North-South divides, and how childcare and investing overlap
Money Observer’s Prudent Parent finds parallels between investing and nursery fees.
22nd April 2020 09:15
by Kyle Caldwell from interactive investor
Money Observer’s Prudent Parent finds parallels between investing and nursery fees.
When upping sticks a decade ago from Liverpool to London, my main concern was the north-south divide beer bubble. The difference in the price of a pint between the two cities – around £1.50 or thereabouts from my extensive research – still hits me hard in the pocket, but over the years I have become less bitter.
Instead, as my priorities in life changed, the north-south house price disparity became much harder to stomach. But, given this was well-recognised and an engrained feature of the property market when I moved to the Big Smoke, it was something I could financially prepare for and grudgingly accept as I saved toward a house deposit.
- Can a two-year-old be a source of investing inspiration?
Since having my son, another north-south divide has become apparent – the cost of childcare. According to Coram Family and Childcare’s survey, the national average for a part-time place (25 hours a week) for a child over the age of two is £131.61, which over a year works out at around £6,800. In London, though, the price of nursery care is much higher, at £182.56 per week, which works out at £9,500 per year.
To add to the pain, childcare costs have risen sharply over the past decade – in 2010 the average was £82 nationally and £97 for London. In percentage terms that represents rises of 61% and 88% respectively, evidence of an increasing geographical divide.
With my investments I do not like to overpay unless there is a compelling reason to do so, and the same applies to other areas of my personal finances. But in certain circumstances there’s no escape route from being squeezed beyond control. Various government initiatives, such as tax-free childcare and 30 hours’ free childcare a week for three- and four-year-olds in England and Wales, have provided support; but given that nursery fees have been constantly on the rise, “there is a danger that these gains will be eroded by several years of above-inflation price rises”, as the Coram Family survey points out.
- Prudent Parent is a monthly column that offers money-saving tactics to help invest and save for children and grandchildren.
This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.