In this post, I will share all the tips and tricks I know about how to save on daycare because that ish can be expensive!
If you haven’t heard, we just announced that we will be having another “sex trophy” in May of 2020. Sorry, I heard “sex trophy” on the radio this morning, and I had to use it…
After the initial excitement wore off, I immediately started thinking about how the added cost of another baby would affect our budget and our financial goals. Specifically, I started thinking about what we could possibly do to reduce our daycare costs. If you’re anything like me, you’re probably wondering the same thing. So, in honor of our new little one, I thought I would share 16 ways to save on daycare.
1. Use a DCFSA to Pay for Daycare Pretax
You may be asking yourself, “What the heck is a DCFSA, and how does paying for daycare pretax help me?”
What is a DCFSA?
A DCFSA is an account used to pay for eligible dependent care services, such as preschool, summer day camp, before or after school programs, and child or adult daycare. The great thing about it is that it is a pre-tax benefit.
How does paying for daycare pretax help me?
By paying for daycare pre-tax, you will save your effective tax rate (up to 37%) on up to $5,000 of daycare expenses every year. In other words, if you were in the highest tax bracket, using a DCFSA would save you $1,850 per year on daycare.
My husband and I aren’t close to the highest tax bracket, so we don’t save the full $1,850. Our savings are more like $800 a year (based on our effective tax rate of 16%), but that’s about a month’s worth of daycare for one child, so I’ll take it!
Where do I Sign Up?
Check out if your work offers a DCFSA as a benefit and enroll in it during open enrollment (if you already have kids) or when your new baby is born (since that counts as an open enrollment event).
2. Grandparents!
Some people have parents (i.e. their children’s grandparents) that are able and willing to watch their children full-time and for free while they go to work. If this is you, congratulations! You’ve just saved a ton of money!
If this isn’t an option for you full-time (it wasn’t for us), consider asking them if they can watch the kids part-time for partial cost savings (i.e. a couple of days a week instead of five days a week).
Another option is to have them watch the kids during date nights. Even helping you by not having to hire a sitter for a few hours while you and your spouse spend some quality time together can save you money, and it’s good for your children to build strong relationships with other adults.
3. Ask Around
When we found out we were pregnant with my first, we were given the advice to get on a waiting list early. We listened and got on a waiting list when I was in my first trimester! Unfortunately, even that wasn’t early enough!
The good news is that because we had to scramble when I was ready to go back to work, we asked around a lot more to find alternative options. We ended up finding an in-home daycare that we loved even more than the daycare option we had been on a waiting list for, and the new option we found was substantially cheaper! So ask around and keep asking because you never know who has that secret daycare option that will be the best (and most affordable option) for your family.
4. In-Home Daycare Options
Like I said above, after scrambling, we ended up finding an in-home daycare that we loved. Don’t overlook non-corporate daycare options, as they can save you money and give your child a more at-home and comfortable experience.
I’ve found that the best way to find in-home daycare options is to network with people with children. Many of the in-home care professionals are small business owners that grow via word of mouth. Ask friends with kids what daycare they use. Also, try looking on Yelp, Craigslist, Care.com, community bulletin boards, mom’s groups, and local churches.
5. Church Daycare Options
Many churches offer daycare options. Sometimes they are cheaper than other options, sometimes they are more expensive. It never hurts to do a little research to find out how they compare to the other options in your area.
6. Ask a Stay-At-Home Mom
Do you know a mom that stays home that would be willing to watch your child for a little extra cash? Paying a stay-at-home mom to watch your child while you work may be a win-win situation. You may be able to have more affordable care and a better child-to-adult ratio while the other mom gets to earn money while also staying home with her child.
7. Host a College Student
Is there a local college near you? If you have an extra room in your house, you may be able to offer room and board in exchange for a college student to watch your child while you are at work. If they can adjust their class schedule, so they take evening classes and watch your child while you’re at work, it could be a mutually beneficial situation because they may be able to study and do homework while your child naps.
8. Host an Au Pair
An au pair is generally a young, foreign woman who helps with housework and child care in exchange for room and board. The State Department requires families to pay au pairs a weekly stipend of $195.75 and a one-time fee of up to $500 towards educational costs. Au pairs aren’t allowed to work more than 45 hours a week. If you have multiple children, this may be a better deal than having them all in daycare.
That being said, an au pair is basically like a family member, so you’ll need to feed them, provide toiletries, and help them with transportation which are all added costs. In addition, because they’re living with you, you’ll be sharing your space with someone, and you’ll be giving up some of your privacy.
9. Get Creative with Your Schedules
Another option is to get creative with your and your partner’s work schedules. If you can work alternate shifts, then one of you can always be home with the baby. Keep in mind that while this may save you money, it can also strain your relationship as you will see less of your partner, and each of you will be alone when you’re watching the child.
Another option related to scheduling, however, would be to ask if you could reduce your hours at work or even go part-time.
10. Plan Ahead and Save Early
One of the best things you can do is research the cost of daycare early and start planning ahead and saving early. If you plan ahead, you can have a year or more (the length of your pregnancy plus the time you’re out on maternity leave) to save for daycare costs. Having a savings fund for daycare will help you feel more comfortable and not like you’re living paycheck to paycheck once the baby is here.
11. Budget for Daycare Expenses Before the Baby Arrives
How do you save for daycare costs? After you’ve researched and figured out how much it will cost you every month once the baby starts daycare, try to start saving that much per month now. If you cannot afford to save that much, it’s time to review your budget and cut expenses or figure out ways to increase your income.
12. Side Hustle to Pay for Daycare Expenses
If you can’t find a way to cut that much money out of your budget to save for daycare, consider thinking of ways to make extra money now. You could look into a side hustle. Another option is for you or your partner to consider getting a new higher paying job, so you have what you need to afford daycare once the baby is here.
13. Start Your Own Daycare
If you love children and want to stay home with your child, but you also need income, you could consider watching other families’ children and starting your own daycare.
14. Work from Home
If you work for a flexible company, you may be able to work from home. While this is an affordable option, it may not be ideal because children can distract you from your work, and your work can distract you from being a mindful parent.
15. Stop Working
Depending on how much you or your partner makes, how many children you have, and how much your daycare costs per child, it may be more cost-effective for you or your partner to stay home and watch the children yourself. For example, if you get paid $40,000 a year (pre-tax), and you have four children in daycare with an average yearly price of around $10,000 per child, then all of your take-home income and some of your partner’s income would go to daycare. In cases like this, it may make more financial sense for you to stay home.
16. Comparison Shop & Ask These Questions
If you start early, you’ll be able to compare shop the different daycare options. To make sure you’re comparing apples to apples when it comes to price, here are some important questions to ask when reviewing the prices of different daycare options:
- Is there a sign-up fee?
- Is there a daily, weekly, monthly, quarterly, or yearly rate?
- What are the drop-off and pick-up times?
- How many days a year is the daycare closed?
- When the daycare has closure days, do we pay the same monthly rate?
- Do we have to pay when we take the child out for a family vacation?
- Do we need to provide diapers, wipes, food, and/or formula, or is that included in the price of the daycare?
Why These Questions are Important
When I was doing my research, some daycare options seemed to be affordable until I got the questions above answered. For example, they had semesters-long fees that didn’t include months in the summer. Summer months were an added cost that they didn’t openly disclose right away. Furthermore, there were multiple closure days, but the semester-based fee stayed the same. Ultimately, I went with in-home daycare, and I was blown away when they didn’t charge me when they had closure days and vacation days. Furthermore, they also allowed me to take my son out for vacation time two weeks out of the year without paying for daycare.
Final Thoughts
I’ve done the research, I’ve interviewed friends, and I’ve scoured the internet for how to save on daycare. These are the tips and ideas I’ve come up with. If there’s a tip I’m missing, please let me know about it in the comments below.
