Some of you may know that in addition to our wealth strategy company, In The Black Financial Wellness, I also have an angel investment group/VC fund, Hera Ventures focused on the Care Economy. Side note, if you’re interested in becoming an angel investor, we’re now accepting applications.
One of the biggest challenges parents face is the cost of childcare. According to the Center for American Progress, the average cost for a nanny for one child in 2020 was $2,448 and $1,360 for one child (a toddler) in daycare.
Unfortunately, the cost of childcare will continue to increase.
But there is hope.
Probably the easiest way to lower your child-care costs is to find a less-expensive provider. If your child is already spending several hours a day in a preschool setting, you may be able to combine this care with a home provider and not use a nanny. If the private day-care center is too expensive, check on family daycare.
1. Is there a relative or close friend who will watch your child?
If it takes a village to raise a child, where are the villagers who are eager to take care of your child so that you can go to the office?
Sometimes you’ll find a grandmother, aunt, or friend who is thrilled to take care of your baby. This usually is the cheapest child care around, but it has other, more implicit costs. First of all, Grandma has already raised one family.
Consider the possibility that she may be more eager to work in her garden than watching your child all day. And what if your child-rearing philosophies don’t match? How will you negotiate your differences?
2. Nanny share
You and your close friend or neighbor may be able to hire one child-care provider and share him or her. This means that your neighbor’s child is always in “child care” at your house or your child goes to your neighbor’s house for child care.
The caregiver stays the same, but the children either move between the two houses or use one. This arrangement can ensure that both your and your neighbor’s child will get lots of attention, but the home base of your “center” may also get lots of wear and tear. You also need to be sure that you agree on your child-raising philosophy.
3. Use a Dependent Care FSA
A dependent care FSA is a pre-tax account that can be used to pay for eligible childcare costs among other things.
Some of the eligible expenses you can use the funds for include nanny & babysitting expenses, daycare, and even after-school care.
The caveat is that the child must be under age 13 and the maximum contribution is $5,000 (for all children). You can enroll in the benefit through work.
4. Check your workplace benefits for backup care
Have you reviewed your workplace benefits to see if your employer has a partnership with a care provider? Employers often offer a benefit called backup care.
Employers partner with a national care provider, such as Bright Horizons and employees can hire sitters, tutors, and other caregivers at a reduced rate (the rate is subsidized by the employer). This could be a life-saver when you are in a pinch.
5. If your child is in a child-care center, see if you can trade time for dollars
You may be able to work early or late hours in the center to save some money on your child’s tuition.
Especially in community centers, these arrangements are possible. The center needs parental help to meet its ratios and keep its programs running, and you get to save a few dollars a week in child-care costs by giving them time instead of cash
6. Try a swing shift with another adult
If you and your child’s other parents work different hours, you may be able to adjust your schedules so your child never goes to daycare.
However, using a swing shift means you and your partner will rarely see each other since you’re always working and sleeping different shifts. Nevertheless, this sometimes works well when both parents have jobs with flexible schedules.