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Babies and Families

How to afford child care when living on a budget

When considering starting a family it's key to factor in the cost of raising a child into the budget as well as the cost of child care.

Many young parents who are already living on a budget simply aren't prepared to face the costs of child care. According to Child Care Aware's 2017 Cost of Care report, the costs of full-time child care in the US can run anywhere from $5,307 to $23,666. Your location, the age of your children and the type of care you choose for them are all significant factors in determining how much you'll spend.

If you plan on having children, and neither you nor your spouse can afford to take a break from your career to stay at home with your kids until they are old enough to attend school, then it's important to determine what kind of budget you have for childcare and how you intend to make your child care plan work. Here are a few things to consider when calculating the possible costs of your child care expenses.

In addition to the Federal Child Tax Credit, which gives you up to $2,000 credit for every child in your home (if you fall within a certain income bracket), parents can also take advantage of The Child and Dependent Care Credit, which will pay a tax credit up to $3,000 for child care for one child under age 13, and up to $6,000 for child care for two or more. You can determine your eligibility for the Child Tax Credit at the IRS' website here and find out more about the Child and Dependent Care Credit here.

Set up a Flexible Spending Account

Talk to your employer's HR department about setting up a Dependent Care Flexible Spending Account (FSA). These FSAs allow you to set aside up to $5,000 (pre-tax) to spend on a wide variety of child care expenses, from facility-based daycares to sleepaway camps and more. The money is usually automatically deducted from your paycheck, which makes budgeting for child care just a little bit easier. 

Weigh your options carefully

Private daycares, in-home daycares, nannies, or au pairs? There are a lot of child care options to choose from. A state-licensed daycare facility may seem like the safest bet, but it may also be the most expensive option in your area. A private nanny doesn't trail far behind in terms of cost, but if you have friends with young children of similar ages, why not consider a nanny co-op? Home-based and faith-based daycare centers tend to be the cheapest, but they aren't always subjected to the same licensing requirements as facility-based daycare centers (it varies by state). If you're shopping for a daycare center, look to your friends and peers for recommendations.

How flexible is your work schedule?

Talk to your boss and HR department about using flex-time or working from home for a day or two per week. Flex-time is especially handy once your children have started school. If your children are under 4, and you and your spouse can both work from home for a day or two each week, that's up to four days that you won't have to pay for child care.

Read the fine print, and don't be afraid to haggle a little

When you're shopping for a child care provider, be sure to carefully review the terms and conditions of any contract that comes your way. Are the center's hours flexible, or will you be slapped with fees if you don't pick-up your children by the assigned time? Will you be charged for sick days or vacation days when you don't need the center's services? (Full-time enrollment sometimes comes with stringent policies attached.) If you choose to go the nanny or private, home-based daycare route, discuss such situations at length with any potential hire so there's no confusion in the future. Be aware that it is fairly common practice for daycare centers to offer a discount to families enrolling multiple children in the same daycare program, so don't be timid about asking for one. If your brood is bigger than two, you might be eligible for an even bigger discount.

Once you've got your child care situation sorted, be sure to read some of our tips for saving for college tuition and 5 ways to help your kids pay for college in the Protective Learning Center.



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