Why Affordable Child Care Matters
Over the years, as more families have both parents working outside the home, the demand for quality child care has skyrocketed. According to the Department of Labor, in 67% of married-couple families with children, both parents are employed. In 2023, 32.6 million families had children under the age of 18, and more than half of them needed affordable daycare at some point. That's a lot of families navigating the child care maze.
Affordable child care is a hot topic, but parents can still be hit with sticker shock when they start digging into the costs. And it’s not just the price tag—access is another major hurdle. A staggering 51% of Americans live in what’s known as a child care desert. This means there are over 50 kids under five in the area but either no child care providers or too few slots available. Essentially, there are three times as many kids as there are licensed spots! So, while many parents are trying to find budget-friendly options, others are struggling to find any child care at all.
To add to the pressure, with maternity leave in the U.S. typically lasting around 12 weeks, parents need to sort out child care quickly if they're returning to work after having a baby.
Finding affordable child care isn’t just about saving money—it’s about reducing stress for families and ensuring children have a safe, nurturing environment. In the rest of this article, we’ll explore practical tips for finding budget-friendly options. Let’s get into it!
Understanding Child Care Costs
According to Census.gov, in 47 states, child care costs for a single child ranged anywhere from $4,810 a year for home-based care for school-age kids in smaller counties to $15,417 for infant care at a center in big counties. Adjusted for inflation, that's about $5,357 to $17,171 in 2022 dollars. For many families, these costs eat up between 8% and 19.3% of their median income per child in paid care.
Daycare costs can vary greatly depending on where you live, but for most Americans, wherever they are, child care is still a major cost. So much so that around 60% of parents can’t afford the cost of childcare.
According to Economy Policy Institute, the top 10 states or state equivalents with the highest child care expenses for preschool, infant care, and day care:
- Washington, D.C. ($24,243)
- Massachusetts ($20,913)
- California ($16,945)
- Minnesota ($16,087)
- Connecticut ($15,501)
- New York ($15,394)
- Maryland ($15,335)
- Colorado ($15,325)
- Washington ($14,554)
- Virginia ($14,063)
If you take Washington, D.C. with the highest average cost of child care at $24,243, and look at the median household income of Washington, D.C., which is $108,210, that comes to around 23% percent of a household income being spent on childcare cost.
If you’re exploring other options, like a nanny, that cost will vary greatly depending on your location as well. If you’re in an area with a higher cost of living, expect to pay more than the national average. One survey has the weekly average cost of a nanny for one child at $766 per week, which would put the annual cost for a full time nanny at just under $40,000.
When your kid starts at school, you won’t need to find child care full time, but you might be looking for a little help after school until the end of your work day. If that’s the case, you can try and get an after-school babysitter for those few hours. The average cost per week for one child will run you $292, but goes up to $305 for two kids.
In short, whether you’re looking at daycare, a nanny, or just after-school help, child care costs can quickly become a significant chunk of your budget, making it essential to find the right solution for your family’s needs and finances.
Exploring Different Affordable Child Care Options
When you're looking for low-cost daycare, there are plenty of options beyond traditional daycare centers. Alternatives like nanny shares, au pairs, child care co-ops, and family care can help cut costs without sacrificing quality.
Nanny shares are a great way to split the expense of a nanny between two families. Usually, one family hosts the nanny and children at their home, while the other drops off and picks up. The cost goes up with more children (typically no more than 4 children between the families), but since it’s divided between both families, it’s still often cheaper than hiring a full-time nanny for just one household. The key to making a nanny share work smoothly is good communication between all parties—so it helps if the two families already know each other and agree on expectations upfront.
Another option for in-home daycare is an au pair. An au pair is a live-in child care provider who comes through an international cultural exchange program. You cover their room and board, and pay a weekly stipend—typically starting around $200. While there are program fees, this setup can be more affordable than hiring a nanny, and it also offers the added benefit of having someone available at odd hours or for extra help around the house. This is a good option for families with a little extra space who wouldn’t mind welcoming someone into their home.
Child care co-ops might be another good alternative for some families. A child care cooperative is a community based program where families share the responsibility of caring for the children. Most co-ops won’t cost as much because instead of paying money, you trade hours. Meaning you volunteer some of your time in exchange for child care when you need it. This is a great option for parents that want to be involved with their child’s care, but aren’t able to do it full time. This way you have support from other co-op members when you need it.
One of the most affordable babysitters out there might just be a family member. While this isn’t an option for everybody, if you’re one of the lucky ones with trusted family members nearby, this is definitely an option worth exploring. If it would be too much to have one family member looking after your child full-time, and you have more than one option available, think about putting them on rotation. You could get a schedule set where one family member watches your child two days a week, and somebody else the rest of time.
Each of these options—whether it’s a nanny share, au pair, co-op, or family care—offers a different way to save on child care, with a balance between affordability and flexibility.
Government Programs That Help with Child Care Costs
Several government programs can help families cover child care costs, particularly those with low incomes. The most prominent programs include the Child Care and Development Fund (CCDF), Head Start, and Temporary Assistance for Needy Families (TANF).
The CCDF provides a child care subsidy to low-income working parents, aiming to ease the financial burden of child care. In 2019, it helped approximately 1.4 million children each month. The program is designed to allow parents to maintain employment or attend school, while ensuring their children receive care in a safe environment. Families typically qualify based on their income and work or school status, with the exact criteria varying by state.Head Start is another key program that supports low-income families, offering early childhood education, nutrition, and health services to promote school readiness for young children. While it doesn't focus exclusively on child care, it plays a critical role in providing care and educational support for families that qualify.
TANF offers a broader range of assistance to low-income families, including cash assistance and child care support. While TANF is known for its cash aid, it can also help cover child care costs, allowing parents to seek employment, attend training programs, or pursue education.
In addition to these federal programs, families may also benefit from the Child and Dependent Care Tax Credit, which allows parents to claim a percentage of their child care expenses when filing taxes. This credit helps reduce the overall cost of care, though it typically provides less immediate relief than subsidies like CCDF.
To qualify for these programs, families generally need to meet income requirements and demonstrate a need for child care assistance due to employment, school, or participation in approved work-related activities. Applications for programs like CCDF and TANF are managed at the state level, with each state setting its own guidelines for eligibility and application processes.
You can find out more about government child care assistance and apply through state agencies or by visiting resources like ChildCare.gov. Keep in mind that despite the existence of these programs, funding is often limited—only a small percentage of eligible children receive assistance. For instance, in 2017, only 14% of eligible children nationwide were able to access public child care help.
Maximizing Employer-Sponsored Child Care Benefits
Many employers offer child care benefits that can help reduce out-of-pocket costs, but not all employees are aware of how to fully maximize these options. Two of the most common employer-sponsored child care benefits are Dependent Care Flexible Spending Accounts (FSAs) and child care stipends.
Dependent Care FSAs allow you to set aside pre-tax dollars to cover eligible child care expenses, including daycare, before and after-school programs, and even summer camps. For 2024, the IRS allows up to $5,000 per household to be contributed to a Dependent Care FSA. Because the money is taken from your paycheck before taxes, you reduce your taxable income, which can lead to significant savings. To take full advantage, be sure to carefully estimate your child care costs for the year and contribute the maximum amount allowed, if possible. It's important to track your expenses and submit claims for reimbursement throughout the year to ensure you're getting the full benefit.
Some employers also provide child care stipends or discounts as part of their benefits package. These stipends are either direct payments or reimbursements intended to offset the cost of child care. In some cases, companies may partner with local child care centers to offer discounted rates for employees. If your employer offers this benefit, make sure to understand the guidelines for how the stipend is distributed and which child care providers are eligible.
Tips for Reducing Child Care Expenses
While we wish we had a magic wand we could wave for people to save money on child care, sadly we don’t. However, we do have some practical tips to help reduce child care costs.
Make sure you’re taking advantage of Child and Dependent Care Tax Credits (CDCTC). If you're hiring an in-home child care provider, you’ll need to pay them legally, or "on the books," to qualify for the CDCTC. In fact, 60% of parents surveyed plan to claim the CDCTC, and 56% plan to claim the Child Tax Credit (CTC) on their federal tax returns this year. For those who didn’t claim these credits, the most common reason was simply not being aware of them (44%).
Check with your Human Resources department to find out if a Dependent Care Account is an option for you and how to enroll. The amount you save depends on your tax bracket, but a rough estimate is about $2,000 in tax savings if you use the full $5,000.
Use these resources to find more affordable daycare tips:
Balancing Budget and Peace of Mind
When it comes to finding quality child care on a budget, it can feel like an overwhelming challenge, but with a little creativity and research, affordable child care solutions are within reach. From exploring government programs like the Child Care and Development Fund (CCDF) to making the most of employer-sponsored child care benefits like Dependent Care FSAs, there are plenty of resources that can help ease the financial burden.
If traditional daycare isn't an option, consider alternatives like nanny shares, child care co-ops, or even enlisting the help of family members. By combining these options and taking advantage of tax credits or stipends offered by your employer, you can make child care work within your budget without sacrificing quality.
Remember, it’s not just about saving money—it’s about finding a solution that offers peace of mind. Affordable, quality care is possible with the right mix of resources, allowing you to focus on what really matters: the well-being of your family.
Keep Reading related blog: 7 Things to Consider when Preparing to Return to Work while Breastfeeding
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