A few months ago we wrote a post about the expense of childcare, and how it can be so cost-prohibitive that it actually forces some parents out of the workforce. We still get a fair amount of traffic from that post, as well as emails, Tweets, etc. Today we have a follow-up on suggestions for how to help pay for that massive expense. We hope some of these are useful. So, onward!
Dependent Care FSA
First and foremost, check and see if your employer offers a Dependent Care Flexible Spending Account. This is a way to put actual additional dollars in your pocket. A Dependent Care FSA works on the same principal as a medical spending FSA: your employer deducts money from your paycheck and puts it into an account for you, and that deducted money is NOT TAXED. This may not sound sexy, but the government taking less of your money = more money for you!
You can put up to $5,000 per year into a Dependent Care FSA, and this money can be used for daycare, camp, nanny expenses, etc.
Tuition Assistance/Sliding Scale Tuition
Some daycares – usually larger, center-based daycares – offer tuition assistance. This is similar to offering college scholarships to students who can demonstrate the need for financial assistance. One example is Bright Horizons, a company that runs daycare centers nationwide. Policies vary by center, but many offer some level of tuition assistance for families who cannot afford full tuition. It’s definitely worth calling around to the larger daycare centers in your area to see if any form of tuition assistance is available.
As we discussed in our previous post, nannies can cost a fortune. Unfortunately, it can be incredibly challenging to find space for an infant in daycare. This means that for a lot of families, nannies are the only realistic option. However, there is a way to cut costs – maybe by as much as 50%! – while still working with a great nanny: find a nanny share. I’m seeing this type of arrangement more and more frequently among my friends and acquaintances.
Here’s how it works: two families will agree to work with the same nanny (with her/his consent, obviously). The nanny watches both families’ children simultaneously. Sometimes the families switch houses, sometimes all the care takes place at one family’s house; the details can vary. I suggest checking local mommy groups (search on Facebook, and if you’re in Los Angeles, try Peachhead) to see if you can find another family interested in nanny sharing with you.
One side benefit to this arrangement is that your kids gets to play with the other family’s kids, so it has a great social development aspect.
This one is a little more patchwork, but definitely worth doing some research. See if your state or city offers any type of childcare subsidies. These are similar to grants; if you qualify, you will receive money you can use to pay for childcare. Usually you’ll need to apply through a state or local agency, and some are tied to a specific center (so to get the money, you’ll need to enroll your child in that specific center).
Here’s one example: the Child Care Resource Center is an agency that helps parents find childcare options and alternative ways to pay for those options. They have a lengthy list of funded childcare programs in California.
Get Your Tax Break!
I know, I know, more boring tax talk. But this is important. The IRS offers a tax break to working parents in the form of a Child and Dependent Care Credit, which reduces your taxable income. In other words, the government will take less money out of your paycheck.
Anywhere from 20-35% of childcare costs can qualify for the credit, with a cap of $3,000 for one child and $6,000 for more than one child. $3,000 to $6,000 per year is real money, my friends! Click here for more info from the IRS.
If you’re using sites like Care.com or SitterCity.com as part of your childcare search, you can generally name the price you’re willing to pay. Don’t be afraid to be honest about what you can afford, even if you feel like you’re lowballing. You may very likely find caregivers who are willing to work with you, particularly if you can work with their schedule.
Consider an Au Pair
This one sounds fancy, but if you have some extra room in your home, it can be incredibly cost efficient. An au pair is a young person from a foreign country who wants the chance to spend time in the United States. She (they’re generally women) lives with a host family and provides childcare; in exchange, the host family provides room and board and a stipend. Au pairs tend to be much less expensive than nannies (as in, about $350/week for 45 hours of childcare, or about $7.78/hour), and they are almost always background checked, CPR certified, and first aid trained.
Heather can testify to how great an au pair can be; she had one and it was one of the best childcare experiences she’s ever had. Au pairs are hired through agencies. Here’s a great place to start.
To Sum Up
Having written checks to daycare centers, nannies, and au pairs, we fully understand how expensive childcare can be, and we empathize with your pain. We send you so much empathy. We sincerely hope this post is helpful in steering you in some new directions you may not have previously considered.
Oh, and don’t forget – if you go with a nanny or au pair, use CluckCluck App with her or him! It allows you to stay connected with your childcare provider throughout the day, so you know she’s got all the important info about your kids and family, and you know all is well at home!
And as always, if you have ideas or tips we missed, send them our way!
Happy childcare hunting, friends.
Erin and Heather