How Do People Afford Childcare? Tips & Strategies Revealed

One of the biggest struggles of parenting today is childcare. For certain families, the price of good daycare is comparable to college tuition. Just how expensive is this, you ask? According to the Economic Policy Institute, the average cost of infant care in the U.S. is more than $1,200 per month! It’s no wonder, then, that many parents are running through the numbers and wondering, “How do people afford childcare?

But if you’re wondering the same, you’re not alone. This blog focuses on practical and actionable strategies that these parents use to manage the expenses of childcare while ensuring their kids are well taken care of.

How Much Is Daycare?

Daycare prices vary hugely — mostly depending on where you live, the age of the child and the type of care. The average cost of full-time daycare for an infant collected by Child Care Aware of America is between about $10,000 to $15,000 a year in the U.S., but in big cities like New York or San Francisco, it’s common for it to top $20,000 a year.

For kids who are a touch older, the cost might dip somewhat, but there’s not substantial savings. In-home daycare or family-run daycare centers are typically on the cheaper end of the spectrum, but there’s still considerable range.

You should also consider extra costs for extended hours, meals, and special programs when calculating daycare costs. And those costs can add up fast.

Why is Childcare so Expensive? 

But before we get to solutions, it’s helpful to understand why childcare costs have ballooned in recent years. A combination of reasons, such as:

• Higher staffing requirements: The majority of states mandate a low children-to-staff ratio, resulting in a greater number of employees needing to be hired in order to remain compliant with regulations.
• Operating expenses: The costs of rent, utilities, insurance and supplies can really inflate daycare expenses.
• Safety and quality standards: Facilities must meet stringent health and safety standards, which incur compliance costs.
• Staffing shortages: Childcare is both physically and emotionally strenuous work, leading to high turnover and wages to hire and keep staff.

Familiarity with these underlying costs brings parents much more awareness about what they’re paying for and why the solutions aren’t one-size-fits-all.

Affordable Childcare Options (how do people afford childcare)

Quality care doesn’t have to be that costly. Here are a few lower-cost options to check out:

Family-Based Daycare

They are usually home-based daycare providers who will care for smaller groups of infants and toddlers at prices that are more affordable than larger daycare providers. These providers often care for smaller numbers of children, which means a more intimate setting.

Nanny Shares

A nanny share is when two families split the cost of a single nanny. This is both personalized for your child and inexpensive.

Cooperative Childcare

Some families participate in childcare cooperatives, where the parents alternate caring for one another’s kids. This is especially powerful for part-time or irregular care needs.

Preschool Programs

Preschools often provide cheaper centres for children in the 3- to 4-year range, often non-profit or community-based programs.

Extended Family Care

If you have family within close proximity, enlisting the help of grandparents or other relatives can help save on childcare costs while providing familiarity and security.

8 Ways to Save Money on Childcare

The good news? So, thousands of families have come up with ways to balance their budgets while meeting their childcare needs. Here are a few practical tips for reducing the costs of childcare:

Utilise Employer-Sponsored Benefits

Childcare assistance is sometimes included in employee benefits offered by companies. These programs might include:

• In-house childcare: Large employers sometimes have childcare facilities located on their premises.
• Dependent care flexible spending accounts (FSAs): Employees use pre-tax dollars to pay for eligible childcare expenses.
• Childcare subsidies: Some companies reimburse a portion of daycare costs.

If you are uncertain about what childcare assistance your employer offers, it can be helpful to ask your HR department. Childcare perks can make or break an offer for parents looking for new jobs, so be sure to weigh this during negotiations.

Research Local Subsidies and Tax Incentives

Government subsidies and tax credits can decrease the load of childcare costs:

• Child and Dependent Care Tax Credit: Depending on earner income, you might be eligible to get back a percentage of childcare expenses reported on your federal tax return.
• State-Based Subsidies: Low- and middle-income families can get subsidies in most states in the U.S. Look up what is offered in your state and check the eligibility requirements.
• Pre-tax Dependent Care Accounts: Employers may allow employees to pay up to $5,000 pre-tax per year, which can reduce taxable income.

Creative Outsourcing with Shared Care Models

Instead of expensive daycare programs, consider cheap alternatives, such as:

• Nanny Shares: Split the cost of a nanny with another family with children of a similar age.
• Co-op Childcare Programs: Organize multiple parents to take turns providing care. Co-ops often ask for time contributions instead of money, making them magic for budget-averse families.
• Stay-at-Home Parents Who Want to Watch and Care: A lot of stay-at-home parents watch and care for kids out of their homes, extending a flexible offer with a personal touch.

These options are especially beneficial for parents who prioritize smaller caregiver-to-child ratios and more flexible schedules.

Strategically Plan Work Schedules

For dual-income families, working hours can be jointly adjusted to reduce the need for paid childcare. For example:

• Separate Shifts: One works days, the other takes evenings.
• Compressed Work Weeks: You might condense your hours into fewer work days each week, saving time and money on child care.
• Remote Work and PTO: If your employer allows for occasional work-from-home days, consider using them smartly to save on expenses.

Get Kids in Subsidized Early Education Programs

For parents of toddlers or preschool-age children, early education programs like Head Start can offer structured, educational care at no cost to qualifying families. Some school districts also have pre-K programs to give children an early learning experience before kindergarten.

Seek Out Multi-Child Discounts

Ask the facility if it offers sibling discounts if your children are in daycare. Many daycare providers charge a discounted rate for families with multiple children enrolled, drawing the financial slope for larger households a little less steep.

Utilize Community Resources

Parents frequently overlook free or low-cost options for part-time childcare:

• YMCA programs: Some local YMCA locations provide low-cost, high-quality daycare and after-school care programs.
• Church and Community Center Services: Many houses of worship and community organizations offer childcare as a service to their members — at rates much lower than those of traditional daycare centers.
• Library Storytime Hours: A favourite among younger children, libraries frequently host educational (and entertaining!) programs during the week.

Becomes Cooperative Childcare Arrangements

By pooling the childcare responsibilities, parents can save money. How does it work? Basically, instead of paying someone to watch your child in a traditional daycare setting every day, a handful of families trade off on watching all the kids in the group. (While co-ops fuel a positive neighbourly dynamic, they also save cash!)

Government Assistance Programs

Government assistance programs are one of the most notable ways to afford childcare. These programs help families who qualify based on their income and other factors. When it comes to government assistance for childcare, it differs not only from country to country but also state by state and city by city. Here are some U.S.-based programs to consider:

Child Care and Development Grant (CCDF)

The CCDF is a federal program that assists low-income families with childcare costs. This fund is allocated to states, which distribute it according to their criteria. Income-eligible families can qualify for assistance to pay for daycare services so parents can go to work or school.

Tax Credits

• Child and Dependent Care Tax Credit: This tax credit assists families in alleviating the cost of childcare. Families can deduct as much as 35 per cent of their childcare expenses based on their income. This can greatly ease the burden of childcare expenses.
• Example 2: Earned Income Tax Credit (EITC): Another federal program that can assist low to moderate-income families is the EITC (Earned Income Tax Credit). It offers a tax refund that can be applied to anything from child care to general expenses.

State-Specific Programs

A few states have childcare assistance programs that are not mentioned above. For example, subsidies, sliding scale fees, or other community resources to help families pay for childcare. If you do, it’s worth checking your state’s specific programs to see if there’s more help available to you.

Additional Ways to Save on Childcare

Community Resources: Inquire about affordable childcare services from local community centers or faith-based organizations.

Corporate Benefits: A handful offer childcare benefits like on-site daycare or childcare stipends. Double-check with your HR team to see what options are available.

Bartering Services: If you have skills that daycare providers might appreciate (like marketing, bookkeeping or facility improvements), you could negotiate discounted rates in exchange for your services.

How to Know if Daycare Is Right for Your Family

Deciding upon daycare is an incredibly personal choice. Here are a few questions to help you decide if it’s the right move:

• Does the daycare’s schedule match your work hours?
• Does the daycare reflect your values (e.g., look at staff education/certifications, curriculum, or discipline policies)?
• Does the price align with your budgeting plans?
• Does your child developmentally fit in, and will they flourish when in a group learning environment with peers?

Touring facilities, meeting with the staff, and reading reviews can also provide clarity.

Tips for Managing Child Care Costs

Strategies for effectively managing the costs of childcare can be a combination of planning and creativity:

• Create a budget: Detail all childcare-related expenses and identify where you can find savings.
• Get An Early Start: Parents often encounter long waitlists for the most affordable daycare options. Start researching and booking spots during your pregnancy if you can.
• Be Willing to Be Flexible: Look at non-traditional solutions such as part-time care options, co-ops or alternative work schedules.
• Tap into Community Resources: Find parenting support communities or other online sources to swap ideas about how to save money and leads on great care resources.

Final Thoughts on How Do People Afford Childcare

None of this means that we cannot afford childcare; it means that childcare, like any other good, can be expensive. Families can ease the burden of childcare costs by taking advantage of government programs, employer benefits, alternative childcare solutions and economic planning.

Supporting policy changes and community resources will also help ensure that affordable childcare becomes a reality for more families. Keep in mind that help exists through financial assistance programs, creative childcare solutions or community resources and you do not need to go through this challenge alone.

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