Continuing shortages and post-pandemic inflation present financial challenges nationwide. The situation is even more difficult for families with kids, with one Louisville mom reporting she had to cut all extra spending — including snacks for her boys — just to make ends meet. Rising child care costs add another layer to parents’ economic burdens. How can you lower or manage your expenses in a failing system where care centers and families struggle to survive? These strategies will set you on the right path to saving money and getting the help you need.
Why Is Child Care So Expensive?
On average, parents spend the same amount — if not more — as in-state college tuition on child care in a single year. Those prices rise even higher for families with multiple children. Yet, with these high child care costs, center owners and staff are grossly underpaid. Where does all the money go and why is child care so expensive?
- Legal teacher-to-child ratios: Each state has requirements for the appropriate caregiver-child ratio. The numbers hinge on the children’s ages. More teachers are necessary for infants since they require more care and attention. Most states hover around a 1:4 ratio for babies, while 2-3-year-olds can be closer to 1:6.
- Location and appearance: Parents are more likely to feel comfortable leaving their child at a center that looks well-kept and is in a desirable location. As such, child care owners put a lot of thought into the establishment they purchase or rent. They must adjust the price per child based partially on their building expenses. In addition to rent, they must also pay to maintain the facility and keep it looking nice.
- Hiring specialized employees: The ins and outs of running a daycare go beyond caregiving staff. Most centers must hire a janitor to keep the place clean. Many also retain an accountant, tax specialist and lawyer to ensure the facility runs above board and is protected in an emergency.
- Liability insurance: As a registered business, the law requires daycare centers to have accident and liability insurance, which can get quite expensive.
- Employee recruitment: Parents want their kids to have the best care their budget can provide. As such, child care centers strive to recruit talented individuals with beyond-basic qualifications like experience and extra certifications or degrees.
- Marketing: Centers need to do an increasing amount of marketing to stay relevant. Most places must pay to set up and maintain a website to attract new clients and keep in touch with current ones. They may also host special events for the same reasons. Some child care centers even hire social media marketers to maintain a presence on platforms like Facebook and Instagram.
- Inflation: The simplest reason for rising child care costs is inflation. As prices for food, diapers, toys, equipment and everything else continue to rise, daycare costs must increase to cover the new expenses.
Ways to Handle Child Care Costs
Understanding why child care is so expensive gives you a better understanding of where your money goes, but it doesn’t help pay the bills. How can you manage your child care costs and stay afloat in today’s economy? Use these tips to adjust your monthly daycare expenses.
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Make a Clear Budget
The best way to succeed when planning child care costs is to be honest with yourself. Sit down and calculate all your monthly expenses and income. See what room you have for daycare. Once you have a realistic number, you can use these tips and shop around for care you can realistically afford.
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Have a Plan for Other Expenses
When your budget is already strapped, you don’t have the luxury of being able to cover unexpected emergent expenses like hospital visits and dental repairs. You must set aside a certain amount each month to save for these moments.
You should also keep up with your kid’s preventative care. Being in child care means they’re around more germs and more prone to accidents. Keep up with regular doctor’s appointments to guard their health. They should also start seeing a dentist as early as six months once their baby teeth come in.
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Hire a Nanny
Covering costs for child care is a balancing game. For one kid, daycare may be the cheapest option. However, two or three may take some more creative planning. A nanny or full-time babysitter could be a less expensive option. Another great way to save is to split the cost of a nanny with another family or two — everyone gets access to quality childcare while saving money.
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Take Advantage of Tax Credits
If you use a daycare or in-home professional so you can work or look for employment, you may be eligible for the Child and Dependent Care credit. You can claim up to $3,000 for one child or $6,000 for two.
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Deposit Funds in a Flexible Spending Account
A dependent care flexible spending account allows you to set pretax money aside for child-care-specific needs. You can use it to pay for a daycare or nanny to care for your kids full-time during the day. It also works for preschool expenses or afterschool babysitters or programs. Ask your employer if they have these accounts available.
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Ask for Help at Work
Your workplace may provide a few opportunities to save money on child care. Some companies offer in-house daycare to watch over employees’ children at little or no cost. It’s an ideal arrangement for both parties since you won’t get held up in traffic dropping them off, and you can use your lunch break to pop in and spend some time with them. If your employer doesn’t offer a program like this, you may be able to negotiate a stipend for child care expenses.
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Adjust Your Work Schedule
You can cut costs significantly by doing some of the work yourself. Reduce the number of days your kids need care by adjusting your hours at work. Can you and your partner arrange to work different shifts for a while so someone is with the kids? It may not be ideal, but it could get you through a rough financial patch. Another option is to arrange with your employer to telecommute part or full-time, allowing you to take care of your kids and get work done from home.
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Become a Stay-at-Home Parent
If your employer isn’t willing or your job doesn’t work well with telecommuting, you may decide becoming a stay-at-home parent is worth it. Does your income barely exceed your daycare expenses? For some families, having one parent stay home is cheaper than hiring someone to watch their kids.
This time could be your opportunity to start a side hustle you’re passionate about. Bring in extra money by using your talents. You could even create your own in-home daycare.
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Lean on Family
Another excellent option to lower child care costs is to use family as a resource. If your parents live locally, ask them if you could pay them to watch their grandkids at least a few days a week or after school, depending on your needs. They may refuse money or want a little something for their effort. Either way, it should be cheaper than sending your kids to daycare full-time.
Manage Your Child Care Costs
Careful planning and out-of-the-box thinking will take you far when managing child care costs. Whether you need to adjust your expenses for a season or long term, these tips can help you afford quality care for your kids.
