6 Ways to Save Money on Childcare


For many new parents, adjusting your budget to accommodate caring for your little one can be a true shock. Everything from diapers and clothes to toys, baby gear, formula and more can cost a small fortune, and in many cases, the expenses are enough to demand a lifestyle change. You may also initially think about saving for college, and you may have heard that college expenses are astronomical. What you may not think about, however, is the cost of childcare. The reality is that child care costs in many markets actually cost more than college tuition at a public university. While you may save for years to pay for college, parents are generally unprepared for the incredible expense of childcare and have not saved for years to pay for this expense. You may initially think that you simply cannot afford childcare, but there are some strategies you can follow that can make this expense more manageable for a tight budget.

1. Adjust Your Budget to Accommodate This Expense

Childcare can easily cost hundreds of dollars or more per month per child, and it can cost significantly more if you have an infant under the age of 12 months. As a first step, you must review and adjust your budget so that can properly pay for this expense. Look at all areas of your budget that you can cut back so that you can free up more money for childcare. For example, you may be able to refinance your car, shop for more affordable insurance, switch to a more affordable cell phone provider and more. These steps may eliminate hundreds of dollars in your budget that can be allocated for childcare costs. In some cases, parents may need to dramatically adjust their lifestyle to pay for this expense. However, keep in mind that this is a short-term expense. If you have your children close together, you may only need to pay for this expense for six or seven years.

2. Focus on Your Child Tax Credits and Deductions

The government provides several different credits and deductions for you to enjoy as a parent. If you are a new parent, you may have not yet calculated the benefits associated with being a parent into your overall tax liability. For example, you will get another credit for each person in your home. In addition, you may qualify for a credit on child care expenses per child. There is also a child and dependent care tax credit that may give you up to several thousand additional dollars as a credit, depending on your income level. You can explore the impact of each of these credits and deductions, and you may be surprised to discover that you will not have to pay so much in taxes next year. You may adjust your withholdings to take this into account, and you can enjoy access to more income each month as a result. You can use this extra money to help pay for childcare.

3. Explore Community Child Care Options

In many communities, there are multiple childcare centers that you can consider sending your children to. This includes church preschool programs, high-end preschool programs, affordable daycare options, in-home care centers and more. Ask your friends who are parents for recommendations, and read online reviews to learn more about different options that are available to you.

4. Think About Non-Traditional Child Care Options

While your primary interest may be focused on finding a daycare or childcare center to take your kids to, this is not always the most affordable or best option. For example, you may consider finding an au pair from another country to work in your home. You may also ask a friend or neighbor to care for your kids. You may offer compensation to them, but this is often more affordable than using a dedicated childcare center. In some cases, you may be able to set up a childcare share situation with another parent. For example, if that parent works nights and you work days, you may be able to watch their kids when they are at work and vice versa. This type of situation may be entirely free for you. Consider your friends’ and neighbors’ needs and abilities when thinking for creative, outside-the-box solutions for childcare.

5. Use a Flexible Spending Account

If your employer offers a flexible spending account, or FSA, you should consider using it. This is a tax advantageous account. This means that the funds that are deposited into the account are not taxed. It reduces your annual tax liability. In addition, the funds that are deposited into the account can be used to pay for childcare. This means that your childcare expenses are essentially paid for with tax-free money. This may not seem like a major benefit to you, but the end result can mean that you save a substantial amount of money over the course of a year.

6. Consider Finding Part-Time Work

If you have thoroughly explored all of these options and have reviewed your budget using some of these thoughtful ideas, you may need to consider working part-time. When you work part-time, such as after school or in the evenings, you may be able to use a teen babysitter to care for your kids. You may also be able to work in the evenings when your spouse is home, and by doing so, you could entirely eliminate the need to pay for childcare at all.

The unfortunate reality is that many parents can easily spend between $700 and $1,000 or more per month per child on childcare expenses. This varies considerably based on where you live, and infant childcare can easily cost much more than that. While some will pay this expense, others will look for alternatives to save money on childcare. There are many creative solutions that you can consider using to make this expense more affordable. It is wise to carefully explore all of the options. Most parents are able to find an effective solution that works for them. While the solution may not be ideal or comfortable, keep in mind that it is a short-term solution that only needs to be in place for a few years until the kids go into kindergarten.


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