How to Budget for Child Care

tania-pic

I was flipping through old pictures of my children and came across the one above. My daughter, now 7, was about 10 months old in this picture. My friend needed a baby for a photo shoot and I volunteered my daughter if I could get copies of the photos. This picture is one of my favorites.

As I think back to when she was a baby, I can’t help but think of how expensive that time in our lives was. In fact, I used to call her my little mortgage payment. With the average cost of childcare for an infant easily exceeding  $10,000 a year, many parents struggle to budget for it. The following strategies can help take the financial bite out of child care:

1. Create a budget to see exactly how much you can spend on child care. Look for items you can cut back on such as cable, eating out or entertainment.

2. Once you have created your budget, decide how much you can reasonable afford for child care. Contact your employer to see if they offer a child care search services. Research childcare options that meet your budget. A private nanny may be out, but a quality daycare facility may fit into your budget. A friend of mine did her budget and realized that it was cheaper for her to stay home rather than put her children in daycare.

3. Once you have narrowed potential childcare providers, ask about discounts. You may be able to get an employee discount or a discount based on where you live or if you have multiple children attending the same daycare. If your income is limited, contact your child care provider or your state’s Child Care Program Office about financial assistance.

4. Consider using employer savings plans like a dependent care FSA to save money for daycare pre-tax or claiming a dependent care tax credit on your taxes. Since you can’t use both on the same expense, weigh your options to see which one is better. In general, a dependent care FSA is better for higher income earners (above the 15% tax bracket) and the dependent care tax credit is better for lower income wage earners.

Don’t let yourself get overwhelmed by the cost of daycare. With a little bit of planning, childcare does not have to bust your budget. A little bit of research can go a long way to helping you find the best childcare option for your needs.

More like this:

Working In The U.S. Temporarily? Here’s What You Need To Know About Retirement

Working In The U.S. Temporarily? Here’s What You Need To Know About Retirement

We get many retirement benefits questions on our financial coaching line from professionals working in the United States but plan ...
Read More
5 Estate Planning Steps Literally Everyone Needs To Take

5 Estate Planning Steps Literally Everyone Needs To Take

You may be thinking that you do not have the need for an estate plan or at least there is ...
Read More
Be A Tax Savvy Investor

Be A Tax Savvy Investor

Take advantage of long-term capital gains rates Hold stocks and mutual funds for more than twelve months to have your ...
Read More

Subscribe

Be the first to know when new resources are published.