26 Smart Ways Parents Can Save Money on Daycare

March 11, 2020

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Raising kids is one of life’s greatest joys. It’s also one of the most expensive. Think about how much you fork over for the cost of daycare every month and you’ll know what I mean. With rising prices, it’s getting more and more difficult to find ways to save on daycare. 

A study by Care.com found that almost half of families in the US are spending at least 15% of their income on childcare costs. But what’s interesting is that the US government defines “affordable care” as 7% or less of household income.

So how can you save on daycare to make it more affordable? It depends on where you live, whether you have family nearby, and how old your kids are. 

Saving money on daycare is possible. Here’s how to do it.

Check Daycare Options in Your Local Area

1. Shop Around

When shopping around for daycare, there’s a lot to consider. To get the most bang for your buck, ask about the child-to-worker ratio and what types of activities are available for your kids. 

Ask about meal policies, too. Some centers will provide food while others will require you to pack a lunch and snacks every day, which can cost you additional money.

2. Understand Your Local Market

Daycare costs can vary quite a bit from one side of town to the other. To save money on childcare, take a good look at your local market.

In some areas, church-based options are cheaper. But other areas might have lower prices for home daycare.

3. Look at Home-Based Daycare

In-home daycare is often less expensive than a daycare center. Home-based providers can provide more one-on-one care for children because they often have smaller groups. 

Some states require child care programs to have a license. Be sure to check with your state licensing office to find out if a daycare license is required.

Child holding red heart

4. Hire a Local Teen

Teenagers are a great option if you need child care for shorter periods of time. It might not work for infant or toddler care, but paying a local teen to watch your elementary-aged kids after school can cost a lot less than a traditional daycare program.

5. Ask Family and Friends for Help

Having family and friends nearby who are willing to help with child care can be a tremendous blessing. Even if relatives watch your child for one day a week, you could save up to $200 or more a month on daycare.

6. Barter Your Services

There’s no shame in exchanging services to save on daycare costs. 

If you offer professional services, such as marketing, construction, or handy work, you could barter with daycare centers for a discount on child care.

7. Start Your Own Daycare

It’s no secret that daycare is expensive. You could avoid paying it altogether by starting your own in-home child care business.

Check with your state regulations to find out if you need to be licensed first. According to ZipRecruiter, you could make up to $59,000 per year with your in-home daycare.

8. Swap Child Care with Other Parents

There’s a good chance other parents are trying to save money on daycare, too. Ask around to see if anyone you know is willing to swap child care. You might babysit for a neighbor on the weekend in exchange for them watching your child during the week so you can go to work.

9. Look at Non-Profit Options

Your local YMCA, church, or other non-profit entity in your community may offer free or low-cost daycare. These types of establishments can get federal, state, and private grants to offset their costs, which allows them to provide more affordable child care.

10. Find Out What Other Parents Do 

If you’re new to the area or aren’t sure what options are available, ask around your social network to find out what other parents are doing. They might know about a daycare you haven’t heard of yet or have the inside scoop on what facilities offer discounts to help you cut costs.

Child drawing with crayons

Ask Around at Work About Daycare

11. Use a Flexible Spending Account (FSA) 

A Flexible Spending Account (FSA) lets you save pre-tax money to use on dependent care costs. You can contribute up to $5,000 per year to an FSA, which can save the average person about $1,500 in taxes every year. 

The downside is that you must use all of the money you contribute before the year is up.

12. Talk to Your HR Rep 

If you’re shopping for daycare, check with your human resources department. Some employers offer discounts with certain local providers to help employees access affordable child care. You can also ask about on-site child care to see if it’s available.

13. Change Your Schedule 

Depending on how you shift your work schedule, you could save a ton of money on daycare costs. If you work Tuesday through Saturday, you wouldn’t need to pay for daycare on Monday, and you could ask your partner to serve as a caregiver on Saturdays to save even more.

14. Adjust Your Hours 

Many parents work different shifts to avoid the high cost of daycare. For instance, you could work first shift while your partner takes care of the children during the day. When you get home, you can take over childcare duties while your partner heads to work in the evening.

15. Work Part-Time 

Working part-time can help you bring in some money while still keeping your daycare costs low. If you have affordable childcare options or have family or friends nearby willing to watch your kids for free, a part-time job can be a good choice.

Related Interview: Creating a Flexible Work Schedule to Live Your Best Life Today

16. Work from Home 

Working from home can significantly reduce your daycare bill. Ask your boss about the option to work remotely one or more days per week. 

With you in the next room, older kids might not need child care at all. For younger children, hiring a high school or college student as a mother’s helper is often less expensive than other daycare options.

Government Resources

17. Apply for the Child Care Tax Credit 

If you pay for daycare so you can go to work, the IRS has a dependent and childcare tax credit available. It’s only available for childcare for kids under 13. How much of a tax break you get depends on your income. The higher your income, the lower your tax credit.

18. Look into Assistance for Low-Income Families 

The government has a child care and development fund to help low-income families pay for daycare. If your children are under the age of 13 (or under 19 in certain circumstances), check to see if you qualify for government help with daycare costs.

19. Consider a Head Start Program 

For kids under 6, the US Department of Health and Human Services provides free, federally funded programs. These Head Start programs might be limited to low-income households and can include meals and snacks, which can further reduce your out-of-pocket expenses.

Personal Considerations

20. Be a Stay at Home Parent 

When it comes to childcare, infants are the most expensive. You might be better off financially if you stay at home for your child’s first year of life. After the first year, daycare costs typically go down so you won’t pay as much if you return to work at that point.

21. Host an Au Pair 

If you have older kids, an au pair can help you cut childcare costs. This is a short-term option since most want to live abroad for a year or only for one summer. An au pair will live with you and your family, but they can save you money over hiring a live-in nanny.

22. Get More from Your Nanny 

A nanny is often the best fit for your family. They can also be very expensive. To save money, ask your nanny to pick up extra tasks like grocery shopping, house cleaning, pet care, or tutoring. Even if you pay your nanny more for these services, you’ll likely save money over the cost of paying for them separately.

23. Check Your Budget 

You need to know how much you can afford to spend on child care before you start shopping around. If you haven’t looked at the numbers, you might be surprised to find that you can afford more than you thought.

24. Start Early 

In most cities, daycare is expensive and in high demand. Waiting lists for local child care are common. The earlier you start looking at centers in your area, the better chance you have to get quality childcare at an affordable cost.

25. Start a Side Gig 

A side hustle is a great way to earn extra cash. Opening an Etsy shop, pet sitting, or becoming a virtual assistant part-time can offset the cost of child care.

26. Take Advantage of Sibling Discounts 

If you have kids that are close in age, ask if a sibling discount is available. Some centers offer a reduced rate for a second or third child that attends the same daycare.

With childcare eating up a huge chunk of your budget each month, finding ways to save can go a long way to funding your financial goals. These tips might not work for everyone, but chances are you’ll find one or two that will help you cut daycare costs. Consider using a combination of these money-saving ideas to maximize your daycare costs and get better child care for your little ones.

How are you saving on daycare for your kids?

Please let us know in the comments below.

Happy kid with paint on her face

Amy Beardsley

Amy Beardsley is a freelance writer and personal finance expert. She specializes in credit reporting, FinTech, and probate and estate planning topics. Her work has been published on Robinhood, Lending Tree, Dollarsprout, Women Who Money, and Well Kept Wallet. She’s also the founder of EarlyMorningMoney.com, a site dedicated to simplifying financial management and helping families win with money.

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