Debt & Budgeting
If you’re preparing to have a baby or if you already have young children, be prepared for some sticker shock when it comes to childcare. If you’ve already looked into it, you know it’s going to be expensive.
A recent study by Care.com found that average weekly rates for the care of one child range from about $565 for a nanny and about $215 for a family care center.
Depending on where you live those costs will vary, but you get the picture, it’s not cheap to find quality care for your children while you’re at work.
Research Your Options
If you have more than one child you’ll feel the pinch even more, especially if both children are under the age of four. It’s one of the most frustrating aspects of being a parent in today’s world.
You want the best life possible for your child, but that often requires two incomes to provide. Of course, you want your children to have the best possible care when you’re working, and that takes money too.
So, what can you do? Well, you have to do your homework. Explore the costs of daycares in your area and research the services they provide. It will help you find a service where you feel comfortable leaving your kids at a price you can handle.
Location is another consideration. You can save time and money if the childcare is closer to your work or home.
You should also take a close look at the potential of working from home. If you’re married, would you be better off if one of you stayed home with the children, maybe working part-time?
Perhaps you use the opportunity to take some additional online classes for career advancement. Once your child goes to school, you can return to the workforce. It’s just something to consider.
FSAs and Tax Credits
Flexible spending accounts (FSAs) allow a single parent to set aside up to $2,750 tax-free each year to pay for childcare or $5,500 for a married couple. While it will not cover all the costs, by any stretch, it can help ease the sting.
Additionally, child tax credits allow you to deduct up to $3,000 per year per child – up to $6,000 per family for childcare expenses. One thing you should note, though, is that while you can use both the FSA and a tax credit, FSA funds are applied first and count toward the tax credit.
Making it More Affordable
Maybe the best choice for everyone is to cut expenses in other areas of your life, freeing up the money you need to give your children the best childcare you can afford. Some basic things you can do that will help with these expenses include:
- Learn to clip and use coupons for other household expenses.
- Shop clothing at consignment boutiques. Especially for baby clothes.
- Eliminate unnecessary expenses (cable television, expensive mobile phone plans, and time-consuming and costly gym memberships).
- Try to find a job closer to home or consider moving closer to work. You will not only reduce commuting expenses but also minimize time away from your child.
- Explore other options for childcare, like a family member, friend of the family who stays at home, or alternating work schedules with a spouse to reduce or eliminate the need for childcare services.
- Start a daycare in the home. Then it is always “bring the baby to work day” for you, and you can contribute to the household income in the process.
Steps like these can go a long way toward helping you manage the costs of raising your child those first crucial years.
- Compare costs to find the best combination of service and care.
- Find other ways to cut costs to accommodate childcare expenses.
- Consider working from home or shifting schedules with your spouse to reduce or eliminate the need for childcare outside the home.
- Explore options outside of traditional childcare facilities.
Small steps like these can yield significant results for your childcare budget and your efforts to manage childcare expenses.
© Fintactix, LLC 2022