Child care is notoriously expensive in the United States. According to a 2021 study by Care.com, 85% of parents paying for child care have to budget 10% or more of their household income to cover it. Near 6 in 10 (59%) pay more than $10,000 per year toward child care, which means they pay more than the average cost of in-state college tuition ($9,410 per College Board).
It’s enough to make many parents stay at home for a few years, dropping to a single-income household. And child care is just the tip of the iceberg, a more obvious expense that says nothing of the hidden costs of raising children.
What’s a middle-class family to do? First and foremost, make sure you understand the costs, options, and factors affecting the cost.
Analyzing Day Care Costs
A 2021 study by the Center for American Progress found that it cost an average of $1,324 per month to send an infant to a child care center. That’s nearly $16,000 per year.
Meanwhile, according to the Census Bureau, the median gross household income in the U.S. was $67,521 in 2020. That means infant care cost 23.5% of the median household income, which is more than many people spend on housing.
But the median family didn’t take home all $67,521. Between local, state, and federal income taxes, they ended up with perhaps $50,000 in net take-home pay. And that says nothing of property taxes, sales taxes, excise taxes, and the myriad other tax burdens in the U.S.
As a percentage of take-home pay, a median family could pay 30% of their income toward child care. If that’s the median family, just imagine how far out of reach that would be for a family below the poverty line.
Of course, nationwide averages don’t tell the whole story. One 2018 study by the Business Broker Network (BBN) found vast differences in infant and toddler child care costs across states. On the low end, Mississippi clocked in at $665 per month ($7,981 per year). The dubious honor of highest child care costs goes to Washington, D.C., where it costs $2,982 per month ($35,782 per year).
That’s roughly the median personal income in the U.S. ($35,805 per the Census Bureau).
In most states, the BBN study found child care also costs more than the average rent for a two-bedroom apartment. Only five states had lower average rents than average infant and toddler child care costs.
Granted, child care for older children costs less than for infants and toddlers. But that’s little consolation for parents with a 6-month-old, a 2-year-old, and a 4-year-old who all need full-time care.
Factors Affecting Child Care Costs
Nationwide and state averages highlight the daunting costs of child care but shed little light on the factors affecting your personal needs and expected costs.
- Type of Day Care You Need. Some day care centers are all-day-only, while others have part-time options. A drop-in center that allows parents to drop off and pick up their child flexibly typically charges more per hour, while a daily center may require you to lock in a rate with a signed contract.
- Scope of Care. If you want care, meals, education, and developmental play, you can expect to pay more for those services. A broader scope of care usually costs more, which is why day care centers generally charge more for younger children who require more attention.
- Proximity to Your Work. In dense urban areas, everything costs more money, from real estate to food to labor, all of which trickles into child care costs. Prepare to pay more for a location convenient to your work if you physically commute to an urban office. However, convenience does bring inherent value, allowing you to pop by on your lunch break, pick up your child if they’re sick, or (if you’re still pumping or nursing) come to the center throughout the day for feeding.
- Recommendations and Desirability. You don’t want to find just any day care center — you want one that comes highly recommended from other parents. You’re entrusting your child to another adult, and if you feel more comfortable with one child care service over a less expensive option, that peace of mind comes with its own value.
- Increased Illness. The Centers for Disease Control and Prevention reports that up to 26,000 kids under the age of 5 are hospitalized because of the flu alone each year, saying nothing of the countless other diseases children catch. Younger kids in day care are especially susceptible to illness because of their immature immune systems and proximity to other children. However, illness doesn’t just affect your children — you may be required to take time off yourself to care for them or if they pass their illness on to you. For freelancers, the self-employed, and workers without paid sick leave, not working means not getting paid. Private child care through a nanny or au pair, for example, could mean less exposure to other children and adults and a lower frequency of illness.
- Food Costs. Does the child care center provide food, and if so, at what kind of upcharge? You may need to pay for a food package at your chosen child care facility or purchase and assemble lunches for your kids at home.
- Possible Low-Income Assistance. Depending on your income level and the programs available in your state, you may be able to obtain financial assistance to help make day care more affordable. While each state’s income requirements and subsidies vary, you can usually find out more by visiting your state’s Department of Human Services website. For example, in some states, you can qualify for subsidies if you earn less than 200% of the state poverty line.
Ways to Make Child Care More Affordable
If you’ve assessed the true costs of day care and decided to go for it, there are several ways to make sure it doesn’t eat up all your monthly income. By doing your homework, you can avoid overpaying while still getting the best facilities and caregivers for your little ones.
1. Shop Around
Ask your friends, colleagues, family members, neighbors, dentist, and third cousin twice removed about their child care experiences. Ask what they’re paying, how they like their day care centers, and whether they’d recommend them.
Then take your search online. Go on local social media groups for parents and ask for even more recommendations. Visit websites like Care.com to search and compare day care centers, nannies, and other child care providers.
After collecting as many referrals as possible, start the vetting process. Visit the facilities and speak with staff to gauge the value for the price. Start with the following questions when considering a potential day care center:
- What is the child-to-worker ratio, and is it within your state’s day care regulations?
- Are you licensed by the state?
- Can I see the center?
- What types of activities are available?
- What is the schedule for a typical day at the center?
- Do you allow parents to visit their children throughout the day?
- What are your meal plans like? Can you accommodate special diets? Do we have the option to bring our own food?
- Do children have naps at this center? Is there a dedicated area for rest?
- How do you handle discipline?
- Do you go outside? Is there a safe play area, and may I see it?
- Do you have references for past and current parents whose children have used this center?
Consider looking beyond traditional day care centers. Regulated and registered home-based day care can prove just as reputable as center-based care, but with lower operating costs. In some cases, they make for more personal child care, with more attention from adults.
Community centers and even schools may offer day care services for limited hours as well, so familiarize yourself with all the options before committing.
2. Trim Costs
Some facilities tack on additional fees that make child care more expensive, including a meal plan, late pickup charges, and costlier day care models such as Montessori-based programs. A good day care center should provide you with a transparent fee schedule for all add-ons and fees that can drive up costs, so be sure to ask for it and confirm which fees are necessary and which are optional.
For example, you may be able to negotiate a better rate if you provide your own food or opt out of field trips. You may also be able to get a better deal by entering a long-term agreement, such as an annual or month-to-month contract, rather than paying a drop-in rate.
Of course, the rate and contract you choose depend on the nature of your career. Those with full-time positions may find that longer-term contracts make more sense than those with side gigs or part-time or shift work with irregular hours.
3. Ask for a Sibling Discount
If you have more than one child who needs care, the cost can be overwhelming. One way to help your bottom line is to ask facilities if they offer sibling discounts — many offer reduced rates for a second and third child.
Not all child care facilities volunteer that information, though, so be sure to ask while interviewing them.
4. Consider Nannies & Au Pairs
Many parents dismiss hiring an individual nanny or au pair as more expensive than day care. But that may not be the case, depending on a few factors.
But before exploring those, it’s worth pausing to differentiate between a nanny and an au pair. A nanny tends to be a local domestic employee who hires out their time, like a maid or a cook. In contrast, au pairs travel from overseas to temporarily work and live in a new country.
The employing family acts as a host of sorts, providing room and board, helping them learn the local language, and generally helping the au pair get the cultural experience they want out of spending a year or two in the country. Because the employer provides room and board, they typically pay less than they would to local nannies who work solely for a wage.
My friends hosted a Polish au pair who spent several years living with them before their son qualified for preschool. They paid her $900 per month in addition to providing room and board, and she quickly felt like part of the family. She provided excellent one-on-one care and helped with domestic chores, and my friends were sad to see her go when she returned to Poland.
If you have multiple kids, you still generally only need one nanny or au pair. That fixes the cost of child care, regardless of whether you have one or three children, and creates an economy of scale for more prolific parents.
But day care services charge by the child.
You may also be able to save money through a nanny share with neighbors or friends. One nanny can watch several children, after all. Consider pooling resources for your own private at-home day care.
5. Take a Year Off
Depending on the parental leave packages offered by your place of employment, it may make more sense to have one parent take a year off to care for a new baby. Don’t forget day care costs are based on the child’s age. Child care for infants and toddlers costs more because they require more labor and potentially increase the number of employees needed to satisfy your state’s worker-to-infant ratio regulations.
Infant day care can easily negate a lower- or middle-income parent’s entire paycheck. Waiting until your baby graduates from toddlerhood can offer more baby bonding time and more money in the bank.
But as you explore this option, look at more than just your bottom line paycheck. Also consider employee benefits like health insurance and employer matching for retirement contributions.
Finally, don’t overlook the cost to your career. The longer you take off, the further behind you’ll fall compared to your colleagues who continued working. While data on the careerlong cost of an extended hiatus is scarce, a 2018 British study reported by HR Review found that workers who took a career break suffered a growing average annual salary loss the more prolonged the gap in their resume.
Those with a nine-month gap earned an average of 1,449 pounds (US$1,934) less per year, 3,864 pounds (US$5,158) less for a two-year break, and a whopping 9,660 pounds (US$12,894) less after a five-year hiatus.
6. Explore Flex Spending Accounts & Child Care Tax Credits
If your employer is willing to assist with day care expenses, a flexible spending account — sometimes part of an employee benefits package — can help offset costs. You or your spouse can also explore funding a dependent care flex spending account (DCFSA or FSA) with up to $5,000 tax-free each year per couple. You can then use those funds to reimburse your day care costs.
Just be sure to use it before the end of the year so you don’t lose the money in the account. You only want to fund your DCFSA with as much as you plan to spend.
Bear in mind you cannot use a DCFSA and claim the child care tax credit, so you need to decide which makes more sense for you. The child care tax credit returns a percentage of your child care expenses, depending on your income, with a cap of $3,000 per qualifying child ($6,000 for two or more children).
Speak with an accountant before opening a DCFSA, especially if you have more than one qualifying child, to determine which option makes the most sense for you.
7. Ask for Family Help
Not everyone has the luxury of available family members nearby, but if you do, they can help ease the burden with regular babysitting. While Grandma doesn’t need to be your child’s sole caregiver, you may be able to reduce day care hours if family members are willing to pitch in and help.
You can offer to pay them and still likely come out ahead.
8. Work From Home
In the wake of the 2020 coronavirus pandemic, millions more Americans found themselves able to work from home. It means continuing to generate income while creating far more flexibility to keep an eye on your kids.
If your job doesn’t currently allow telecommuting, one option is negotiating a flexible or remote work option as a benefit. Alternatively, you can explore new jobs or even a new career that lets you work from anywhere. You could even branch out on your own and work as a freelancer.
Just remember that working from home still involves working. While it adds flexibility to step in and care for your child when needed, you can’t work productively and care for an infant or toddler at the same time.
As a test run, take a week to work from home and see how productive you are. Some people “practice” working from home for a few weeks beforehand to ensure they can actually stay organized and effective. It helps if you have some strategies for balancing work and child care and are prepared to find ways to keep your kids busy while you work.
9. Adjust Your Schedule
If you can juggle your schedule to better align with your spouse or other family members’ availability, your child can spend less time in day care, and you can spend less money. If your or your spouse’s boss is flexible, see if you can rework your schedule to reduce costs.
For example, if you have family members who could watch your child in the mornings but not afternoons, you could potentially start your work earlier to end work on time.
You can also adjust your schedule with your spouse to save money. Working opposite schedules may require only minimal child care each week, helping you keep more of your take-home pay. Just make sure the constant balance between work and home life doesn’t overwhelm you and your spouse — with little time together as a couple and even less leisure time to yourselves, your marriage and sanity may be put to the test.
10. Consider Part-Time Employment
Depending on your career, you may be able to switch to part-time work, reducing the need for child care.
Part-time employment also allows more flexibility in your schedule. If you don’t like the idea of leaving your little one during waking hours, you could choose a late-night or early-morning shift to maximize your time at home. While you still may require some day care, it could be more feasible for family to pitch in, and a drop-in center is always an option.
Bear in mind that by choosing to work fewer hours, you could miss out on benefits like health insurance and paid vacation time (although some part-time jobs do offer health insurance). However, if your spouse qualifies for benefits through full-time employment, taking a part-time position may mean lower day care costs without having to sacrifice benefits.
In some cases, scaling back on work could actually help you come out ahead in the long run. Add up how much you can make in part-time wages and subtract what you’d pay in child care costs as well as any taxes you would owe. Then, compare that to working full time and paying for more child care. While you might technically make less with part-time hours, you could keep more in your bank account if you can scale back on your child care needs.
11. Move for More Affordable Child Care
As reported by the BBN, child care costs 4.5 times as much in Washington, D.C. ($35,782) as it does in Mississippi ($7,981). For that matter, housing costs around 5 times more in D.C. as well, according to Business Insider.
But the increasing number of Americans who can work from anywhere don’t need to put up with excessive costs of living to continue earning a substantial salary. A moderate salary goes a lot further in a low-cost-of-living area.
For instance, I earn income in U.S. dollars, but I live in Brazil, where each dollar stretches much further. I pay the equivalent of around $500 per month for a full-time nanny, who not only watches my daughter but also cleans our apartment, cooks meals, and goes grocery shopping for us. If the expat lifestyle appeals to you, check out these 10 countries where you can live comfortably on $2,000 per month.
But moving doesn’t only come down to your cost of living. You may decide to move closer to your parents or other family members so they can provide more child care support.
12. Pool Day Care Costs With Your Employer or Co-Workers
Do you work in an office with plenty of other parents with children below school age? Your employer may be open to offering day care as an employee benefit to attract and keep top talent.
If they’re not willing to pay for all of it, they may be willing to put something toward it. Even if they refuse, you could still potentially pool resources with your co-workers to hire a full-time shared child care provider near your workplace. Even sharing a nanny with one or two other co-workers could cut your costs in half or lower.
Final Word
Ultimately, only you and your partner know what’s right for your family, whether that means working full time, staying home full time, opting for a modified work schedule, or changing jobs or homes entirely. Day care is expensive, but you have plenty of child care options at your disposal to reduce costs.
Consider the issue from all angles and decide what works best for your kids and your career. There’s no single right answer, and everyone’s approach should differ based on their personal needs and desires.
