How to Save Money on Child Care
What do children have in common with grade-A steak? Both are tracked by the USDA, and it turns out that both are quite expensive. The average middle-class family will pay almost $300,000 to raise a child over 17 years; that's up $8,000 from last year, and the cost will only grow from there. The bulk of that expense often comes from child care -- but asking relatives to pitch in often leads to uncomfortable tension. Read on for a step-by-step guide to saving on child care costs while keeping your kids safe and your family happy.
In this article:
- What you should know
- Workplace solutions
- Government resources and tax credits
- Top 4 safe, inexpensive alternatives to sitters
- Protect your child
What you should know
Employer-provided child care might be the simplest option. Not only do some employers subsidize child care, but you can also get a tax break on your spending.
There are a number of government tax credits available to help you out. Often, you can qualify whether or not you're employed or low-income. Not only are there tax credits available, but you can also turn to federal agencies for help in finding a reputable sitter.
Safety first. Your child's security is always paramount. We'll provide resources in finding an affordable yet trustworthy source of child care.
Many companies run their own child care services at a much lower cost to employees. The advantages to an onsite child care center are multifold; you save on commute time and maximize time spent with your children. Also, having a go-to child care center where your colleagues' kids are in attendance is a great start for building relationships for a close-knit play group later down the line. Companies can also provide referrals or discounts to child care centers if they do not run one onsite.
You might be able to pay for child care through an employer-offered flexible savings account, or FSA. You can contribute up to $2,500 a year into a flexible spending account tax-free, and use that money toward qualifying expenses such as child care.
Another option is telecommuting. Telecommuting offers parents the ability to double down and watch their kids while working from home. Even if you can't telecommute every day, try to work out an arrangement where you can work from home as much as you can.
Also, if you work in the public sector or for a company with more than 50 employees, you might be eligible for the Family and Medical Leave Act, which provides for up to 12 weeks of unpaid leave to care for a sick child.
Government resources and tax credits
The government maintains a handful of resources to help you find affordable, safe, and enriching child care:
Each state administers a federal government-funded child care and development program; this website will direct you to the right agency for your state. In addition, the government offers a few programs:
- Child care Aware helps you find free or reduced-cost programs in your area.
- If your child is under 6, consider visiting a Head Start program near you.
The federal Child and Dependent Care Credit will reimburse 25%-35% of your child care expenses incurred in order for you to work or look for work. The credit pays out up to $3,000 a year for a single child, or $6,000 a year for two or more. Child care expenses, in this case, include day camps as well as babysitting. Further, 24 states offer additional dependent care credits.
If your child needs to go to a special camp or requires extra care because of a medical condition, you might also be able to count those expenditures as medical expenses. You can deduct your and your dependents' medical expenses above 7.5% of your adjusted gross income.
Top 4 safe, inexpensive alternatives to sitters
1. Do a nanny share. Diffuse the cost of hiring a nanny by sharing among a group of families. Group care is an excellent way to share costs while still accessing great personal care for your children. When getting into a nanny share situation, make sure you do not have too many families involved in order to keep schedule coordination as simple as possible. Nanny share with a family you trust and one that you can have open discussions with on potentially touchy subjects. Before you get into the arrangement, figure out who will host the nanny and shell out payroll taxes, rules on extra compensation, and length of the contract. Be sure to get it in writing, no matter how close you are to the other families.
2. Consider babysitting co-ops. This arrangement distributes child care responsibilities over a group of families. As in every co-op, there is a little bit of elbow grease required from time to time. You have to contribute to the "cooperative" part of the co-op though by putting in some babysitting hours for all the kids in the coop. This option works well when the families have different schedules and can cover for each other.
3. Off to grandma's house we go. If your parents, grandparents, aunt, or great-uncle twice removed happens to live nearby, see if they can help out a bit by picking up one or a two babysitting shifts a month -- but while every bit helps, be sure not to impose too much and create a burden for your relatives. You might want to enlist younger relatives or family friends as "sitter's aides" as they learn the basics of babysitting, and then setting them off to fly solo.
4. Hire an au pair: not quite like the movie. Depending on how much you pay for child care, hiring an au pair -- a live-in nanny from overseas -- might be a cost-effective option. You can go through programs like AuPairCare or Au Pair in America to find an international voyager who'll live with you for a year, take care of your kids, and get a taste of the States. Weekly rates run around $350 for a basic au pair; costs rise for infant care or for au pairs with degrees in child care. Keep in mind, though, that au pairs are limited to working only 45 hours a week, so you're still on the hook for some of the time.
Protect your child
Of course, keeping your child safe is the most important aspect of child care. Simply going by accreditation or name is not enough; you'll need to do some digging to make sure that your caregiver is trustworthy.
For example, only 18 states require that child care centers check their employees' names against the sex offender registry; just over half of the states conduct a state and federal fingerprint check. If you use a day care provider or employ a babysitter through an agency, ask what security measures they use.
If you hire your own babysitter directly, require that he or she take a fingerprint and sex offender registry check; a simple name check is often not enough. The FBI or your state attorney general or public safety department can help facilitate a background check.
You might also enjoy:
- Do You Qualify for the Child or Child Care Tax Credit?
- Honey, That's My Money: Managing Personal and Joint Expenses
- How Much Should I Save for Retirement?
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