How To Afford Daycare: 10 Ways

If you’re planning on starting a family, you’ll want to consider the potential costs of child care. According to Care.com’s 2023 Cost of Care Report, 67% of American parents who were surveyed spent 20% or more of their annual income on child care expenses.

The majority of parents and families rely on some form of child care every day. If you’re wondering how to pay for day care, we have you covered. To help you decide which options might be suitable for your situation, here are 10 ways to save money on child care costs.  

How Much Does Day Care Cost In The US?

The monthly or annual cost of child care depends on several factors, including the program type and care provider, the age of the child and the geographic area where the program is located. The U.S. Department of Labor (DOL) estimated that the median cost of child care for one child ranged from $5,357 – $17,171 in 2022. For many families, this eats up a significant amount of their annual household income.

The DOL also found that child care costs were consistently more expensive for infants and younger children. This is often the age group that families need care for the most, because the children aren’t old enough to attend elementary school. In many cases, parents have no choice but to pay for expensive child care services. 

How To Decide If Day Care Is Right For Your Family

If it makes financial sense, a traditional day care center may be the best fit for you and your family. Day care is beneficial in a number of ways. It gives children an opportunity to connect and build relationships with other children and teachers. Full-time day care centers also help prepare young children for school and support early childhood learning and development.

Day care programs are beneficial for parents and caregivers who work or attend school. Such programs are especially helpful if you can’t work remotely.

If you’re wondering how to afford day care, try fitting day care expenses into your household budget. Making this work could require cutting costs for activities such as dining out or clothes shopping. But if the cost of day care is more than you can afford, you might have to consider child care alternatives.

10 Ways To Make Child Care More Affordable

If traditional day care costs are outside of your budget, don’t worry – it’s still possible to make child care more affordable for your family. Here are 10 ways to potentially save money on day care expenses.

1. Become A Stay-At-Home Parent

While this isn’t an option for everyone, becoming a stay-at-home parent is one way to save on child care costs. Becoming a stay-at-home parent may be more realistic if you live in a dual-income household. Of course, you’ll have to determine whether removing a source of income is worth the savings on day care expenses. If day care costs more than you or you and your partner can realistically afford on two incomes, it could make sense to stay home with your child. 

2. Consider Part-Time Day Care Options

If you can’t commit to a full-day day care program, perhaps explore half-day or part-time options in your area. This could be doable if you work part time or you and your partner have different work schedules. Half-day day care programs will also be less expensive than traditional full-day child care services.  

3. Change Up Your Work Schedule

This method doesn’t work for everyone, but if it’s possible, changing the hours you work could help you save on child care costs. This option may work even better for you if you (or both you and your partner) work remotely or have a flexible job schedule.

Changing your work schedule could ensure that at least one parent is always home to take care of your child. Speak with your employer to see if adjusting your work hours or working remotely is a possibility for you. 

4. Explore Local In-Home Day Care Programs

Home-based day care programs are held in private residences by licensed child care providers. This type of day care arrangement is typically smaller and accepts fewer children than a center-based child care program. In-home day cares are also usually less expensive than programs held in child care centers.

The DOL compared the costs of in-home and center-based child care to estimate just how much one could save using an in-home day care. In a medium-sized county (100,000 – 499,999 people), the DOL estimated that the median cost of home-based care for an infant was $8,687 in 2022. Meanwhile, the median cost for an infant receiving center-based care was estimated at $11,354 for the year.  

Do research in your local area to see if home-based child care programs are available to you.

5. Consider Nanny Sharing

A nanny share is a child care service with several families sharing the same full-time nanny. This means you split the cost of child care with the other parents or caregivers. The average cost of nanny-sharing varies, as it largely depends on the nanny’s rate and the number of families utilizing the nanny’s services.

Connect with other families or parenting groups in your area to find out if nanny sharing is an option for you.

6. Join A Co-Op Nursery School

Cooperative, or co-op, nursery schools are nonprofit organizations that are similar to traditional day care centers – but with a few key differences. Instead of being solely managed by professional child care providers, co-op nursery schools depend on parent volunteers to help with everyday child care activities. The parents who work at co-ops are certified teachers or work closely with professional educators.

Because co-ops are primarily run by volunteers, this keeps child care costs lower for parents and caregivers. However, in most cases, you’ll have to volunteer at the co-op for your child to attend the program. If you have the time in your schedule, a co-op nursery school can be a less-expensive alternative to other day care centers. 

7. Research State And National Government Programs

Depending on the nature of your situation, you may qualify for child care financial assistance through your state or the federal government. Below are some of the more common government assistance programs you may find through research:

The Child Care and Development Fund (CCDF): The CCDF is a federal program that provides child care funding to states, territories and tribes. The funds are disbursed through grants, contracts and certificates to eligible low-income families that need child care because the parents or caregivers work or attend school.

Early Head Start and Head Start programs: These two federally funded programs are designed to provide children from low-income families with early childhood education services that can prepare them for school. Early Head Start and Head Start are free programs that support children from birth to age 5 with their social, emotional and cognitive development.

State-funded pre-kindergarten: State-funded pre-K programs help children between the ages of 3 and 5 prepare for kindergarten. These programs are often either half-day or full-day and are only available during the school year. Depending on your state, qualifying families may be able to access pre-K programs for free or at a lower cost.

8. See If You’re Eligible For The Child Care Tax Credit

If you paid for child care services at any point throughout the year, you may qualify for the child and dependent care credit when you fill out your tax return. This tax credit helps you get some of the money back that you spent on child care during the previous year. The credit gives taxpayers up to $3,000 for one qualifying dependent and $6,000 for two or more qualifying dependents.  

To qualify for the child and dependent care credit, you’ll need to meet the following criteria:

You paid someone to take care of at least one qualifying tax dependent during the previous year.

You were working, looking for a new job or attending school full-time and paid for the care so you could do any of these actions.

You (and your spouse if filing jointly) must have earned an income during the year.

To claim the tax credit, you’ll need to fill out Form 2441 and include the form when you file your tax return.

9. Review Your Employee Child Care Benefits

If you’re a working parent or caregiver, your employer may offer a variety of child care benefits that can make day care more affordable for you. One example of an employee benefit is a Dependent Care FSA (DCFSA). This type of pretax flexible spending account lets you contribute up to $5,000 per household to pay for eligible child care expenses. The DCFSA allows you to set money aside to pay for services such as day care, preschool, nursery school and summer camp.

Other examples of employee benefits that support working parents and caregivers include employer-sponsored child care subsidies, onsite child care services and paid family and medical leave (FMLA).

10. Get Help From Family Members

Enlisting help from family members may be the most affordable and practical child care option. If they’re willing and able to pitch in, your family can help care for your children while you work or go to school. This unique opportunity can give your family members a chance to spend quality time with your kids. What’s more, you can hopefully rest easy knowing your little ones are being taken care of by people they’re likely already quite familiar with.

The Bottom Line

Traditional day care centers and child care assistance can be expensive for families. However, numerous alternatives can make child care more affordable and, in some cases, free for parents and caregivers.

If you’re trying to find a place in your budget for child care expenses, look no further than Rocket Money^SM. The Rocket Money app lets you manage your bills and finances right on your phone. It even allows you to create a customized budget so you can set money expenses, groceries and more. Sign up for the Rocket Money app today.