Nicole, 36, and Matthew Griffiths, 37, from Brighton, who earn a combined £205,000 a year, feared they could not afford a second child because childcare costs would rise to nearly £40,000 annually. The couple, both in senior tech roles, felt "out of control" when they realised the financial impact, but they eventually saved £21,495 through pension over-payments and launched a business to help other families.
The £100,000 childcare trap
Parents lose entitlement to tax-free childcare worth £2,000 a year per child as soon as one parent earns over £100,000. They also only qualify for 15 hours of free childcare a week for a child over the age of three, rather than the full 30 hours available to working parents under that earnings threshold with a child over nine months.
The couple were already paying £1,600 a month for their eldest daughter's nursery before expecting their second child. Their mortgage repayments on their three-bedroom home also jumped from £2,100 to £3,300 a month in 2022.
Struggling to out-earn the problem
Facing nearly £3,000 in extra monthly outgoings, the couple found that earning more was not the answer. Mat, who earned £125,000 as chief product officer at an insurance tech firm, spent three months applying for two senior jobs, each involving nine stages of interviews. He said: "I did get two job offers and they were both really good jobs but because every pound you earn in that income tax bracket you basically take home half of, it's really hard to out-earn the problem because you're paying so much in tax."
Nicole, who earned £80,000 in senior management for tech service and operations, said the cost of childcare came as a shock when they first became parents. The couple, who also received dividends from two to three Airbnb properties, found the financial pressure threatened to become worse when they discovered they were expecting their second daughter.
Finding a solution and launching a business
After months of researching tax, pensions and childcare support rules, the couple reclaimed childcare support worth £16,281 for both daughters, saving £21,495. They initially used pension over-payments but later switched to what they called the "entrepreneur route," quitting their jobs to launch Wealthy Parent Guide, a tool helping families earning six-figure salaries understand their options and save on childcare.
Mat said: "The average parent that comes to us saves £919 per month on their childcare costs." That is £11,028 per year. The business helps parents model how changes to pension contributions and other financial arrangements could impact their childcare costs and take-home pay.
Nicole added: "As a society, I would say we encourage women into senior leadership roles but the childcare system can financially incentivise them to step back." Mat noted that the system can discourage career advancement, saying: "If people in the prime of their careers are going, you know what, I don't want a bonus. I don't want a promotion because it just screws up my childcare costs. It's not worth it."
