7 steps: How couples and single parents can prepare for child care costs

April 11, 2018

Learn financial and strategic moves to ease the expense and stress on your family.

 

For many parents, juggling work, children and the cost of child care takes a part-time strategist and full-time accountant. Securing affordable child care can be even trickier for single parents.

We’ve outlined the top seven considerations for both couples and single parents when it comes to budgeting for child care costs.

 

1. Make saving a priority

A tight budget can get squeezed even more when day care gets added into the mix. However, try not to let day care costs derail your budget overall. Saving can still be a priority, even if you need to save a little less due to child care costs.

 

2. Use a flex spending account

Luckily, there are some great tax breaks that can make child care costs less expensive. For instance, when paying for day care, use a dependent care flexible spending account (set up through your employer). It allows you to use pretax dollars to pay for qualified out-of-pocket dependent care expenses, potentially leading to significant cost savings.

Or…

 

3. Use available tax credits

… if you don’t have a flex spending option through your employer, think about using the child and dependent care credit. To qualify for the credit, your child care costs must be spent on care needed to let you work or seek work. Keep in mind there is a maximum deduction amount and that other rules apply.

 

4. Comparison shop

When looking for care, consider the costs of preschool versus a nanny or nanny share, and the pros and cons of each. And remember that costs decline as your child ages; infant rooms are the priciest due to teacher-child ratios.

 

5. Consider changing jobs

Also, consider whether a more flexible job might lead to cost savings on child care. If you’re married with young children, can one of you work evenings so a parent is always home? If you’re a single parent, can you shift your hours to accommodate child care?

 

6. Budget for extra expenses

When budgeting for child care, remember that child care is more than just preschool. Include summer day camps, before- and after-school programs and baby sitters when calculating your yearly child care expenses.

Also, if your child is old enough, working from home, even once a week, might help you save.

 

7. Consider other options

Finally, consider if paying for child care makes sense financially. If you’re paying for day care, you might be spending $15,000 a year or more, depending on where you live. That might not be a considerable expense if you and your spouse have well-paying jobs. However, if either of you nets just $30,000 yearly, then half of your take-home pay is funding day care. The number goes up if you have more than one child, of course.

If you love your job, this trade-off might make sense. However, if the person with the lower salary is working just to pay bills, think about that partner staying home, at least until one child is in kindergarten. It can be a tough decision, but it's certainly one worth thinking about.

 

Want to learn more about tackling tough money topics just like this? Explore more articles about personal finance.

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