110. Save $500+ per month (per child) – 22 ways to save money on child care
The cost of child care shocks most new working moms. In many cities, parents can spend over $30,000 a year for a full-time nanny or two kids in a high-quality daycare center -- rivaling annual college tuition.
Child care costs are on the rise, with the average family paying between $7,200 and $9,600 per year. Most families would jump at the chance to reduce their child care costs.
For example, day care for children under five in central New Jersey costs an average of $1,600 per child per month.
Here are 22 ways to save money on child care:
1. Use employer's flexible spending account program. Save a bundle on taxes by paying your childcare costs with pretax dollars. Participate in your employer's flexible spending account program.
If you're already paying these child care costs out-of-pocket, why not get a tax break on these payments? With a Dependent Care FSA, you can exclude up to $5,000 from gross income for amounts paid for dependent care assistance. This means if you're in the 28% tax bracket and you elected the full $5,000 for Dependent Care FSA benefits, it would result in a tax savings of $1,400 plus $382.50 for FICA taxes that are also avoided.
Below is a partial list of expenses that a Dependent Care FSA can be used for*:
- Child care centers
- Family day care centers
- Preschool or nursery school
- Caregivers for disabled dependent or spouse who lives with you
* Please consult BASIC prior to election for eligibility requirements.
In addition to the benefits offered by the Dependent Care FSA, many families with two or more children are also able to claim the federal government's Dependent Care Tax Credit (if they spend more than $5,000 per year on dependent care expenses).
Pre-tax savings: Check to see whether your employer offers a Dependent Care Account, which is a type of Flexible Spending Account that allows you to save up to $5,000 of pre-tax dollars specifically for childcare or elder care. Additionally, Uncle Sam might give you a break if you spend after-tax dollars on childcare, in the form of the Dependent Care Tax Credit.
Check with your human resources department to see if you can participate in a dependent care account. Many companies now offer this attractive benefit, which permits you to put a certain amount of money aside each month on a pre-tax basis. Yes, this is still money coming out of your own paycheck, but Uncle Sam will not levy any tax on it! Depending how much money you put aside, the savings most certainly add up! When your childcare bill is due, withdraw the money from the account and use it to pay the provider directly. Make sure, however, that you know exactly how much money your will need. Whatever you do not use at the end of the year is forfeited in many cases.
2. Inquire to see if your company has partnerships or offers discounts for certain child care provider services. Companies will sometimes negotiate discount plans with local child care providers to help offset child care costs.
Ask if your company offers discounts on services such as childcare providers or gyms.
3. Cut childcare expenses through flexible scheduling. Can you telecommute, job share or work more flexible hours to reduce the hours away from home?
Arrange your work schedule to alternate with your spouse's or relative's to reduce the amount of time your child will have to spend in day care.
I consider it a mark of true dedication and grit when a couple decides to split shifts in order to reduce the time children are in care. If your husband works the day shift and you’re able to work the night shift, you can eliminate paid child care altogether. Or you work Monday through Friday and he works Wednesday through Sunday, cutting your child care expenses to three days.
This can be tough on your relationship, though, so think through how you will keep solid marital and family bonds. Can you have an early dinner together, after he gets off but before you start work? What about a breakfast ``date’’ just the two of you, once a week?
A less exhausting alternative is to move your schedule slightly. If you work 7 am to 3 pm and your partner works 10 am to 6 pm, you’ll need less child care -- and save a boatload. Again, plan out family time so that your marriage and family unit remain strong.
Don’t assume that your employer won’t let you negotiate a different schedule. You’ll never know unless you ask!
Swap your schedule: If you and your partner have any flexibility at work, see if you can change your schedules so that one of you is home with the kid(s) as much as you can afford. Do not confuse this with working at home, though — chances are, if you’re watching a child, you’re not going to get a whole lot of work done, unless it’s naptime.
Do you know a coworker with similar backgrounds and parenting styles? Perhaps you can split the cost of home child care.
4. Get help from public school. If your public school district offers a halfday pre-kindergarten program for 4 year olds, enroll your child. It's free and reduces childcare costs to halfday rates.
Some local governments offer publicly funded pre-kindergarten programs for 4-year olds. They may also provide enrichment programs for older preschoolers that can reduce the amount of time you need to pay for private child care.
You also should investigate care provided by your local YMCA, JCC, or churches. While each program varies, child care given by a nonprofit may be less expensive because there’s no need to return profits to corporate shareholders or company owners.
5. Join or start a babysitting cooperative. When my first baby was born, I joined a new mother’s group at the local birthing center. Every Wednesday morning we sat with our babies at our feet, comparing sleep techniques, sharing breastfeeding woes, and gradually helping each other become comfortable in our new role. I stayed close with several of the moms after returning to work, and we decided to start a babysitting cooperative.
Neighborhood co-operative: If you have neighbors who are in the same boat, get everyone together to discuss ways you might be able to share the childcare burden. Taking one day off a week in exchange for two or three days of childcare can be a good deal. If you have even one neighbor who stays home with his/her kids, talk about whether they might be willing to accept a pittance in exchange for a morning/day/days of watching your own little one.
6. Barter your services for babysitting. Maybe you've found the ideal daycare center for your needs, but the cost is too steep. Ask the director if they need any part-time assistance in the office that might win you a tuition discount.
If you have a special skill like accounting or fundraising, even better. But there's always more filing to be done, and parents to call about the wait list. You'll never know unless you ask.
You may find your skills come in handy around the neighborhood too. Or with other parents, you can simply swap babysitting. You watch their kids this Saturday night; they watch your children the following one.
Trade a service you can provide for a service you want, like childcare. The sky’s the limit here, so think creatively. For example, you may be able to provide music or golf lessons to a neighbor in exchange for childcare. This arrangement works best when both parties share clear expectations at the outset.
You should consider using standard pricing to determine the going rates for each service provided so that services are exchanged for their real value, and fairly (if the fair market value of an hour lesson is $10 and for childcare $5 – you may want to exchange two hours of childcare for a one hour lesson). If you aren’t sure how much a private music lesson costs in your area, ask around so that you can make an even trade.
7. Enlist family members. If you’re lucky enough to live near your child’s grandparents, aunts, or uncles, ask them if they’d be able to watch your offspring one or two days a week. You could ask them to do it for free, or offer to pay them, even if it’s just gas and expenses. Many grandmothers would accept below market rates to help you out and because they’d relish the bonding opportunity.
For far-off relatives, consider whether they might visit for a month in the summer to care for your little ones. Or if your children are old enough, send them to your relative’s for a week or two. You might enjoy the novelty of a quiet house at the end of the work day.
Nana’s nannying service: It goes without saying that if you have family nearby who are of retirement age and home a lot, tap them in to help you out.
Even your older children can participate by helping to watch their younger siblings after school, while you get work done. It’s up to you whether this counts as a family chore, or deserves a token monetary reward. Either way, it’s much cheaper than a regular babysitter.
8. Take your baby to work. Now, if you are a police officer, nurse, mail carrier, or other profession that keeps you moving, this isn’t a viable option for you. If, however, you have your own office or work in some other situation that gives you a measure of privacy, this could work, especially in the first few months when babies sleep a lot and are primarily immobile. If your boss seems hesitant, ask for a trial run. He or she might rather give it a try than to risk losing you as an employee.
9. Try part-time child care. Maybe you can get by with a part time job. Or maybe you can arrange your schedule so that you only have to be at work for a few hours before your spouse can come and pick up your baby from day care. If so, some day cares may be willing to give you a reduced rate for only attending partial days. Another possibility is to find a parent who works the opposite schedule as you (for example, you work mornings and she works afternoons) and then split a single day care spot with her.
10. Work opposite shifts. If the part-time day care thing isn’t working, try working completely opposite shifts from your spouse. You can work days while they work nights or vice versa. This can totally eliminate the need for day care. However, it can also eliminate a lot of much needed sleep for both parents!
11. Use neighborhood children as mother’s helpers. My husband and I love the 11-year old girls in our neighborhood. They adore babies and preschoolers, and consider it an honor to spend a couple of hours playing with them while we have a meeting in our home or get some work done. Plus, they charge $5 an hour, compared to the $7-8 we give high school students, $10 an hour for high school graduates, or $13 an hour we pay our daycare center teachers for babysitting. (If our rates sound high, it's because we live in a big city. My high school sophomore stepdaughter charges $5 an hour for sitting in her mom’s suburban hometown)
12. Consider hosting an Au Pair. We have a guest room in our basement that has its own bathroom and is private enough to house an au pair. But when we thought about living with an unknown young woman, whose English skills might be poor and would have to adapt to America, we decided the trouble and risk outweighed the money we’d save.
Still, I know several families that have had good luck with au pairs. They found women in their early or mid-20s, who are more mature and independent than some of the teenage au pairs. Their children bonded with the au pairs and loved learning about another culture and language.
Au pairs are much cheaper than nannies, although you do have to pay room and board. An au pair cannot legally work more than 45 hours a week, so think carefully about the time you’ll need. If it’s less than 40 hours a week, you also have a built-in weekend sitter!
13. Take the tax credit for child care. All working parents should look at taking the federal tax credit for child care expenses. Up to 35 percent of your costs may qualify, with a cap of $3,000 per child. Check with your tax preparer or the Internal Revenue Service for the specifics on qualifying for and claiming the credit.
Make sure you get a receipt from your day care provider that has the provider’s tax identification number on it.
14. Get help. If you are a low income family, you may be able to get child care assistance from your state. This assistance may not pay your total child care bill but it generally pays most of it.
15. Look into working from home. Similarly, working from home, a.k.a. telecommuting, can cut your child care costs. Even if it’s one day a week, it can save you money.
If your children are young, you’ll probably still need full-time child care in order to get your work done. But you’ll save the time of dressing for work, and your commute, which probably will result in a shorter day of child care. And less child care time means money in your pocket.
As your kids grow older, they’ll be able to amuse themselves, or start on their homework, while you wrap up your workday. You might even teach them to set the table and begin dinner preparations.
16. Telecommute or work from home. More and more employers are allowing their employees to work some of the time or all of the time from home. If you have a job that could be done at home, talk to your boss about this possibility. As added incentive, remind him or her that your working from home will result in fewer sick days and less office space used.
17. Go back to school. If you’ve thought of pursuing a Master’s degree or PhD, now might be a good time to get the ball rolling. My husband is completing his PhD and as a working student, he has been supported by the Graduate Employee Organization union. One of the perks of this has been subsidized on-campus childcare. From the time they were 18-months old, both of our boys have attended nursery school/preschool, three days a week, at no cost to us. If your local university offers such a program, you might consider returning to school — plus, as my father always says, “Time spent pursuing education is never wasted.” Especially when free childcare is involved!
18. Bring someone into your home. If you work at home, or even if you don’t, consider hiring someone to come in to watch your children. I have done this with both children and it worked out very well. If you’re looking for help in the late-afternoon, consider calling your local high school’s/college’s career center and hiring a responsible local student. I also found a three-day-a-week infant sitter through my church; we paid her $10/hour ($11/hour after she earned a certification in infant CPR) and it was well worth the cost.
19. Work at a day care center. Different centers have different policies but in an ideal situation, you will be able to work in the same room as your baby and receive free child care while you are on duty. Keep in mind that while most day cares won’t pay a whole lot, the free child care might make it worth it.
20. Hire a college student to nanny for you and share her. Find one or two parents who are willing to pay toward hiring this student and then have her watch your children and the children of the other parents who are paying. This will allow the kids to become close friends, offers many of the same benefits as you would realize if you were to hire a nanny for your child alone, and will give you the flexibility you need to save some money.
21. Consider a home daycare program. A home daycare can usually charge less than a center-based child care program because the provider does the lesson planning, cleaning, meal preparation and other child care related tasks herself, so there is no employee overhead. And since home daycare providers operate inside of their homes, there are no additional building fees to pay. But when choosing a home daycare for a child, do it with care; not all states require the providers to be trained or licensed.
22. Ask for sibling discounts. Having more than one child enrolled in a daycare program can break the bank. For this reason, some daycare centers offer sibling discounts. Even if giving discounts is not a common practice in a particular child care center, ask for one anyway. More than likely, the center will knock off a few bucks just to keep the children enrolled.