It’s no secret that child care is expensive. There’s a lot of debate about how we can lighten the burden of the cost of child care moving forward. While there are many big ideas and long-term options, there are also a few simple ways that you can make your child care coverage affordable.
1. Plan Ahead
The first thing that parents can do to manage the financial cost of child care is to plan ahead for what they need. Like many things, there’s a seasonality in the demand for child care help. When a family schedule changes, so does their need for a sitter. These typical seasons include: the start of a school year, the start of a calendar year, and the end of a school year.
When demand for child care is high, the most affordable options tend to be scooped up first. When parents plan ahead, they start their search with plenty of time to find the right care at the right price for their family.
2. Make A Budget & Stick To It
Like anything else in a budget, it’s the unexpected expenses that tend to push it into the red. If you know you only have so many funds to utilize for child care, then set up a plan to help ensure that you don’t go over.
Decide what your monthly budget for child care is and then do the math. How many regular hours do you need? Can you imagine any situations in which those hours increase or decrease on a week-to-week basis? What about occasional date nights? When you factor in all of these needs, make sure you have wiggle room each month for those unexpected hours.
3. Hourly Rates
When deciding how much to pay your babysitter or nanny, it’s important to set a competitive rate to attract the best caregivers. But there are lots of factors to consider when determining the cost of child care.
The Local Going Rate
Due to cost of living and minimum wage laws, hourly rates are different depending on where you live. Get familiar with your local going rate for babysitters and nannies.
How Rates Increase
For nannies and babysitters who set their own rates, the cost can increase for a few reasons:
- The number of children in their care
- Certifications and specialty training they have
- Additional household responsibilities included in the job
- Travel and job-related expenses
4. Check-In With Your HR Representative
Many employers have some kind of child care as a part of their benefits package for employees. Check-in with your HR representative about what options are available for you. If child care isn’t a part of your employee benefits, take some time to meet with your HR representative to advocate for family support at your company.
5. Use A Nanny Share
A nanny share is when two (sometimes more) families work together to hire a nanny that will take care of all of their children at the same time. When compared to hiring a nanny by yourself, a nanny share could reduce how much you’re paying by one-third. If you’re looking for child care coverage for a lot of hours each week, that savings adds up quickly.
If you’re considering a nanny share, be sure to assess everything that you need when it comes to child care and everything that’s involved with a nanny share. If there’s harmony in those two lists, then maybe a nanny share is an option for you.
6. Set Up A Dependent Care Flexible Savings Account
The Dependent Care FSA is a flexible spending account that’s a pre-tax benefit offered by an employer and used to pay for qualified, out-of-pocket dependent care expenses—like your nanny’s wages. How much you can save in taxes depends on your tax bracket and your state and/or local income tax rates. Remember, in order to take advantage of a Dependent Care FSA, you must be paying your caregiver legally.
7. Utilize Your Child and Dependent Care Tax Credit
If you need to find help from a babysitter or a nanny so that you could work or look for work, you could qualify to claim the Child and Dependent Care Tax Credit on your taxes. There are requirements for you (the parent), your child, your caregiver, and your caregiver expenses to meet in order to qualify. If you’re eligible, this credit “gives back” a portion of the money you spend on care, and can reduce your tax bill by hundreds or even thousands of dollars.
8. See If You Qualify For The Child Care and Development Fund
The Child Care and Development Fund is a federal and state partnership funded by the Child Care and Development Block Grant Act. The fund provides assistance to low-income families who need child care due to work, work-related training and/or attending school. Use the eligibility checker to see if this is an option for you and your family.
