From houses to cars to a cup of coffee, the cost of basic living has risen exponentially in the past few decades. The high price of quality childcare is one area where cost inflation has impacted parents in particular.
Average Childcare Costs
Compared to an average annual cost of $4368 in 1985 and $7436 in 2011, parents in 2017 spent an average of over $9,000 on daycare expenses for one child. These costs can easily exceed $20,000 per year for families with two young children.
How to Budget for and Reduce Care Costs
While the statistics are undeniable, available resources can help mitigate some of the cost parents face.
Use a Flexible Spending Account
A dependent care flex spending account allows you to pay for a portion of your child’s eligible care expenses with pre-tax dollars. These accounts lower your annual tax burden and allow you to keep a greater portion of each paycheck.
Utilize the Child and Dependent Tax Credit
If you don’t have the option to use a flex spending account, take advantage of the child and dependent care credit on your annual tax form. This credit directly reduces your tax bill by the amount you qualify for, and you can claim this credit regardless of your income bracket. However, parents who earn higher incomes will probably qualify for a smaller credit amount.
Particularly if you live in a mid-sized or large city, you may find that the costs of care centers vary greatly between neighborhoods.
Explore Alternative Care Options
While standard daycare facilities are the most popular choice, they are far from your only option. Look into some alternative providers to help stretch your budget a little further.
Nanny-sharing. If you know of another family in a situation similar to yours, see if they would be willing to share a nanny’s services and salary.
Family. Having willing family members help care for your child can be a wonderful option, so take advantage of the help if it is available.
In-home providers. Licensed home-based providers typically charge lower rates since they have fewer overhead expenses.
Church-based programs. Many churches view their daycare programs as a form of ministry, so they often charge less than standard facilities while still providing high-quality services.
Community programs. Facilities such as your local YMCA may offer affordable programs.
Consider Working Alternate Hours
If your job has some flexibility, check into the possibility of working part-time or working hours opposite from your partner’s. You could also inquire if your employer would be willing to let you put in some or all of your hours from home.
Ask About Discounts
It’s always worthwhile to investigate the possibility of available discounts.
Sibling discount. Some facilities may reduce your overall charge if you have more than one child using their services.
Employer discount programs. Ask your human resources department if your employer offers any company discounts for nearby care facilities.
Weekly vs. daily rates. Since they receive a larger lump sum at once and can better plan for their staffing needs, some facilities offer a discounted weekly rate that is significantly less than paying by the day.
Check if Your Employer Offers Assistance
Employers are beginning to realize that childcare assistance is a valuable employee benefit. Find out if your employer offers programs such as on-site care facilities or contributions towards care costs.
While quality care remains a large expense for working parents, spending some time learning about your options may help you reduce your bill significantly. Finally, keep in mind that these costs decrease as your child grows, so they won’t be a permanent line item on your budget.