How to optimize your finances for family and part-time work

My boys are 14 and 16 now, so we don’t talk about childcare and work models as much anymore. Electric scooters are more likely at that age (any advice for getting teens to wear helmets? – Let us know in the comments!).

With shared responsibility, mutual understanding, the courage to take on flexible jobs and lots of help from our grandparents, it was always quite easy for us to somehow balance work and family. My husband and I love our children and our work, and neither has ever been an obstacle to the other. Admittedly, we are by no means perfectionists and yes, our boys had to become independent faster than other children and certainly have a very different relationship with digital devices since the pandemic. In retrospect, I wouldn’t do anything differently for myself.

Still, as an economist, I was fascinated by the discussion about nursery subsidies that has been going on in recent months and weeks, because economic relations and their effects on all of us continue to inspire me. Of course, the great adventure of having a family can only partially and incompletely be expressed in numbers and the facts do not count for joy, love and warmth. So here are some facts and practical tips on how to optimize your finances with children and family following the debate that has just taken place in the National Council on subsidies for nurseries.

According to estimates from the Zurich Youth Welfare Office a child costs an average of 1,525 francs per month. Extrapolated to 18 years, that is about 330,000 francs. This estimate does not include costs for third-party support, e.g Day nurseries and out-of-school care. According to the BFS, these amount to 10 per child under the age of 13 465 francs per montha household with children spends an average of 619 francs per month on childcare outside the family.

A third of households with two children have difficulty making ends meet financiallythe situation for single parents is even more difficult: in more than half of single-parent families, the income is barely enough to make ends meet.

The Child punishment or parental fine (terrible word!) describes the Loss of wages suffered by parents after the birth of their first child. According to Prof. Zweimüller’s studies, the loss of income for mothers in Switzerland after the birth of their first child is about 60%.

This loss of income can last for 10 or even 20 years. The phenomenon is not only typical for Switzerland, but, as studies show, is similar for mothers from Germany and Austria, for example, and can mainly be explained by a reduced workload.

According to the BFS (2022), around 10.1% of men with partner and youngest child under the age of 25 part-time vs. 44.8% of women. Less work pressure not only leads to a lower salary, but also to considerably lower premiums for the AHV, occupational pension scheme (BVG) and possibly private pension schemes; which may not be immediately noticeable, but in the long run has a sensitive effect on the available money in old age, especially since women also have a higher life expectancy and the money has to last longer. That’s how women are in Switzerland are much more likely to be affected by poverty in old age than men.

Cheaper external childcare certainly helps to improve the financial situation of parents, but creates only limited incentives to change working modelsand thus only solves the long-term financial problems to a limited extent, especially when it comes to women’s pensions.

For example, according to reports and according to studies by Prof. Zweimüller, mothers no longer work because childcare becomes cheaper. For example, in countries with far-reaching discounts on external childcare, such as Austria, the child discount is not or not significantly reduced. One of the main reasons for this could be cultural norms or personal preferences, but also other economic factors such as the tax burden on married couples.

In addition to affordable childcare, a far-reaching and long-term improvement in families’ financial situation also requires reforms of the pension system, family-friendly, flexible working models for both parents and the associated cultural acceptance and reforms of the tax system . It will be a while before we get there, but here are a few practical tips for your finances that you can apply immediately if you are planning a family, already have children or planning to work part-time.

When the family grows, not only the monthly budget changes, but often also the life planning and thus the long-term financial goals. Perhaps you have a greater need for security or the desire to own your own home is growing? Income changes with the changes in the occupational situation.

Ideally, the family’s financial plan regulates who has what expectations, who wants to work how, which childcare model is chosen for the children and how the safety and care of the partner in question is arranged, for example in the case of part-time work. Depending on the life model (married, cohabiting, etc.) there are also tax aspects. In addition to financial planning for the parents, long-term planning for the children’s future should also be included.

Which part-time work-work-life-financially-optimal is optimal depends on many factors, e.g. whether both partners want to cut down, whether someone stays at home completely, what the changed income situation means for taxes, costs for childcare, etc. There is no general answer to what is financially optimal.

This is evident from the SOTOMO study “The part-time study” that was published in February would people in Switzerland prefer to work 59%. Ideally, the optimal financial and pension mix is ​​calculated individually. If you want to calculate quickly, you can also try out this part-time calculator.

If you work part-time or not at all, this can have major consequences for your pension provision later in life. Here are some points to watch out for:

As you can see, family financial planning takes some work and research, but it is extremely important to avoid unpleasant surprises in the future. What tips do you have for finances with family and part-time work? 😉