6 Strategies Real Parents Use to Manage the Cost of Child Care

The skyrocketing costs of child care put a strain on nearly every family’s budget. But these tips from real working parents can help you navigate this financial burden.

The cost of child care can be difficult to manage for many families. According to the Center for American Progress, child care expenses in the United States average around $16,000 per year.

Despite the strain that such a big financial obligation can put on the average family's budget, it's an expense that many working parents have to figure out nonetheless. ChildCare Aware reports that American families rely on child care for over 12 million children under the age of five.

Because access to affordable child care is such a challenge, parents may need to find creative ways to cover those costs. If you're looking for strategies to make child care work for your family, the six tips below from real working parents may provide you with some inspiration.

A women holds money in her wallet

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1. Make a plan.

You've probably heard the famous quote, "If you fail to plan, you are planning to fail." There is a lot of truth in the saying that parents can apply to practical financial matters, such as budgeting for child care costs.

Winnie Sun, managing partner of Sun Group Wealth Partners and mom of three (ages 8, 10, and 12), says the key to managing the cost of child care is to come up with the right plan. "Ask any parent," says the Irvine, California-based financial advisor, "and they will say that quality, dependable care is essential, but the stress of finding someone to trust with your child is real."

Sun has her clients start by filling out a free budget worksheet from MyBudgetWorksheet.com. From there, parents can assess how much money they can afford to put toward child care each month, and then search for the best options in their price range.

"If you find that what you have allocated isn't enough," says Sun, "see if there are other ways to supplement and get the care you want. Talking to a financial advisor, a career coach, or other professional could help."

Joining online parent groups in your community and talking to neighbors are other options that Sun suggests exploring. You can also consider a part-time child care environment, asking a family member for help, or sharing resources with other parents. The HR department for your company might also offer benefits that you're not aware of.

"You may have your heart set on one option," Sun says, "but know that one size doesn't fit all. Having a safe, caring, and financially comfortable child care situation is key. Stay flexible, but do your research."

2. Take advantage of state child care assistance.

Your state of residence might offer financial assistance that could help you cover a portion of your child care expenses. There are 25 states with a dependent care tax credit that eligible parents can claim on their tax return. Eighteen states, meanwhile, have an employer child care tax credit that incentives employers to provide child care services for their employees.

Megan Santiago, graduate student, therapist-in-training, and owner of Holistic Momma uses state assistance to help her family keep their child care bill as affordable as possible. The Tampa-based mom of two (ages 1 and 5) uses the Florida Voluntary Prekindergarten (VPK) program voucher to help cover the cost of her daughter's preschool.

This year, the state child care assistance program was even more helpful than usual. "The child care tax credit, which is typically given in our tax refund," says Santiago, "was given to us monthly this year instead, so we use this to pay for my daughter's schooling."

Santiago's family also pitches in to help out; her mother-in-law watches her toddler two or three days a week, so the family can keep costs down.

3. Get creative with the way you pay.

When it comes to the money you need to spend on child care services, choosing the right way to pay could lead to significant savings. Lee Huffman, credit card expert at BaldThoughts.com and host of the We Travel There podcast, provides several helpful tips by sharing how his family finds extra ways to save on child care costs.

"We save money on child care by contributing to a Dependent Care Flexible Spending Account, which allows us to contribute on a pre-tax basis," says the Nashville-based father of two. "The 2021 limit of $10,500 easily covers our children's after school and summertime care now, but it only covered a portion of the cost when our kids were in daycare."

To enhance the savings potential, especially when his children were in full time daycare, Huffman added another layer to his financial strategy. "To save even more, we use a rewards credit card to pay the bill and earn cash back, airline miles, or hotel points. Then, we submit receipts for reimbursement so that we can pay the balance to avoid interest charges."

4. Don't forget to plan for the one-off expenses too.

Parents tend to remember to add the cost of monthly recurring child care fees into their budgets. These costs are something you know about ahead of time and expect to pay every month. Yet other child care related expenses can sneak up on you if you're not careful.

Kiersten Saunders, Atlanta-based writer and co-founder of Rich and Regular, is the mother of a 4-year-old son. The financial educator encourages families to plan ahead for expenses such as bookbags, lunch boxes, school supplies, teacher gifts, and more.

"As you review your spending each month or quarter," Saunders says, "make sure you're tagging any expense related to child care so you have a more accurate picture of what child care is costing you on an annual basis. This way, you can create a more reliable budget and plan for any upcoming expenses."

5. Start your own business.

The next approach may not work for everyone. But if you possess an entrepreneurial spirit and the idea of being your own boss appeals to you, you might consider choosing something similar to the strategy of Kathy Lee of Healdsburg, California.

Lee, founder of Baby Boomer Super Saver, is the mother of an adult daughter. She tells the story of how she made child care affordable for her family when her daughter was younger.

"When our daughter was a toddler," Lee says, "I started a licensed family child care business in my home. I even found a $5,000 start-up grant to buy equipment (outside play structure), toys, and supplies for my child care business."

Starting an in-home business gave Lee the ability to stay home with her daughter. The move eliminated child care costs and helped her create an income in one fell swoop.

Lee ran the child care business out of her home for 10 years. And once she closed the business, she was able to resell all of her equipment and supplies to help recuperate some of her operating costs.

6. Look for other ways to save.

You may not be able to reduce the cost of child care as much as you would like. However, it might be possible to find other ways to save so you can offset high child care fees.

Sandy Young of Toronto, author of The Money Master and mother of one, looks for ways to stretch the funds in her budget wherever possible. This approach includes asking loved ones for hand-me-down baby clothes and gear and buying secondhand baby items when needed.

"Afterwards, when you no longer need your baby item," Young says, "you can resell it on Facebook Marketplace to recoup some costs." There are other secondhand sites that you can use to sell used goods as well, providing additional cash that you can put toward child care costs or something else.

Young also suggests taking advantage of free educational programs for young children. These may be available at child care centers, public libraries, churches, or recreation centers. "Search your local listings to see what year-round programs are being offered," says Young. "This is a great way to keep your children entertained at little to no cost."

There's no perfect approach to managing the high cost of child care. But with some planning, research, and creativity, you might be able to find the perfect strategy for your family.

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