If the cost of daycare is stretching your personal finances in a big way, you’re not alone. Care.com data shows that by 2023, the average weekly cost of day care for an infant will be $321. Well.
If you are drowning in daycare fees, you can transfer your child to a different center with fewer facilities. But do you really have to make that switch? As a parent, you naturally want the best care possible for your child. So moving to a lower cost facility may not be ideal, despite the potential savings involved.
The good news, however, is that you can have options to save money on childcare without having to skimp on quality. Here are some to explore.
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1. Arrange your work schedule so that there are fewer days at daycare
Some people’s work hours have the potential to be more flexible than others. If you have a good relationship with your manager and a proven track record of meeting deadlines, ask for some time off.
You never know if your boss might agree to have you work a Wednesday through Sunday schedule instead of Monday through Friday. If you can go from needing five days of day care a week to just three, the savings can be huge.
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Of course, this suggestion assumes that you have a spouse or adult willing to take care of your child on Saturdays and Sundays while you spend your time at work. If not, then this advice may not work for you. But if you have a co-parent who works a traditional Monday through Friday schedule, then this idea might work well.
2. Sign up for a dependent care FSA
You may be familiar with a flexible spending account, or FSA, in the context of setting aside money for health care expenses. But there is another version of the FSA that can be used for childcare expenses: a dependent care FSA. And while contributing to one of these accounts won’t directly lower your day care costs, you can reap some tax savings when paying for the care you need.
This year, dependent care FSA limits are $2,500 for married couples filing separately or $5,000 for singles and married couples filing jointly. If you put $5,000 into a dependent care FSA this year and then tap that account to pay your daycare expenses, you’ll shield $5,000 of your earnings from taxes.
Your specific savings there will depend on the tax bracket you are in. But if you’re in the 22% bracket, a $5,000 dependent care FSA contribution could result in $1,100 in savings for you.
3. See if part of a nanny makes more financial sense
It’s understandable that you don’t want to transfer your child to a second-rate daycare center to save money. You want your child to have the best care possible.
One of the reasons some daycare centers charge so much money is that they maintain small caregiver-to-infant ratios, such as one caregiver for every four children. But you can get a more favorable ratio — and spend less money — by looking into the nanny segment.
Care.com puts the average weekly cost of a nanny at $766. That’s more than double the average weekly cost of daycare for infants, which, as a reminder, is $321. But what if you find two other parents in your neighborhood who also need childcare and split the cost of a nanny? In that case, if you were billed $766 a week, your share would be roughly $255, which would be less than what your daycare center charges. In addition, you may even end up in a situation where your child gets the attention you want them to get.
Often, with the nanny feature, a nanny looks after a small group of children at a time. It is common to rotate the houses using one of these arrangements, by assigning preset days or using a cycle that works for you.
So for example, let’s say three of you in the same neighborhood share a nanny. On Mondays, your nanny-sharing parents can drop their kids off at your house before work, where your nanny comes over to watch everything. On Tuesday, you can take your child to another house for the same setup, and so on.
It’s only natural that you want the best care for your child. Use these tips to lower your costs without having to compromise on the quality of care your child receives.
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