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As we walk through getting your budget and finances in order many said their biggest expense was child care. I can see the frustration of child care not even being on most financial guru budget sheets. There are some ways to reduce costs and even tax savings that you may be missing out on.
One note before we go any further: With this whole section, please keep in mind that I’m a work-at-home mom, homeschooling my kids. We all are in different walks of life, so please no one jumping up and saying that you should just stay home. I’ll be the first to admit it’s not for everyone, nor can some families afford to live on one income. Okay now back to saving money.
The Tax Breaks
The biggest tax break is the Child and Dependant Care Tax Credit. As long as you and your spouse (or just you if you file single) were working or looking for work you can get a tax credit equal to 35% of the amount you paid for their childcare. This is up to $3000 for one child or $6000 for multiple children. There are some rules to know (it’s the government after all) so read up to make sure you qualify.
Another tax break is asking if your employer offers a Dependant Care Flexible Spending account. You can put money in this account pre-tax each month to help pay for child care expenses. The money doesn’t even have to stay in the account long, just take it out of paycheck and then pay the daycare with the account. You can put up to $5,000 per year in the account which would save an average family $500-$750 in taxes.
Daycare Savings Options
Many parents go daycare hunting with the goal of finding the Harvard’s of the daycare world. You look at features and amenities long before you look at price. Just because the place has a year waiting list doesn’t mean that it’s going to be the best place for your kids. You have to start looking the same way you would for a car. You aren’t going to go and buy the high end luxury model if you don’t have the money, and we don’t need to do the same with daycare. The average cost of daycare in the US is $972 a month, so lets say you saved and got in under $650 a month. Over the next 4 years that will cost $31,200 or the price of a new Honda Odyssey. (If you go right at average it’s $46,650).
To bring down this price first make sure you are focused on price as much as you are focused on amenities. It’s okay to look at prices first, you aren’t a bad parent… just a savvy one. Now, I am not suggesting you select the cheapest daycare where they put the infants in a dark room so they’ll sleep all day. I’m just suggesting you consider daycares that aren’t top price range. You always want to make sure the daycare you select meets the requirements for your state.
Ask for discounts. Many offer multiple children, large group (if your work offers a partnership or discount to certain places), you’ll even find discounts for paying in cash or check over a credit card (one in our town offers 3% off).
Barter for discounts. If your dream daycare is way out of the budget see if you can do part-time work there to help offset the cost.
Look into half-day programs. This is a little complicated, but some parents use one program for the first half of the day and then at lunch time move their kids to an afternoon daycare. I’ve seen other parents do this same concept for summer daycare savings moving kids from one vacation Bible school to another. A half day program runs on average $200 a month.
Church Daycares. These tend to be cheaper than stand alone programs, mostly because they are usually non-profit. In my area the average is $600 a month, a of $200 a month over a for-profit company. They are still fully accredited programs and teachers, and fully licensed.
Look into Co-Ops. This is perfect for anyone working part time, you can trade childcare hours with other moms (or even just date night trading for a time out without paying a babysitter). You work Monday and Wednesday, they work Tuesday and Thursday and neither of you has to pay a dime for child care. Throw in a few other mamas and you could get this going with only one day per week for each of you.
Try Rearranging Your Schedule. See if you and your husband can work different hours and thereby not need daycare. This has marriage ramifications though, so make sure you are both cool with the plan. Or just ask your boss if they might be okay with flexible schedules or working from home a few hours a week.
In Home Daycare. This is probably the most overlooked option, and the cheapest. If your neighbor is a stay at home mom of 2 with kids around the ages of your kiddo, just ask. Would she be up for you paying her $125 a week? That’s $500 a month she didn’t have and she’s already home. This is also a great option for after school care. A good friend of mine took care of an extra kiddo every afternoon till their mom got off for $50 per week. Keep in mind though, that one mama can only handle so many kids.
Bring in an Au-Pair. Who wouldn’t want to travel to foreign countries and take care of kids. You provide room & board and weekly stipend. The average weekly cost of an Au-Pair is $361 and most can watch up to 5 children for the same price. If you have 2+ kids this is a deal over daycare. Legally they can only work 45 hours a week, but if you work less than that you have a weekend babysitter as well. One other benefit of an Au-Pair is that you don’t miss work when your kids are sick!
Public School Options. If you have a 4 year old see if your school district offers a K-4 program. This is offered at the elementary school you are zoned for and is the full school day following the school schedule. In some cases this program is free to you, though in others you can pay on average $150 a week. You would still need afterschool care if you work till 5. After school care is around $45 per week.
Do you have any other ways you save on child care?
Tomorrow we are tackling the medical category. This is a big one…