Childcare Prices Are on the Rise Again, Here Are 5 Tips to Cut Costs
Online caregiver directory Care.com released its ninth annual Cost of Care Survey today, and the findings support what parents have known for quite some time—childcare costs are on the rise. The study reports that more than half of parents spend 20 percent of their income on childcare, 13 percent more than what the U.S. Department of Health and Human Services recommends, with 58 percent planning to spend over $10,000 this year.
Each year, the survey looks at the cost of care in America to spotlight how childcare costs impact parents and families professionally and financially. This year’s survey of over 3,000 parents found that 63 percent of parents say childcare has gotten more expensive over the past year.
This price increase isn’t just imagined. The survey shows that the cost of daycare increased by five percent this past year, with the average American paying $226 a week for one child. Meanwhile, the cost of hiring a nanny increased by 23 percent, with more families considering the option as daycares fill up and parents struggle to find openings. In fact, of the parents surveyed, 43 percent said it’s been much harder to find childcare providers over the past year.
While costs go up, families are finding more ways to make ends meet, whether that’s through budgeting, 68 percent of parents say they budget for childcare costs, or by cutting back on vacations (51 percent), clothing (41 percent) and dining out (45 percent).
But for some families, budgeting isn’t enough. Thiry-one percent are considering taking on a second job, 26 percent are reducing hours at work, and 21 percent are leaving the workforce entirely. For others, childcare costs simply mean fewer children, with 35 percent saying they’re less likely to have more children.
“The pandemic made it crystal clear: without childcare, parents can’t work. And, as we saw with the Great Resignation, without childcare that’s affordable and accessible, parents—especially moms—leave the workforce, impacting the overall economy. This year’s Cost of Care Survey reinforced that: when childcare is expensive, parents cut back on work, saving and spending,” said Care.com expert Maressa Brown.
Here are five tips from Care.com to help you cut back on childcare costs:
- Make the most of tax credits. When you pay your caregiver on the books, you can access the Child and Dependent Care Tax Credit which can save quite a bit. With this credit, parents can save $600 for one child and $1,200 for two. In addition, parents can save $2,000 per child using the Child Tax Credit.
- Contribute to a Dependent Care Flexible Spending Account if you have access to one through work. You can contribute up to $5,000 pre-tax to cover babysitters, daycare, preschool, nannies, and summer camps. But remember, FSAs are “use it or lose it,” so be sure to contribute only as much as you’ll spend.
- Talk to your employer. More and more employers are offering care benefits, including memberships to online platforms, backup care and even cash subsidies. Find out what benefits you have and if you don’t have them, advocate for them.
- Consider a nanny share. This isn’t for everyone but can be a great way to save money and have more social interaction for your kids. Typically, two families with children around the same age will share a nanny, and while she might charge more for looking after multiple kids, the costs are split between the families.
- Make sure you’re paying the market rate, not overpaying, in your area. Learn the rates for different types of care, including nannies, sitters and childcare centers. Care.com’s cost of childcare calculator is a great tool for gathering that info.
To learn more about your childcare options and ways to help mitigate the rising cost of childcare for your family, check out The Bump’s Childcare Guide.