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Saving as a family: how to ease the pressure on your family budget.

Coronavirus has not only turned family routines upside down, but family budgets as well. Home working, home schooling and other consequences of the COVID-19 crisis have altered our spending patterns. But even amid coronavirus, the cost of supporting a family should not be underestimated. So, take a moment now to make a family budget to help you get an overview of your expenses and find out where you can save.

 

As parents, you are confronted with various financial issues. You receive a family allowance and tax deductions for children. At the same time, you spend a great deal of money on your children. You can save on big expenses by planning carefully. Your children should also learn to handle money at an early age – with pocket money they can spend or save.

Do you know how much you earn and spend?
 

You probably know exactly how much money you make. When it comes to your family's outgoings, costs such as rent and health insurance are fixed while others change monthly. These include expenses for food, clothing, gifts and hobbies. Keep track of these amounts for a few months in a budget book. An ice cream for the kids, a few hours of paid parking, a drink and snack at the bar – it is surprising how much money people spend on seemingly small items.

 

Tip: A budget is most helpful when you can identify the different line items individually. Ask your insurance company or bank about budget tracking. You can find information sheets and sample budgets for various family sizes and incomes at www.budgetberatung.ch.

 

 

 

This is how much a school-age child costs

 

How much does a child in primary school cost each month? The “Zürcher Kinderkosten-Tabelle” (Zurich child cost table) has the answer to this question: a single child between the ages of 7 and 12 costs CHF 1,485 per month (as at 2018). The following rule generally applies: the older and more active a child is, the more he/she costs. While a young child is happy to play with a few wooden blocks, a teenager needs a bicycle, tennis lessons or a guitar.

 

 

Expenses for school and tutoring

The compulsory nine years in Swiss state schools are free. In many places, books, notebooks, field trips and school camps are paid for by the canton. In the final years of grammar school (Gymnasium), parents must pay for their children’s school materials themselves. They are also responsible for covering private tutoring. And all that can add up: while older students tutor for CHF 20 or CHF 30 per lesson, teachers charge up to CHF 100 for the same service. In cantons with grammar school entrance exams, private preparatory courses are becoming increasingly popular. These cost between CHF 2,000 and CHF 3,000.

 

 

Expenses for holidays and leisure-time activities

Statistics show that two-thirds of all people in Switzerland travel for their holidays. Most of them budget for more than CHF 2,000 per adult for this holiday. The most expensive leisure-time activity is sport. Gym or club membership, clothing, gear and training camps are costly.

 

Tip: You can save a lot of money when buying gear for your children’s hobbies. You can probably hire sports equipment or buy second-hand. Hiring makes sense for musical instruments: they should grow with your child.

 

If your child plays a musical instrument, the potential cost is huge: recorders are cheap but a piano is an expensive purchase. When it comes to lessons, most music schools are subsidised by the municipality or canton so you don’t pay the full amount.

 

 

How much pocket money makes sense?

If you want your child to learn financial responsibility, then he or she needs to have some money first. This is why finance and education experts alike recommend pocket money. How much you give your child depends on your financial situation. It also depends on what your child will have to pay for out of his/her own pocket. Budgetberatung Schweiz (Budget Advice Switzerland) has issued this recommendation on the topic of pocket money:

 

Younger children should receive pocket money weekly, older children monthly.

 

Age in years 6 Amount per weekCHF 1.– Amount per month
Age in years7 Amount per weekCHF 2.– Amount per month
Age in years8 Amount per weekCHF 3.– Amount per month
Age in years9 Amount per weekCHF 4.– Amount per month
Age in years10 und 11 Amount per week Amount per monthCHF 25.– bis CHF 30.–
Age in years12 bis 14 Amount per week Amount per monthCHF 30.– bis CHF 50.–
Age in yearsab 15 Amount per week Amount per monthCHF 50.– bis CHF 80.–

For older children, you may agree to provide a larger allowance:

 

Intended usePocket money AmountCHF 30.– to CHF 80.–
Intended useMobile phone AmountCHF 20.– to CHF 30.–
Intended useClothes, shoes AmountCHF 60.– to CHF 80.–
Intended useHairdressing, toiletries, cosmetics AmountCHF 20.– to CHF 40.–
Intended useBicycle, moped AmountCHF 10.– to CHF 30.–
Intended useSchool supplies (excluding school books) AmountCHF 10.–
Intended useMeals outside the home AmountUp to CHF 10.– / meal
Intended useTravel costs (season tickets for public transport) Amount 
Intended useSchool books, excursions, camps, sports Amount 

All you need to know about family allowances

 

If you are employed then you receive a family allowance. In most cantons, this consists of the following:

  • CHF 200 per month per child up to his/her16th birthday
  • CHF 250 per month per child in education up to his/her 25th birthday

 

In about one-quarter of cantons, family allowances are somewhat higher. Employers can also voluntarily elect to pay higher amounts or allowances. Family allowances are always paid in full, even if you only work part-time.

 

Good to know: The minimum salary to be eligible for the family allowance is CHF 587 per month. In order for self-employed persons to receive a family allowance, they must join a family compensation fund and pay contributions. Unemployed parents are entitled to a family allowance if their unemployment benefit does not exceed CHF 42,300 per year (as at 2019). In the canton of Valais, the limit is CHF 56,400 and Geneva, Jura and Ticino do not have limits.

 

It is only possible to receive one family allowance per child, even if both parents work. Which parent receives the allowance depends on if they live together, who has custody and if one of them works in the canton of residence. If your partner receives the family allowance but you live in a canton that pays higher allowances, you will receive the difference.  

 

 

How to save taxes as a family

Families pay less in taxes. You receive a tax deduction for each child at canton and federal level. You can even claim this deduction if your child has reached the age of majority but is still in training, school or an apprenticeship – provided you finance his/her living expenses.

 

Good to know: If parents pay taxes separately, only one parent can use the deduction. This is generally the parent who has custody. If one parent receives alimony, he or she can use the tax deduction until the child reaches the age of majority. Afterwards, the paying parent is entitled to this deduction. The federal government and cantons have different rules for this situation, so ask the tax office for further information.

 

 

Deduct childcare costs

In addition to the child tax deduction, you can also deduct the costs of third-party childcare from your taxes. You are eligible for this if you are unable to look after your children yourself due to employment or education/training (see “Deductions for third-party childcare”). If parents are separated, the parent who has custody is entitled to the tax deduction. If parents have joint custody and share responsibility for the children, the tax deduction can be split.

 

 

Good to know: If have a childminder for leisure activities outside of working hours, these costs cannot be deducted from your taxes.

 

 

 

Savings tips for family life

 

Your opportunities to save depend on your fixed costs. The lower your expenses for housing, health insurance and mobility, the more money you are able to put aside.

 

 

Keep housing costs low

Your housing costs, including ancillary costs, should not amount to more than 25 to 30% of your income.

 

 

Choose affordable health insurance

Basic insurance benefits are the same for all health insurance and every health insurance company is required to accept you. You can use the federal government’s premium calculator to compare the current figures: www.priminfo.ch.

 

Please note: Unlike basic insurance, health insurers can refuse to offer you supplementary cover. Make sure you have been accepted by the new insurer before cancelling your current cover. You do not have to have your basic and supplementary insurance with the same provider. 

 

Want to stick with your health insurance despite higher premiums? You can still save money by making a few adjustments:

  • Cancel your accident insurance: If you have accident insurance through your employer, you can cancel cover through your health insurer. Children must have accident insurance through your health insurance provider.
  • Change your insurance model: With a GP or HMO model, your basic insurance could be up to 20% cheaper. Under this model, you have to be examined by a GP or in the group practice before going to a specialist. Ophthalmologists, gynaecologists and paediatricians are usually excluded from this rule.
  • Increase your excess: A higher excess means lower premiums. However, this only pays off if your healthcare costs are low. In the worst case, you need to be able to pay the CHF 2,500 excess yourself. Children don’t pay an excess and a voluntary one is rarely ever worth it.

 

Good to know If your income is below a certain threshold, you’re entitled to a premium discount. The requirements vary by canton. Ask your health insurer if you can benefit from a lower premium.

 

 

Reconsider your car

The costs of a family car can accumulate: fuel, insurance, road tax, depreciation and parking can quickly add up to CHF 1,000 per month. If you don’t drive your car often, using a provider such as Mobility is a lot cheaper. The offer is now so widely available that you can always find and easily book a car close by.

 

 

Big purchases at low prices

You can save a lot by buying items on sale. Second-hand shops and second-hand markets for children’s clothes can have great bargains too. You can often find cheap second-hand goods online on auction sites and classified ad platforms such as ricardo.ch, tutti.ch and anibis.ch.

 

Before you buy something, consider whether hiring would be a cheaper alternative. The shared economy is a huge trend right now. Maybe you could borrow items such as a tent, dinghy or travel cot in your neighbourhood or buy them together with other families.

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