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.
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.
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 ChildCare.gov, a resource from the US Administration for Children and Families, there are other safety factors as well.
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.
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:
The states with the most affordable childcare in 2019 included:
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.
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.
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.
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.
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.
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.
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.
You may be eligible for state and federal government programs that could help you cut childcare expenses.
Learn more about these programs:
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.
Depending on where you live and your income eligibility, you may qualify for child care subsidies or cost-reduction programs.
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.