How to save money on childcare

How much money are families spending on childcare?

According to the United States Department of Health and Human Services, childcare is considered affordable if it costs families no greater than 7% of their household income. However, when surveyed, most families indicated that they were spending 10% or more of their income on childcare costs. Some families plan to spend over $10,000 per year on childcare, which outpaces the average annual cost of in-state college tuition.

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Since the cost of childcare doesn’t seem to be decreasing anytime soon, there are a few ways for familiar to save money on daycare and childcare that might help them feel less financial pressure.

Ways to save money on childcare

There is no one-size-fits-all solution for every family regarding childcare. In some cases, there is government assistance or programs through a job or educational institution, and in other cases there are family members and nanny sharing.

Enlist family and friends

If you have family that lives nearby, see if they can help you watch your child or children while you’re working. Close relatives may be the most eager to see and bond with your little one, and parents may not feel anxious asking them. Close friends might also be willing to assist with occasional childcare duties. You should always offer to compensate anyone who helps you watch your children—their time is just as valuable as yours.

Join a babysitting co-op

If you live in a neighborhood with lots of children or have lots of friends with similarly aged children, you may want to join or start a babysitting co-op, where parents rotate caregiving responsibilities. It’s a more organized system than simply trading babysitting services with a friend, given that this group would operate during the work week. It may take some time to get started, but it can certainly help save money in the long run.

Consider a family day care or corporate day care

While traditional day care options may be the most popular, family day care centers can be an affordable option, especially when compared to full-time nannies. In this instance, a provider cares for children in a private home, but still must meet strict licensing regulations in order to care for children.

Another option that can help save on daycare costs is taking advantage of corporate-sponsored childcare. Many office complexes offer on-site childcare at a reduced price for tenants and employees. Other workplaces may offer subsidies to help cover the increasing costs of childcare. Check with your company’s HR department to see if this is an option for you.

Use a dependent care flexible spending account

Some employers offer what’s called a Dependent Care Flexible Spending Account, or DCFSA. This account lets you save pre-tax dollars from your paycheck to pay for childcare. These accounts are similar to health care FSA, which allow you to contribute to an account to reimburse yourself at the end of the year for money spent on childcare. Because the money is considered pre-tax, it can adjust the amount of money you’ll owe or be refunded when you file your taxes. It may require some additional budgeting when you first get started, since you’ll have less take-home income.

Apply for assistance

Most states have programs that help low-income families with childcare costs. Families pay a portion of the costs based on the size of the family and their income, and the state pays the remainder through the program. It’s important to apply early to these programs, as they tend to have very long waitlists.

Hire a student

Local colleges and universities that offer programming in early childhood education or nursing may have students eager for hands-on experience and extra cash. Reach out to a local college’s employment office to be connected with potential candidates. If you know trustworthy high school students, they can typically be trusted with younger children, and you’re likely to have a personal connection with them.

Families with young children who need care during the day need to carefully consider their budgets and their options to determine what they can afford. Shop around to as many different daycare options in your area to figure out what exists and at what cost and take a look at your spending habits. If you haven’t already put together a monthly budget to understand where you’re using your money, there are a number of budgeting templates available to help you get started.