How to Budget for Child Care Expenses This Fall

By Kara Reynolds | Sep 19, 2019

We’ll cover our ears while you shout out any expletive that comes to mind — we know, you’ve just realized how much child care costs. It’s not a miscalculation, nor is it just a price spike in your city. On average, a year’s worth of day care will cost an average of about $10,000, according to The website puts the cost of a nanny for the same period at just under $30,000 per year. So, now that you’re done screaming, you’ve got work to do. Budgeting for child care can be tough, but it certainly isn’t impossible — especially not with these five steps:

1. Calculate the Precise Cost

We have to face the exorbitant price of child care once more in our budgeting quest. You can’t start to figure out how you’ll spend on day care or a nanny if you don’t know the exact price you’ll have to pay each week or month. Begin this process by finding the center to which you want to send your little one. You can also interview nannies to learn their salary requirements, and figure out how much you’ll have to pay them with taxes included. Good news — you might be eligible for some tax cuts that can make your child care of choice cheaper. The Child and Dependent Care Credit will put between 20 and 35 percent of expenses up to $3,000 back into your pocket. You can also opt into flexible spending through your company and use up to $2,000 from that savings account to pay for care.

2. Outline Your Current Budget

You can’t figure out how to pay for child care without knowing how you spend your cash now. So, draw up a good, old-fashioned pie chart or create an Excel sheet, if you’re feeling less artsy about your expenses. This task will help you in the next steps, wherein you’ll find places you can funnel funds into child care. Generally, it can be an eye-opening process for parents, as it’s so easy to lose track of how much you spend on extraneous items or Target runs.

3. Find Places to Trim and Save

Now you’re ready to budget for child care expenses. Your best bet is to cut down on nonessential spending — going out to dinner or buying a cup of coffee each morning are prime examples. By prepping both of these at home, you can save serious coin. You can also cut down on essential spending on gas, groceries and even clothes, so long as you’re creative about it. For instance, start a carpool with your neighbors and save fuel. Buy only secondhand clothes and enjoy those smaller price tags. Plenty of ideas exist to make grocery shopping cheaper, too — try paying for your food in cash only, so you stay within your budget for the month. Although you can feel free to cut spending in most areas, try to keep funneling cash into your savings. You don’t want to sacrifice your retirement for day care. You should also be aware of your emergency fund and how much money it contains. You never know what will happen, so cultivating one is smart regardless of how much child care costs.

4. Consider Other Options

Perhaps your budget has revealed that you can’t afford to pay for the child care your family needs. Don’t worry! There are more options than just day care and in-house nannies, so weigh them all before giving up. For example, you and your partner might consider adopting opposite work schedules or putting in hours that only slightly overlap. That way, you only have to pay for child care for a minimal amount of time. Sometimes, it’s more cost-effective for one parent to stay home. You could also start a nanny share with a friend or neighbor — the employee will be happy to make more cash, and both families will benefit from lower child care costs.

5. Continue to Track and Adjust

Now that you’ve figured out how to pay your child care expenses, it’s up to you to make sure your family remains comfortable. Old habits die hard, so the cost-cutting measures you put in place can be hard to obey. Keep yourself accountable and track your budget throughout the day care years, so you know what’s happening. Of course, you’re likely to change jobs and, hopefully, make more money as time goes on. That’s great news for parents. When changes in your budget occur, you should re-delineate your spending to see where you want to funnel more of your newfound cash. As kids grow up, they cost more money in different ways — afterschool activities, anyone? Stay on top of your spending so everyone’s comfortable, happy and chill for years to come. Child care costs a lot of money — but you don’t have to stress yourself out trying to pay for it. Instead, get real with your spending and find ways to save. With that, you’ll be ready to cover the costs of a nanny, day care center or any other form of child care that works for you. It will feel great knowing your kids are in capable hands, all thanks to your thoughtful budgeting.

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