According to a report by the the U.S. Department of Agriculture, it will cost about $241,080 for a middle-income family to raise a child born in 2012 to age 18. This amount includes food, shelter, and other costs, and a large percentage of that hefty price tag goes to child care. Housing accounted for the largest percentage of that amount, but for families in the middle-income group, the next largest average expenditures were child care and education, accounting for 18 percent of spending.
Many Americans have a difficult time paying for a babysitter in order to go out once in a while, let alone paying for private schools or regular daycare. The cost of full-time center care for an infant in a center ranges from 7 to 19 percent of the state median income for a married couple with children (depending on the state) and exceeds 25 percent of median income for single parents in every state. As children grow older, care often becomes more affordable (with the exception of private school), but it is often still very expensive. Here are some ways to save on child care costs, while not sacrificing quality and safety.
1. Make a budget
Just like most areas of saving money, you will do better if you have a budget. If you determine how much you can actually afford to spend on child care, you might find that you are spending too much of your monthly income. You also might learn that if you can be more careful with your spending, you can afford a better child care situation (closer to your house, lower teacher-to-child ratio, etc.). Check out Child Care Aware’s calculator to determine how much you should be spending on child care. In addition, some child care centers (and even some in-home care providers) may give you a discount for paying early, which is easier to do if you know how much extra money you have.
2. Consider an in-home or relative care situation
Child care in a private home is often much cheaper than center care, and often the children get more individualized care. According to a 2013 Child Care Aware study, the average annual cost of full-time center-based care for an infant in Mississippi was $4,863, but care in a family home was $3,930. In Massachusetts, center-based care cost $16,430, but family-home child care cost $11,046. If you’re lucky enough to have a trustworthy relative who can watch your children, you can consider that as well. Either way, you want to make sure that whoever you chose to care for your children is well trained in safety and basic child care. Although nannies are often more expensive than in-home or even center-based care, sometimes college students or newly working professionals will accept a lower wage if you are able to offer them room and board.
3. Use your child care tax credit
If you pay someone to take care of your child or children, you may be able to claim this federal income tax credit. In order to claim this credit, care must be provided for a child 12 or younger, and your child has to be in care because you are working or looking for work. The payments for child care can’t be paid to your spouse or any dependent, and you must file single, married filing jointly, head of household, or qualifying widow or widower with a dependent child. The child you are claiming must live with you for at least half the year, and if you received any child care expenses from an employer, you have to deduct those from your credit.
4. Start early and pay your deposit
Many child care centers or in-home providers have waiting lists because they are well-known, affordable, or have excellent staff. If you are able, start researching child care before your child is actually ready to attend. Many preschools require parents to register months in advance and require a non-refundable deposit to hold your child’s spot. If you are able to determine where you want your child to go for child care or preschool early, you may save money by getting into an affordable daycare or preschool. You also increase the chance that your child will be in a safe and educational environment by starting your research early.
5. Consider changing your schedule
This option isn’t right for everyone, but it can work well for some. If you or your spouse can rearrange your schedule so that one of you can be home most of the time (especially once kids are in school and only need before and after school care), you may save a lot of money. Some parents decide that having one spouse stay home full-time makes sense because so much income is going toward the cost of care. Even if you can’t change your schedule around to be home whenever your kids are home, you might be able to find someone who can help you during the hours that you have to work.
6. Create a babysitting co-op or trade goods
Many parents share childcare. Parents may work only a few days a week and take turns running the child care, or they may go in together to pay for babysitters or after school care. This is particularly effective if you have close friends who you trust and if you all have flexible schedules or work a few set days each week. Although it is a little tricky, some parents are even able to exchange services: If you have an occasional babysitter who needs a lawyer and you happen to specialize in the area she needs advice in, you might be able to trade your work for hers (but be sure you do this legally).
There are many other ways to save on child care without sacrificing quality. Many companies offer child care reimbursements, so check with your human resources department. Creating a flexible spending account could also help you budget and save money. Some companies offer on-site care, which might save you money on travel costs, as well as give you piece of mind. Some child care providers also offer discounts if you have multiple children in care.
More From Wall St. Cheat Sheet:
- What’s the Real Cost of Raising a Child?
- Teaching Kids about Saving? Here’s How to Start
- 5 Hurdles to Saving and How to Avoid Them
- Personal Finance - Lifestyle
- Family & Relationships
- child care