6 Strategies Parents Use to Manage the Cost of Child Care

The skyrocketing costs of child care can strain a family’s budget. These practical tips from 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. That big financial obligation can put a big strain on the average family's budget.

Even so, child care is an expense that many working parents have to figure out. In fact, ChildCare Aware reports that more than 12 million children under the age of five require care—and that number may grow in the coming years.

Because access to affordable child care is such a challenge, parents may need to find creative ways to cover those costs. Are you looking for strategies to make child care work for your family? Check out these six tips from working parents, which may give you some inspiration.

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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's 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 brainstorming the right plan. "Ask any parent, and they will say that quality, dependable care is essential, but the stress of finding someone to trust with your child is real," says the Irvine, California-based financial advisor.

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."

Sun suggests joining online parent groups in your community and talking to neighbors. You can also consider signing up for 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 offer benefits too.

"You may have your heart set on one option," says Sun, "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 keep her family's child care bill as affordable as possible. Specifically, the Tampa-based mom of two (ages 1 and 5) relies on the Florida Voluntary Prekindergarten (VPK) program voucher to help cover the cost of her daughter's preschool.

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 Payment

When it comes to 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, shares how his family finds extra ways to save.

"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." It has previously covered after-school and summertime care, as well as some of 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 the One-Off Expenses

Parents usually remember to add the cost of monthly recurring child care fees into their budgets. These costs are something you know ahead of time and expect to pay every month. Yet other child care 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 backpacks, lunch boxes, school supplies, teacher gifts, and more.

"As you review your spending each month or quarter," says Saunders, "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 taking a cue from 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 our daughter was a toddler, 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'd 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 includes asking loved ones for hand-me-down baby gear and buying secondhand items when needed.

"Afterwards, when you no longer need your baby item, you can resell it on Facebook Marketplace to recoup some costs," says Young. You can sell used goods on other secondhand sites 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."

The Bottom Line

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 a strategy that works for your family.

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