16 paid weeks.
The leave in Ireland applies to same-sex couples too. So, whether you are a father of a new baby, or you are the partner, spouse, civil partner or cohabitant of the mother of the baby, or you are the parent of a donor-conceived child, you are entitled to paternity benefit. The leave also applies to adoption.
Those who are employed or self-employed with enough PRSI contributions are eligible. Some employers will top things up to your full salary.
Uptake of paid and unpaid leave by new fathers here remains sluggish. Fewer than 50 per cent of new fathers claimed paternity benefit in 2020, according to the Central Statistics Office. Until more fathers take leave for caring, women will continue to bear the financial hit for having children. Women who take time off work from age 30-36 could be looking at a reduced pension pot of about €118,000 than if they had taken no break at all, according to Irish Life, the biggest life and pensions provider in the country.
More than 82 per cent of women who started maternity leave in 2020 returned to work for the same employer within six months of their maternity leave ending, according to the CSO. For this same cohort who started maternity leave in 2020, in the 12 months following their last maternity payment, 13 per cent were no longer in employment.
Those eligible for paternity benefit are also eligible for parents’ benefit. This entitles each parent up to a further nine weeks of leave during the first two years of the child’s life or, in the case of adoption, in the first two years of their adoptive placement.
Parents’ benefit, like paternity benefit, is paid at €274 a week. Some employers will top it up to the full salary, otherwise many households will struggle with the drop in income.
For those wanting to extend their maternity leave, however, it can ease the cost.
Parents can weigh up whether one of them taking 18 weeks parents’ benefit might actually cost less than full-time childcare. Where two children are attending an early years service, the financial difference between maintaining a career and not can be negligible.
Taking time off work when everyone is still pretty sleepless can also make life easier. It may mean fewer family sick days for one – childcare bugs have a habit of spreading.
Some 63 per cent of those starting maternity leave in 2021 went on to take up parents’ benefit leave, according to CSO figures. Some 39 per cent of paternity benefit recipients did so.
Austria, Canada and Germany offer “bonus weeks” of additional paid leave if both parents use a certain portion of the family entitlement. Ireland ranks just 27 out of 39 countries for paid paternal and home caring leave entitlements.
There is little relief on childcare costs for almost the first three years of parenthood. Then they can start two free Early Childhood Care and Education (ECCE) years. The three hours of ECCE is government funded, but many preschools may prioritise applicants opting for longer hours.
If you’re planning towards savings in this phase, your child’s birthday makes a difference. Your child must be two years and eight months before September 1st to start that year. Your child’s birth month can mean paying more for childcare for longer.
You could skip a year of ECCE, with your child starting primary school sooner. The vast majority of children these days (83 per cent) are now aged five and over when starting primary school, according to Department of Education figures.
Parents of ECCE-going children will still have to arrange childcare for the remaining hours of the day. Many creches provide ECCE on site, so parents will pay for all but three hours. For example, a service might charge €200 per week for full-day care. However, when the ECCE subsidy (€64.50) is included, the cost of the session for parents reduces to €135.50 a week.
Over summer, Easter and Christmas holidays and the spring and autumn midterm breaks, ECCE doesn’t run, so the cost goes back up to that €200 a week.
When kids start “big” school, childcare fees start to come down. The average hourly fee for after-school care in term time nationally was €5.25 per hour, according to Pobal figures for 2020-2021.
The average weekly fee for school-age care out of term time nationally was €168.46. The highest average weekly fees for out-of-term school age care were in Dún Laoghaire-Rathdown (€199.52), while the lowest fees were in Carlow (€144).
If you have a child in junior or senior infants and another in an older class, the hour between pickups works against working parents. Childcare for this one hour for five days a week costs about €139 per calendar month or €97.34 with NCS subsidies at one Wicklow service.
Fees for an after-school service five days a week, which runs until 6.30pm, are €520 per calendar month, or €316 with the universal subsidy. Childcare over the 14-odd weeks of school holidays is €220 per week per child.
Parental leave enables parents to take up to 26 weeks’ unpaid leave per child before the child’s 12th birthday, or up to the 16th birthday of a child with an illness or disability but it’s on your own dime. Where households need two salaries to pay the mortgage and household costs, this leave is moot.
What it does provide is flexibility. More than 100 days of school holidays is about four times most workers’ holiday entitlement. Some parents use a mix of paid annual leave and unpaid parental leave to bridge the gap.
Think before switching jobs – generally, you must have been working for your employer for a year before you are entitled to parental leave.
Fertility rates in Ireland have declined from 2.0 in 2013 to 1.5 in 2023, according to CSO figures. A value of 2.1 is usually considered to be the level that the population would replace itself in the long run, ignoring migration. Until parents are better supported, it’s hard to see this trend reversing.