According to Care.com’s annual Cost of Care Survey, one in three families spent at least 20 percent of their household income on child care in 2017, and nearly one in five spent 25 percent or more. If you’re in a similar situation, consider some ways to ease the burden.
Assess your child care options
Numerous child care options are available, and some are more affordable than others. Many families rely on day care centers to take care of their young children, and Care.com reports that these cost an average of $211 per week for an infant. Family care options – those offered in a home environment – are slightly less expensive, averaging $195 per week. In either case, parents should ensure that facilities are licensed by their state.
To ensure a child receives individual attention and is cared for in the home, hiring a nanny is an option, but the average weekly rate is considerably higher: $580. Another choice is to secure an au pair, a foreign national who would spend a year in the U.S. and receive room, board and a monthly stipend in exchange for child care.
Sometimes, it takes a village. Daycare or preschool cooperatives are run with volunteer commitments by parents, so they can be affordable choices. You may be able to share care with friends or neighbors, either taking turns watching each other’s children or engaging a nanny to watch both sets and splitting the cost. Consider asking family if anyone can commit to a regular day or two to help out. And, if you just need after-school care for kids, ask around the neighborhood for a responsible teen babysitter.
Talk to your HR department
Meet with your company’s human resources representative to learn if you have access to any dependent care benefits, and ask your partner to do the same. Some companies offer family-friendly benefits, such as child care reimbursement, up to a certain annual amount; on-site child care, which can be more convenient and affordable; or a dependent care flexible savings account (FSA).
With a dependent care FSA, you can set aside up to $5,000 in pre-tax dollars each year as a family. The funds can be used for daycare, preschool and even summer day camps. It is important to keep receipts, as you must submit reimbursement requests. This benefit is “use it or lose it” – funds remaining at the end of the year are lost, so estimate your needs carefully.
Additionally, your employer may offer flexible work arrangements that can help you minimize the hours required for child care. For instance, you may be able to work from home one or two days a week, or you may be able to adjust to a later shift, using child care services for only half the day instead of a full day.
Use government credits and subsidies
You may be able to get a tax break with the Child Care Tax Credit by itemizing up to $3,000 per child or $6,000 per family. Be aware that if you have a dependent care FSA, those assets will be applied to the credit first. If you used $5,000 from your FSA for two children, then you would have a $1,000 tax credit remaining.
Through the Child Care and Development Fund, the federal government provides funds to states to pay for or subsidize child care for low-income families at certified day care or in-home care facilities. ChildCare.gov provides information on the many programs available. For instance, Head Start and Early Head Start programs prepare children for school, while state-funded pre-kindergarten helps ensure school readiness.
Explore nonprofit options and discounts
Nonprofit organizations – such as local churches and religious groups or the YMCA – may offer low-cost care. These groups often receive grants that help offset costs and allow them to provide quality care to low-income individuals.
Finally, when shopping for a child care provider, be sure to ask about any discounts available. Some providers will offer a sliding fee scale, basing rates on income levels. Others may offer reductions to military families. If you have more than one child, inquire about sibling discounts on monthly rates and enrollment fees.
Adding to your family is a balancing act. With some diligent research and planning, you can secure quality care for your child while staying on track to being financially awesome.