How to save money on childcare
These ideas can help you save money on daycare, babysitting, and caregiver expenses. This will make money on childcare affordable.
Ask for the support of family and friends
Relative care is a great way to cut down on money on childcare costs if you have relatives nearby. While you should offer to pay them compensation, it will likely cost you less than what you would pay for child care at a center or for an aide.
Another perk: Flexibility Flexibility. Flexibility. A family member may be able adjust his/her schedule to meet your needs. However, a contract provider might charge additional fees. Avoid misunderstandings and hurt feelings by being on the same page regarding care (like work hours or parenting philosophies), and discussing problems as they occur, sharing tips and information about safety and health, and offering some compensation even if they decline payment.
Babysitting trade services
Trading babysitting services with other families in your neighborhood or with someone from your baby group is a great option. It’s cheap and gives the other parent a break. It works like this: A parent comes to your home to watch your children (ideally, after they have fallen asleep), and you return the favor later.
Create or join a babysitting cooperative
A babysitting cooperative is basically a group of parents that come together to share caregiving responsibilities. Instead of paying a babysitter, participants “pay” one another by caring for their children. Because co-op babysitting services are usually offered during pre-determined hours and days, it is more structured than just trading one-for-1 babysitting services. This option requires more work to set up (you will need to find other families, but you can use local Facebook groups to help you do this). However, it works well when there are more families involved.
Split the cost of a babysitter/nanny with another family
Seek out other people who are interested in sharing a babysitter, also known as “nanny share” or “share care”. What’s the upside? Both families will save money and the children may form close friendships.
You might consider a family daycare or in-home care option.
Family day care is where the provider provides care for children in a private house. This can be cheaper than full-time nannies and day care centers. Home day cares, like commercial day care centers must comply with strict state licensing requirements to be allowed to operate.
Home daycare providers must also follow the same safety precautions as you do at home, such as guards on windows and gates, and fluff-free bedding for cribs. A clean, child-safe house should have a well-maintained kitchen and bathroom as well as an enclosed outdoor play area.
Consider corporate daycare options for your office
Many office buildings have child care on-site and offer discounts. Ask your human resource department if there are any discounts available for employees who work at nearby child care centers. Some employers offer subsidies to help with caregiving costs.
Ask your HR representative for additional benefits and reimbursements
Ask your HR manager if there are any perks and reimbursements that the company offers, if you haven’t already.
You can save money by taking advantage of benefits such as pre-tax transportation plans and adoption assistance. You may have even been able to negotiate a lower rate with a placement agency for a nanny.
Look into a Dependent Care Flexible Spending Account (DCFSA)
Check with your employer to see if they offer a flexible spending account (FSA), which allows you to save pre-tax dollars on your paycheck for child care expenses.
This type of account is similar to a FSA for health care, where you can use it for medical expenses. However, you can also contribute pretax income to pay for dependent care costs related to work. The funds are taken out of your paycheck before taxes so you will have a lower tax liability at year’s end. Maximum contribution for 2022: $5,000 per household per year.
Profite from tax-free opportunities
Check to see if your income qualifies you for the Child and Dependent Care Credit when you file your taxes. The percentage you are eligible for will depend on your income. Your income determines the percentage and credit.
Although it may not seem like much at first, a tax credit can reduce your tax liability and even result in a refund.
While there are exceptions, it is important to remember that you can’t usually use both the DCFSA or the Child and Dependent Care Credit. Talk to a tax advisor to determine which option makes sense for you and your family.
Many states offer financial assistance to families with low incomes for child care. You typically pay a percentage of the child care costs for your child based on your income and family size. The state pays the rest.
Child Care Aware of America maintains a database that provides information about the available resources and programs in each state. You should apply early because these programs can have long waitlists.