Last updated March 2024
Childcare costs are expensive and increasing. The most recent data from the U.S. Labor Department’s National Database of Childcare Prices, which tracks costs in 2,360 U.S. counties, reports that childcare costs range from eight to 19 percent of a median family’s income per child. That totals between $5,357 and $17,171 per year when adjusted for inflation. A recent study by the Bank of America Institute found that since 2019 the average childcare payment per household has risen by more than 30 percent.
What’s a less-than-loaded parent to do to keep their little(s) cared for? Here are some savings tips:
Consider a nanny share. Splitting costs with another family or families makes the expense of a full-timer far more reasonable. But, as your toddler has taught you, sharing can be difficult. Seek parents with similar parenting styles (time outs or talk it out? limit sugar or ice cream for lunch? consistent schedules or go-with-the-nap-flow?), who live close to you, and who share your expectations about the nanny’s job responsibilities.
Home-based daycares tend to be cheaper than larger centers. To assure you’re using a high-quality one, look for businesses accredited by the National Association for Family Child Care, ask for personal recommendations, and check with your local better business bureau.
YMCAs, JCCs, and places of worship often offer cheaper fees than secular day-care centers.
If you work in one area (maybe a city downtown?) and live in another (the suburbs?), check day-care center prices in both areas. You might find that the suburban ones are somewhat less spendy. Similarly. There can be differences among suburbs.
If your employer offers a dependent-care Flexible Spending Account (FSA), enroll to pay for child-care expenses with your pre-tax earnings. At the time of this writing, you could set aside up to $5,000 per year. If you don’t have an FSA, the next-best thing is to claim your child-care costs on your taxes. Depending on your income, you can claim from 20 percent to 35 percent of your care expenses up to a maximum of $3,000 for one person, or $6,000 for two or more dependents. To claim the Child Care Tax Credit, you must file IRS Form 2441 with your federal income tax return.
Many large employers have arrangements with on- or off-site day-care centers with reduced rates for employees.
Ask for a flexible schedule at work. This might involve one parent working 10-hour days in exchange for a four-day workweek and one less day of paid childcare. If grandparents step in once a week, you could net even greater savings. Consider sharing care with another family, with one family providing care on certain days or vice versa.
If you have an extra bedroom, consider hiring an au pair. While the average weekly cost of a nanny is around $800 (depending on where you live), the average weekly cost of an au pair is about $350 (not including costs such as cell service or a car). And that’s regardless of how many children you have or where you live. Plus, au pairs are also available 45 hours a week, versus a nanny’s 40 plus overtime, and many au pairs are insured by their placement agencies, meaning you don’t have to pay their premiums. But you will have to pay an annual program fee, which can be around $10,000 depending on the agency.
If you’re a military family, you are likely aware that active-duty service members can qualify for child-care financial assistance.
