Childcare Costs: How to Save Money on Daycare

Tara Seboldt
Mar 04, 2022

Childcare costs are burdening families across America, especially low-income families. Parents want their children to be safe in a high-quality childcare program. Yet, it also needs to be affordable.

This article takes a look at why childcare is so expensive, how to save money on it and how to find help paying for childcare.

Why Are Childcare Costs So High?

Finding a high-quality daycare is difficult enough. It can seem impossible to find one that’s also affordable.

Let’s explore the reasons why.

Keeping Your Children Safe

Every parent wants to know their children are safe, especially when in the care of others. A large reason childcare is expensive is to ensure the safety of the children at the facility. Any daycare center you choose should have the proper licensing for your state.

A daycare license is only one part of keeping children safe.

According to, a resource from the US Administration for Children and Families, there are other safety factors as well.

These include:

  • Comprehensive background checks for all child care providers.
  • Health and safety training for child care workers, such as Pediatric first aid and CPR.
  • The nutrition and physical activity offered by the center.
  • Caregiver-to-child ratios and group size to ensure one-on-one time with each child.

Providing High-Quality Child Care

Whether you want Montessori-style education or just basic daycare, a better-quality facility will likely be more expensive.

One of the biggest factors is the salary of the staff. High-quality facilities often pay their staff members a higher rate and require more training (often paid by the facility).

According to data from the Center for American Progress, increased costs of quality childcare translate directly to increased pay for childcare providers.

A provider who earns a better wage is more likely to stay with the facility. That provider then has a chance to build a long-term relationship that helps the comfort and development of your child.

States with Highest and Lowest Childcare Costs

How much you’ll pay for childcare depends on your state of residence. Based on data from Child Care Aware of America, the states with the highest average annual cost of childcare in 2019 included:

  • Massachusetts: $20,880, which is 16.4% of the median household income
  • California: $16,452
  • Minnesota: $16,120
  • Connecticut and Colorado: $15,600
  • Maryland: $15,403

The states with the most affordable childcare in 2019 included:

  • Mississippi: $5,760, or 7.6% of the median income
  • Arkansas: $6,443
  • Alabama: $7,280
  • Kentucky: $7,440
  • Louisiana: $8,580

Costs for childcare change based on the age of your children, as well.

Early childhood care for young children is usually more expensive than care for elementary-aged kids, while infant care is even more expensive than preschool-age care, due to the amount of hands-on care.

Tips For Saving Money on Childcare

These tips could help you save money on childcare. Not all of these tips will work for every family.

However, you may find an option that helps you cut costs.

Consider Nanny Sharing

Just like it sounds, nanny sharing lets you and another family split the cost—and services—of a nanny. The arrangement can look different depending on the nanny and family needs.

For example, you might only need care on Monday, Wednesday, and Friday, while the other family needs care on Tuesday and Thursday.

The nanny still gets a full week of work, and you save on the days you aren't using the nanny.

Another option is to pay the nanny a higher rate and they care for both families at once. You’ll still save money by splitting the higher rate with the other family, and still get the 1x1 care nannies tend to offer.

Ask for Discounts

Many childcare centers have discounts available—even if they don’t advertise them. When you’re interviewing childcare facilities, ask about potential discounts.

Sibling discounts are popular if you have multiple children. This discount gives you a reduced rate for additional children that you enroll in the facility.

For example, you might save $50 a week on care for your second and third children.

You can also ask if you can get a discount for using fewer services. Some facilities let parents provide their own meals in exchange for a discount, for example.

Use Employer Programs

Talk to your human resources representative to see if your employer has any childcare programs. Some employers offer discounts to certain daycare facilities. Large employers may even have onsite care.

Be sure to ask about a Dependent Care Flexible Savings Account (DCFSA). This account lets you save money for childcare costs and helps reduce your taxable income. It’s only available through your employer, and not every employer offers them.

If you have access to a DCFSA, you can withhold money from your paycheck to fund the account. You pay for childcare out-of-pocket and apply for reimbursement through FSA funds. Just be sure to use up all of the money in the account each year—FSA dollars are forfeited if you don’t use them by the end of the year.

Mix Services to Reduce Full-Time Daycare

You may be able to reduce your costs simply by cutting the number of hours your child spends in expensive childcare. This can be done by mixing types of trustworthy childcare.

Let’s say your parents are available to babysit in the afternoons a few days a week. This means your children won’t have to be in daycare during these hours, thus cutting your costs.

Another example is if you’re able to work from home or adjust your family schedules. Can your partner start work earlier than you? You can watch the children in the morning and they can watch them in the afternoons.

Reduce Your Work Hours

It’s not uncommon for a parent to leave their job to stay home with their children. If your child care expenses are higher than what you make at work, it makes more sense to stay home. Be sure to consider other factors, in addition to money, before you leave.

For example, you may want to stay with your employer if they provide your family’s health insurance, or simply reduce to part-time if your career is in a field where longevity leads to better pay or prospects.

This may feel impossible for working families, but it’s still a good idea to compare your wages to the cost of childcare. You might find that not working to avoid expensive child care saves your family money.

With the rise in remote work, you might also be able to find part-time work that you can complete in your child’s downtime or even a job with flexible hours that would help you work around your child's schedule.

Childcare Costs Help

You may be eligible for state and federal government programs that could help you cut childcare expenses.

Learn more about these programs:

Are Childcare Costs Tax Deductible?

Yes, you may be eligible for the child and dependent tax credit. This credit helps lower your tax liability based on your income and a percentage of your childcare expenses.

Be aware that you can’t use the child tax credit and a DCFSA for the same expenses.

What Government Programs Help with Childcare Costs?

Depending on where you live and your income eligibility, you may qualify for child care subsidies or cost-reduction programs.

  • Head Start and Early Head Start: This program provides free childcare services focused on development and learning. It’s available to low-income families.
  • State Childcare Subsidies: The federal government awards each state funds to help families cover the cost of childcare. Be sure to check your state’s eligibility requirements.
  • Local Scholarships and Assistance: Some community nonprofits offer daycare scholarships and low-cost childcare for eligible families. Check with local daycares and family-oriented nonprofits to see what’s available in your area.

Final Thoughts

The cost of childcare is one of the most expensive parts of many families’ budgets. Using a combination of government benefits and money-saving tips, your family can likely cut the cost of care.

Reducing costs can help you save significant money by the time your child is old enough where childcare isn't necessary.

Tara Seboldt

Tara is a financial writer with over five years of professional writing experience. She previously worked at a financial planning firm. Tara uses this professional experience to help readers better understand their finances and make smart financial moves. When she’s not writing about money, Tara enjoys spending time in the Idaho mountains hiking, camping, and skiing.

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