Prospective parents dream of baby snuggles, chubby cheeks and bike-riding lessons.
Not usually included in this dream? A daycare bill that rivals (or exceeds!) their mortgage or rent payment.
Unfortunately, the high cost of childcare is the nightmarish reality for modern parents: According to career support platform Zippier, parents pay an average of $340 per week, per child, for daycare. And in 2020, 57% of working families spent more than $10,000 annually on childcare.
If you’re facing a daycare bill equal to the GDP of an island nation, staying home with your child may seem like the most economical option. But recent research from sociologist Kate Weisshaar shows that employment gaps can lead to upwards of 40% lower wages later in life.
So here are some alternative options and ways parents can alleviate childcare costs.
Share the Care
When your parents were petitioning for grandbabies, they may have promised you free childcare. For many families this is an excellent, inexpensive solution. Of course, for others, it might not be possible.
“The Black community is already systematically behind, which means our parents aren’t able to retire on time,” says Nia Adams, a Chicago-based personal finance educator. “We can’t do the typical ‘Let’s go to Grandma’s house’ because Grandma’s at work and Grandma has to work, so she’s not available.”
Indeed, in Motherly’s “2022 State of Motherhood Report,” 10% of Black mothers said they have zero childcare support. That’s two times higher than white moms and three times higher than Latina mothers.
If family care isn’t on the table, consider banding together with other parents in your community, school or workplace to create a schedule that works for all of you. Sitting Around is a great resource for this—for a $15 annual fee, you can create a babysitting co-op with other local parents and swap sitting hours for free.
While a nanny is generally more expensive than daycare, some families are reducing that cost by using a “nanny share.” In this situation, two families hire a nanny together and that nanny watches both families’ children at the same time.
Each family can expect to pay about two-thirds of the fee they would pay if the nanny was just working for one family. This gives each family a significant discount but still offers fair compensation to the nanny—who has a more complex job.
To create your own nanny share, pair up with a local family who has similarly aged kids and childcare needs.
The Child and Dependent Care Credit may reduce your taxable income to help offset the costs of childcare. This credit provides households with a maximum tax credit of $1,050 for one child and $2,100 for two or more children. The full credit is only available to households making $15,000 or less annually, but families with incomes of up to $438,000 can still claim up to $600 for one child and $1,200 for two or more children.
You could also try a Dependent Care Flexible Spending Account (DCFSA). This type of account allows you to set aside pre-tax dollars for use on eligible childcare and dependent care services. Households can contribute a maximum of $5,000 per year to their DCFSA, which is pulled from their paychecks. You won’t pay taxes on the money you contribute and won’t owe taxes on DCFSA money you use for eligible childcare.
According to the U.S. Office of Personnel Management, DCFSA account holders save an average of 30% on dependent care services—which means you can save an average of $1,500 per year.
Finding Inexpensive Daycare
If daycare is your best (or only) option, there are several ways of finding facilities that won’t break the bank. These include:
- Government programs. Certainstates offer subsidies for childcare financial assistance for low-income parents. Your child may also be eligible for Head Start or Pre-Head Start programming from birth up to age 5, or pre-kindergarten from ages 3 to 5, at low or no cost.
- Nonprofit programs. Churches, YMCAs, Boys and Girls Clubs and community centers offer low-cost childcare as well, in part because they may receive federal, state and private grants that help offset their costs.
- In-home daycares. A caregiver who offers daycare out of their private residence will generally charge less than a daycare facility. However, not all in-home daycares are licensed, so do your research before committing.
What if you could summon a qualified caregiver as easily as you request an Uber?
No, Mary Poppins won’t arrive at your home within 15 minutes, but these childcare apps can help simplify the complicated task of finding affordable childcare:
- Care.com. This app gives parents a huge selection of sitters to choose from. You create a profile and browse local caregivers for free, but you’ll need to upgrade to a paid membership if you want to connect with candidates. References are included in the sitter profiles, and you can request a background check for an additional fee.
- Urbansitter. The Urbansitter app shows you recommended caregivers based on ratings and reviews from parents in your community. The app prides itself on rapid responses—it boasts a three-minute response time for last-minute jobs. The app costs $59.95 for a three-month pass, and the sitters set their own rates.
- Seeking Sitters. For a one-time membership fee of $59.99, you can use this one-stop-shop resource to match with a sitter who fits your specific needs, including everything from full-time nannying to last-minute bookings.
- Bambino. Bambino requires parents and sitters to register via Facebook, which allows the app to see which sitters other parents have used and recommended. The app is free, but there is a $1.95 or $2.95 booking fee, depending on the sitter’s experience level.
Millie content is licensed from Dotdash Meredith, publisher of Millie, Real Simple, InStyle, Investopedia, The Balance and more.
Emily Guy Birken is a former educator, lifelong money nerd and Plutus Award–winning freelance writer. She is the author of five books including “The 5 Years Before You Retire” and “Stacked: Your Super Serious Guide to Modern Money Management,” written with Joe Saul-Sehy. Emily lives in Milwaukee with her spouse, two sons, a dog and a cat.